Compulsory Purchase and Compensation

Barry Denyer-Green

• Publisher: Routledge
• Year: 2018
• ISBN:
  9780429866906
• Edition: 11
• Topic: Architecture
• Subtopic: Urban Planning & Landscaping

Compulsory Purchase and Compensation is the essential guide to this complex and increasingly relevant area of the law. Now in its eleventh edition, no other book presents the same level of information on the law relating to compulsory purchase and compensation in England and Wales in such an accessible way. The best-selling book on the subject, previous editions have been used by professionals and students alike in order to gain a full understanding of a key subject for any surveyor or lawyer.

The book is also especially suited to those coming to this complex subject without a specific background in the law and ideal reading for those students taking planning and built environment law modules. Surveyors in particular will find this book invaluable.

This new edition has been extensively revised and reflects the changes to the law in the Housing and Planning Act 2016 and the Neighbourhood Planning Act 2017, and also recent decisions of the courts and the Upper Tribunal, all of which will be of particular interest to those working on cases related to HS2, the proposed high-speed railway line from London to Birmingham, Leeds and Manchester.

Part I

The power to compulsorily purchase land

1 Introduction

1.1 The use of compulsory acquisition powers

Most people think of compulsory acquisition as part of the power of the state to expropriate private land for some public purpose. While it is the state, through the parliamentary process, that provides powers of compulsory acquisition, the powers that are available in this country are wide, and go far beyond the taking of land for public projects.

(a) Public projects

Taking land compulsorily for public projects, such as roads and airports, is understood and accepted as a proper use of powers of acquisition. This book is primarily about this use of the compulsory acquisition power. However, there are increasing signs of tension in this country arising from the use of such powers by privatised undertakings, such as the water and electricity industries. There is resistance to the use of these powers where a private undertaking is able to profit from the taking of land at a price that disregards the value of the land to the project.

(b) Land reform

Land reform policies usually proceed on the basis that the ownership of land is unequal or not fairly distributed, and this produces economic inefficiencies or social tension. One immediately thinks of landless agricultural peasants in a developing country. However, we do have land reform policies in this country, although they are not so called. Under the Leasehold Reform Act 1967 the owners of long leases are entitled to enfranchise the freehold. It is said that this policy is justified because the long leasehold system is inefficient; in certain areas a monopoly landlord owned all the freehold. Freeholds were therefore not freely marketable and this produces economic inefficiencies. It is also said there is unfairness because the leaseholder pays for the building, but loses it at the end of the lease.

There are more recent examples of what might be called land reform acquisition powers in the Landlord and Tenant Act 1987 and the Leasehold Reform, Housing and Urban Development Act 1993. All these statutes contain powers of acquisition available to individuals to take private land and redistribute land ownership. Save for certain points of comparison, this use of powers of acquisition is not dealt with in this book.

But much more controversial is the use of compulsory acquisition to acquire and assemble sites, such as in town centre schemes, where the ultimate development will be carried out by a developer, with commercial incentives, and the developer indemnifies a local authority for the authority’s costs in acquiring the necessary land, such as under section 226 of the Town and Country Planning Act 1990. Presumably this use of the power is justified on the basis of defects in the market place such as inhibiting development and the creation of employment or housing opportunities.

(c) Sanction

Sometimes the state will obtain powers of compulsory acquisition to use as an ultimate sanction to encourage or discourage certain behaviour. Thus the Housing Act 1985 contains powers to take houses that have fallen into disrepair, and there are powers in the Planning (Listed Buildings and Conservation Areas) Act 1990 to acquire listed buildings where an owner fails to comply with obligations to keep in repair. The sanction of the use of powers of acquisition is dealt with in this book because the effect of the sanctions generally lies in some restricted entitlement to compensation.

(d) Regulation

Planning and pollution control legislation plainly prevents owners from using their property as they might choose. In that regard it is arguable that part of the bundle of rights that makes up the concept of legal ownership is taken away. Where compensation is payable for certain types of the regulatory controls over property, this is considered in this book.

