National Grid Electricity Transmission Plc v Anthony White Estates Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Briggs,Sir Stanley Burnton,The Master of the Rolls |
| Judgment Date | 03 March 2014 |
| Neutral Citation | [2014] EWCA Civ 216 |
| Docket Number | Case No: C3/2013/1946 |
| Court | Court of Appeal (Civil Division) |
| Date | 03 March 2014 |
[2014] EWCA Civ 216
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE UPPER TRIBUNAL (LANDS CHAMBER)
LCA582011
Royal Courts of Justice
Strand, London, WC2A 2LL
THE MASTER OF THE ROLLS
Lord Justice Briggs
and
Sir Stanley Burnton
Case No: C3/2013/1946
Robin Purchas QC and Rupert Reed (instructed by BERWIN LEIGHTON PAISNER LLP) for the APPELLANT
David Elvin QC and Katie Helmore (instructed by GOSSCHALKS) for the RESPONDENT
Hearing date: 18 th February 2014
Introduction
This appeal raises a novel point about the quantification of compensation payable to the owner of land in respect of the grant of a wayleave for an electric power line, pursuant to paragraphs 6 and 7 of schedule 4 to the Electricity Act 1989.
The point arises from the fact that, prior to the grant of the wayleave, the owner of the land affected by it had agreed to sell it to developers for a price which, by the time of the grant, substantially exceeded its development value on the open market, pursuant to a conditional contract which fell away because of the grant of the wayleave. The single question arising on this appeal is whether the amount of compensation payable to the owner of the land should be measured by reference to the price payable under the conditional contract or the substantially lower open market development value of the land, at the time of the grant of the wayleave. The Upper Tribunal (Lands Chamber) decided that compensation should be measured by reference to the contract price. The appellant, National Grid Electricity Transmission PLC ("National Grid"), contends that this involves a radical departure from settled principles governing compensation payable for compulsory acquisition, with major implications for the electricity supply industry.
The Facts
The facts are undisputed, and comprehensively set out in the decision of the Tribunal. For present purposes, the following brief summary will suffice.
At the beginning of this century the Respondent Arnold White Estates Limited ("AWE") was the owner of land (previously exploited by sand extraction) of about 19.5 acres south of Leighton Buzzard, referred to in the Tribunal as "Area 15C". An overhead power line ran east-west across the middle of Area 15C, supported by pylons on adjacent land, but not on Area 15C itself. The power line overflew Area 15C pursuant to a contractual wayleave granted by AWE's predecessor in title in 1964, which was terminable on six months' written notice.
Area 15C was, together with adjacent land, shown in the Bedfordshire Local Plan Review 2004 as suitable for residential development. AWE promoted a Development Brief for Area 15C, together with adjoining land to the north, northeast and west which was approved by the South Bedfordshire District Council in September 2006. The development brief recognised an uncertainty whether the power line would continue to cross Area 15C or be removed, and proposed alternative development along a 54-metre wide strip underneath the power line, according to whether the line was removed or retained. If removed, then the 54-metre strip would be suitable for residential development. If retained, the presence of the power line would prohibit such development within the 54-metre strip. I will call the 54-metre strip "the pylon land", even though there has never been a pylon on it, because this is how it has come to be described.
Planning permission for the residential development of Area 15C, together with adjacent land, was granted on appeal in December 2007, with conditions reflecting the retention or removal of the power line which broadly followed those in the Development Brief. Following the public inquiry which led to the grant of planning permission, AWE sold the whole of Area 15C to developers (George Wimpey South Midlands Limited and Persimmon Homes Limited) pursuant to two contracts both dated 20 th July 2007. One contract ("the pylon land contract") related solely to the pylon land. The other contract related to the rest of Area 15C, on either side of it.
The pylon land contract was conditional upon the removal of the power line, and the purchase price was £5,361,246 plus VAT, indexed at RPI from the date of contract until payment. The price payable under the contract for the rest of Area 15C was also subject to indexation, but that contract was unconditional.
