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AN ARTICLE by Peter Scrafton FIRRV, FCIArb, MRSA(Hon) Solicitor (Non-Practising)

December 2009.

In my last piece I wrote of the facts of the case, its progress through the system, the result and as to the powerful Court of Appeal which decided it.  Now, I want to look, briefly, at the legal issues.  This is needful, even though the decision of the Lands Tribunal was essentially on the facts, as it is appropriate to consider the route taken by the Court.


The ratio of the decision is that, where there is a reasonable prospect of a planning permission at the valuation date, then it is also probable, applying the civil standard of proof, that permission would be granted, because, in the no-scheme world, an owner would be expected to do what might be necessary to look after himself, by  making the appropriate planning application; and he could assume that the planning authority would decide it according to policy.


This appears from para 66 of the Tribunal’s decision, which discusses the requirements of Rule 2 (sale in the open market by a willing seller), and then holding that, if the statutory hypothesis assumes that planning permission would be available, then:-


“.....On the assumed hypothesis........ there would not at the date of valuation have been a mere prospect of planning permission. There would have been a determined planning application granting permission…"


The Tribunal later (at para 70d) explained how this approach differed from that of assessing hope value:-


"Whether planning permission would have been granted in the no-scheme world is to be determined by reference to the decision that a reasonable planning authority would have made. By contrast hope value is to be assessed by reference to the view that the market would have taken as to the prospects of achieving planning permission."


The Tribunal accordingly valued the site on the basis of the planning permission which it believed would have been available, rather than on the (lower) “hope value” basis contended for by Transport for London, made on the basis that there would have been no actual permission, but only a "very good prospect", subject to such uncertainties as would have been perceived by the market (para 134).


It is appropriate to examine the manner in which TfL’s arguments were rejected by the Tribunal, and by the Court:-


Citing Porter v Secretary of State [1996] 1 EGLR 10 TfL contended that the question of planning permission was "probabilistic, not deterministic" - that the valuer should assess the chance of the grant of planning permission at the valuation date (probabilistic), and not whether permission would be granted at that date (deterministic).   The Tribunal held, though (at para 54) such may be the character of the approach taken by the Courts in assessing the measure of damages (compensation) on the basis of reasonable foreseeability, it is not the route to be taken in the determination of compensation for compulsory purchase.  Assumptions arising under the Act or under Pointe Gourde are to be applied as facts, and not the subject of the test applied by the Courts in cases where the Act and Pointe Gourde do not apply.


Having considered the actual issue in Porter (an injurious affection case brought under s7 of the 1965 Act) the Court declared that there were important policy issues at stake in the instant case.  First, they said, the Act of 1961 there is an apparent legislative intention to create a statutory code within which the principles of  Pointe Gourde were to be assimilated (para.20); and that (at para.65) it must be accepted that, where the statutory assumptions apply, the probability of a planning permission becomes a certainty. 


They went on to hold that, where a claimant was unable to take advantage of the statutory assumptions because of an anomaly in the provisions fixing the date of consideration, then, as far as possible, they would interpret the no-scheme rule so as to remedy the anomaly rather than extend it.


Further, they said, it was plainly desirable that there should be consistency in the assessment of compensation for compulsory acquisition of land in materially similar cases, whether or not the statutory assumptions applied.


Driving home the point, as it were, at para 66 the Court held that the statutory policy reflects the common assumption and practice of tribunals, courts, practitioners and valuers. That policy and practice has, they said, obvious merit in simplifying the task of valuation for the purpose of assessing compensation. In doing so, it reduces the likelihood of disputes and litigation, it promotes compromise, and will save costs.


With that conclusion that there were powerful policy considerations to support the decision of the Tribunal, the Court went on to draw the attention of Parliament, yet again, to the need for the drastic reform of the compensation system, whether at one fell swoop (as recommended by the Law Commission under Carnwath LJ’s chairmanship) or piecemeal (see Greenweb).  With such utterances by such a strong Court, it is devoutly to be wished that someone in government or Whitehall will pick this issue of reform out of the “Too Hard” pile and face up to the matters requiring action, about a number of which I have written, previously, in these pages 


©J.P. Scrafton, 2009

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