1.2 Compensation and compulsory acquisition

It is too simple to say that whenever land is taken compulsorily fair compensation should be paid. The measure of compensation must be interrelated with the policy behind the acquisition power. Thus there may be little point in having a compulsory power as a sanction if the defaulting owner is fully compensated. There is a rather crude relation in this country between the measure of compensation (if any) and the use of the powers. That was recognised by the European Court of Human Rights in James v United Kingdom Government [1986]. Thus compensation is only paid in very limited circumstances where land is the subject of the regulation power considered above.

1.3 Compulsory acquisition and the law

This book is divided into four principal parts appropriate, it is submitted, to four different aspects of the law of compulsory purchase and compensation. Part I considers the need for powers to compulsorily purchase land. Today, these powers are almost entirely statutory and they are set out only in sufficient detail to enable the valuer or surveyor to understand the background to the exercise of compulsory purchase. Part II is concerned with the procedures that follow the obtaining of compulsory purchase powers, and the steps that have to be taken to exercise those powers and take possession of land. The rules, both statutory and judicial, for determining the amount of compensation payable for a compulsory purchase of land are the subject of Part III. There are circumstances where, although no land is compulsorily purchased, an owner may claim compensation for some injury or damage to his land, or a depreciation in its value, caused by the activities or decisions of public authorities; the circumstances are outlined in Part IV.

Although modern compulsory purchase and the associated rules of compensation are statutory in origin, the interpretation of the relevant statutes has been the subject of a considerable amount of litigation, and the resulting case law is important. Since most readers of this book will not have ready access to the volumes of reported cases, a rather fuller treatment of the important cases will be found than is usual in a textbook. For much the same reason there are no footnotes and all references to statutes, orders, regulations and law cases are incorporated in the text. Following each case name will be found the year it is reported, e.g. [1979], and, occasionally, the court concerned – LT for Lands Tribunal, QBD for Queens Bench Division, CA for Court of Appeal and HL for House of Lords. Consultation of the ‘Table of cases’ will give what is called the citation, which enables the case to be found in the law reports.

The purpose of this book is to provide an outline of the subject, particularly for students taking examinations in estate management, surveying, valuations and planning, and for practitioners in these disciplines. The text needs to be of a manageable length, concentrating on principles, yet illustrating the practical application of the principles with suitable cases. Here a warning must be given. The non-lawyer generally assumes that law is certain and, if applied to a given set of facts, a definitive answer can be given, upon which reliance may be placed. Nothing could be further from the truth. One can never be absolutely certain what the law is until a court (or the appropriate Tribunal) has decided a case; one then knows the answer, but only for that case. Of course one can predict what a court might decide where a set of facts closely follows the facts in a previously decided case, or is clearly within the words of a statute; this is what a lawyer does in advising a client, and this is what the author has done in the following pages when making statements or propositions of what the law is. Sometimes the law is so doubtful that this is not possible; then the author has either left that doubt unresolved, or expressed his view as to what the law ought to be.

Until recently the Lands Tribunal had jurisdiction to determine the amount of compensation payable in most circumstances of compulsory purchase. Its decisions were nearly always decisions on the evidence before it in any particular case and were therefore not precedents binding on itself in later references. Under the Tribunals, Courts and Enforcement Act 2007, the work of the Lands Tribunal passed to the new Tribunals Service. Under this system the more important cases, and appeals, are heard by the Upper Tribunal (Land Chamber), and the more straightforward cases should go to the First-tier Tribunal (Land, Property and Housing).

1.4 Human rights

The Human Rights Act 1998 gives effect to the rights and freedoms under the European Convention on Human Rights. The Act and the application of the Convention on the compulsory taking of land has required careful consideration in relation to the preparation of compulsory purchase orders and their supporting statements of reasons. Human rights are considered in Chapters 4 and 27 below.

1.5 Law reform

The last few years has seen much activity directed to the reform of the law relating to compulsory acquisition. In July 2000 the Department of the Environment, Transport and Regions published its final report – Fundamental Review of the Laws and Procedures Relating to Compulsory Purchase and Compensation. That review set out a number of recommendations that arose out of the deliberations of an advisory group. The government followed this with its own proposals in Compulsory Purchase and Compensation: Delivering a Fundamental Change. At about the same time, the Law Commission took an interest in the reform of the law relating to compulsory purchase and compensation. The Commission published its final reports – Towards a Compulsory Purchase Code: (1) Compensation (Law Com No 286) and (2) Procedure (Law Com No 291) – in 2003 and 2004 respectively.