On 11 th March 2008 AWE served notice on National Grid terminating the contractual wayleave, and on 15 th September 2008 served statutory notice requiring its removal. National Grid then applied to the Secretary of State for the grant of a statutory wayleave under paragraph 6 of schedule 4 to the Act. After a hearing before an inspector in 2009, the Secretary of State granted the wayleave on 21 st June 2010. The result was, of course, that the pylon land contract fell away.
One effect of the economic troubles which began in 2008 was that, by June 2010, development land values in the Leighton Buzzard area had fallen substantially from their levels in July 2007. It was common ground before the Tribunal that the open market development value of the pylon land in June 2010, ignoring the pylon land contract, assuming the removal of the power line, and with the benefit of the planning permission, was only £3,195,000. By that time the price which would have been payable under the pylon land contract if the power line had been removed had risen due to indexation to £5,829,477.
Having heard expert evidence, the Tribunal concluded that the value of the pylon land subject to the statutory wayleave was, at the time of its grant in June 2010, a nominal £1, notwithstanding that the wayleave was for a period of only fifteen years, rather than in perpetuity. This conclusion of the Tribunal has not been challenged on appeal. The result was that the Tribunal awarded AWE compensation in the sum of £5,829,476, being what they described as;
"the difference between the contract price at the date of valuation and the value at the valuation date in the real world." (Decision paragraph 97)
The Statutory Framework
Section 10(1) of the Electricity Act 1989 provides two methods whereby an electricity supply undertaking may obtain the requisite rights enabling it to construct or, if already in existence, keep power lines over land. The first is by compulsory acquisition of the necessary land, pursuant to schedule 3. The second is by acquisition of wayleaves, pursuant to schedule 4. Schedule 3 incorporates, with important adjustments, provisions of Part 1 of the Compulsory Purchase Act 1965. The grant of a wayleave involves no outright acquisition of land, compulsory or otherwise, and therefore Schedule 4 makes bespoke provision for compensation. Paragraph 7 provides as follows:
"(1) Where a wayleave is granted to a licence holder under paragraph 6 above-
(a) the occupier of the land; and
(b) where the occupier is not also the owner of the land, the owner,
may recover from the licence holder compensation in respect of the grant.
(2) Where in the exercise of any right conferred by such a wayleave any damage is caused to land or to movables, any person interested in the land or movables may recover from the licence holder compensation in respect of that damage; and where in consequence of the exercise of such a right a person is disturbed in his enjoyment of any land or movables he may recover from the licence holder compensation in respect of that disturbance.
(3) Compensation under this paragraph may be recovered as a lump sum or by periodical payments or partly in one way and partly in the other.
(4) …"
Certain aspects of the interpretation of paragraph 7 are less straightforward than they might appear at first sight. For present purposes, I shall confine myself to those aspects which are common ground. First, the word "land" is used differently, as between sub-paragraph (1) and (2). In sub-paragraph (1) it has the broad meaning set out in schedule 1 to the Interpretation Act 1978, so as to include "any estate, interest, easement, servitude or right in or over land". Thus, the "owner of the land" in paragraph 7(1)(b) includes the proprietor of an interest in land, such as an option to acquire it: see Oppenheimer v Minister of Transport [1942] 1 KB 242 (a case about the meaning of "lands" within section 49 of the Lands Clauses Consolidation Act 1845). "Land" in paragraph 7(1)(b) must a fortiori also include the interest of a purchaser under a contract for the purchase of land. By contrast, "land" in paragraph 7(2) appears to be used in its more limited physical sense, because of the reference to "any person interested in the land".
Secondly, it is common ground that the valuation date for the purpose of the quantification of compensation under paragraph 7(1) is the date of the grant of the wayleave. Again by contrast, paragraph 7(2) contemplates compensation for damage or disturbance occasioned in the exercise of a right conferred by a wayleave, which may occur at any time during the period for which the wayleave is granted.
Thirdly, it was broadly common ground that, like other statutory provisions for compensation for the compulsory acquisition of, or of a right over, private property, compensation for the grant of a statutory wayleave is to be quantified in accordance with what has come to be known among compulsory purchase lawyers as the principle of equivalence. In its earliest and classic form, the principle is encapsulated in Horn v Sunderland...
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