Any student of this subject will wish to consult the Law Commission Reports and the preceding consultation papers Nos 165 and 169. As always, they are extremely well researched and provide an illuminating background to understanding the law relating to compensation and procedure. Whether the government will find time to bring forward legislation to reform the law, and what shape that law reform will take, remains to be seen. As the student will see, in passing through this book, the statutory structure of the law is spread over a number of different enactments that commence in 1845, until the present time. Some consolidation would be desirable. The fundamental changes in the nature of planning and development plans over the last 30 years has left parts of the compensation legislation behind, especially that concerning the assumptions that can be made as to the planning status of land being compulsorily acquired. The defects in the rules concerning the planning status of land were highlighted by the Court of Appeal in Transport for London v Spirerose Ltd [2009] where Carnwath LJ drew attention to the Law Commission Reports, and to the government’s response to a call for a new compensation code in December 2005. The government then rejected the call for such a code on the grounds that, inter alia, it could not devote resources to such an exercise in view of its other legislative priorities. However, the central corpus of compensation law has developed through a number of decisions in the courts and in the Lands Tribunal over a considerable period of time. If a fundamental reform of that central corpus had the effect of throwing away the valuable guidance in those decisions, that would be unfortunate. It does not assist either acquiring bodies or claimants if they are faced with new rules untested and unguided by decisions in the courts and the Tribunals.

The Planning and Compulsory Purchase Act 2004 was the government’s first response to this reforming activity. This widens the powers of compulsory acquisition under the Town and Country Planning Act 1990. It also introduced loss payments to make some allowance for the upset, discomfort and inconvenience in being compulsorily acquired. However, important reforms to the rules about planning assumptions were made by the Localism Act 2011. The Housing and Planning Act 2016 and the Neighbourhood Planning Act 2017 both made further substantial changes to the rules relating to notices to treat, general vesting declarations, advanced payments and, importantly, the scheme rules have been codified.

2 The need for statutory powers

2.1 How can land be expropriated?

This chapter is intended for the student or layman whose knowledge and experience of law, and of what laws are for, is limited. If the rest of the book is to have any meaning or purpose, the reader should have some idea why laws of compulsory purchase are necessary and what those laws seek to do.

Let us start with the essence of the problem: one person (or some public authority) wishes to acquire the land of another, if necessary, without his consent. Perhaps an example will focus our minds on the problem and the possible solutions.

If Marigold has the exclusive use and enjoyment of Herbaceous Border, and Clover desires it for himself to the exclusion of Marigold, Clover can set about satisfying his designs in a number of ways. Clover can use force, or the threat of it, and dispossess Marigold – the force approach. The method is not unknown in certain countries today, and it has some advantages – no notices, no objections and no compensation. It was even used in this country before Henry II restored order.

However, if Clover is uncertain about his strength, or legal or moral rules prevent the use of force, he may attempt to become the owner of Herbaceous Border by purchase. He either waits until the property is put on the market, or he will offer a price to Marigold. Depending on her attachment to the land and her willingness or otherwise to sell, the two may reach an agreement whereby Clover will become owner – this can be called the agreement approach. If Marigold is not initially a willing seller, Clover may have to offer a substantial price to turn unwillingness into willingness and to persuade Marigold to sell Herbaceous Border.

If the force approach is ruled out, because it is immoral or illegal, and the agreement approach is unsuccessful, because Marigold does not want to sell, there is no way that will enable Clover to become the owner of Herbaceous Border without its owner’s consent under either of these approaches.

If Marigold and Clover live in a country with a developed legal system, that system may contain laws acknowledging the idea of private property and providing rules for its protection. Although this would prevent Clover using the force approach, he might be able to persuade the lawmakers to pass a law to legalise force or to compel Marigold to make an agreement: we can call this the compulsory purchase approach. We will examine the full implications of this approach a little further on. Meanwhile some other possibilities must be considered.

If the legal system of a particular country does not acknowledge the idea of private ownership of land, none of the approaches so far considered will be appropriate; who may use Herbaceous Border becomes a matter for the community, state authority or government concerned: the individual will have no ‘rights’.

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