Transport for London v Spirerose Ltd ((in Administration))
| Jurisdiction | UK Non-devolved |
| Judge | LORD SCOTT OF FOSCOTE,LORD WALKER OF GESTINGTHORPE,LORD MANCE,LORD NEUBERGER OF ABBOTSBURY,LORD COLLINS OF MAPESBURY |
| Judgment Date | 30 July 2009 |
| Neutral Citation | [2009] UKHL 44 |
| Date | 30 July 2009 |
| Court | House of Lords |
[2009] UKHL 44
Appellate Committee
Lord Scott of Foscote
Lord Walker of Gestingthorpe
Lord Mance
Lord Neuberger of Abbotsbury
Lord Collins of Mapesbury
HOUSE OF LORDS
Appellants:
Michael Barnes QC
Eian Caws
(Instructed by Eversheds LLP)
Respondents:
Nicholas Nardecchia
(Instructed by Lodders Solicitors LLP)
My Lords,
The issue for decision in this appeal relates to the basis on which compensation for compulsory purchase should be assessed in a case where the land in question has an unrealised potential for development but where the success of an application for the requisite planning permission is, although probable, not a certainty. More particularly, the issue is whether, in such a case, compensation should be assessed on the basis that planning permission for the development would be granted, or whether the amount that such an assessment would produce should be discounted to reflect the lack of certainty. I have had the advantage of reading in advance the opinions of my noble and learned friends Lord Walker of Gestingthorpe and Lord Collins of Mapesbury and agree with their conclusion that the assessment of compensation should take into account that lack of certainty and that, accordingly, this appeal should be allowed. I want, however, to add just a few words of my own and for that purpose gratefully adopt the recital of the relevant facts to be found in paragraphs 67 to 72 of Lord Collins' opinion.
Compulsory purchase is a creature of statute and the compensation to be paid to the expropriated owner is likewise provided for by statute. The current statute is the Land Compensation Act 1961, which consolidated earlier legislation. Rule (2) of section 5 re-enacts the principle set out in section 2 of the Acquisition of Land (Assessment of Compensation) Act 1919, but that had been established earlier by judicial decisions interpreting and applying provisions in the Land Clauses Consolidation Act 1845, that compensation was to be assessed on the basis of the value of the land to its expropriated owner, not on the basis of its value to the acquiring authority. Rule (2) says that
"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."
It is obvious that once land has been made the subject of a compulsory purchase order and notice to treat has been served by the acquiring authority, the value of the land to the seller in the open market cannot be ascertained by an actual sale. The market value becomes a matter of valuation and for that purpose a hypothetical open market has to be assumed and the attributes of the land for the purposes of the hypothetical sale in that market become important. The 1961 Act provides both for certain matters relating to the land to be assumed and for other matters to be disregarded. Section 6 of the Act provides for certain disregards (see para 77 of Lord Collins' opinion), none of which, fortunately, is relevant in the present case, and section 9 requires any depreciation in the value of the land caused by the acquiring authority's compulsory purchase plans to be disregarded.
Bearing in mind the importance of development potential in the assessment of market value, it is not surprising that sections 14 to 16 of the Act provide for certain assumptions about planning permission to be made. None of these is relevant in the present case. One of the statutory assumptions, namely, an assumption that planning permission for the land in accordance with a certificate issued under section 17 of the Act would have been granted, might have been relevant but, in the event, was not (see paras 83 to 85 of Lord Collins' opinion which explains why not).
Nonetheless section 14(3) of the Act expressly keeps open for the expropriated owner the right to have included in his compensation the value to be attributed to any development potential the land may have. His compensation does not have to be confined to the existing use value of the land.
The Tribunal found in the present case that there was a probability that planning permission for a valuable re-development of the land in question would have been granted. But they awarded compensation on the basis of a valuation of the land not on the footing that the permission would probably have been granted but on the footing that it would have been granted. They attributed a value of £608,000 to the land on that latter footing but a value of only £400,000 on the footing that "permission is not as a matter of law to be assumed and only hope value is to be taken into account". The Court of Appeal affirmed the Tribunal's decision and the issue for your Lordships is whether the Tribunal was justified in law in treating a probability as a certainty.
The proposition that if an application for planning permission would probably have succeeded it should, for statutory compensation purposes, be assumed that planning permission would have been granted, cannot be derived from statute. That assumption is not one of the statutory assumptions to be found in the 1961 Act. If a section 17 certificate had been obtained the assumption would have been required by section 15(5) of the Act but that had not happened. Moreover the extra-statutory assumption of a certainty of planning permission appears inconsistent with Rule (2) of section 5. It could not be supposed that the sale of a property, in respect of which it could be concluded that a grant of planning permission would probably succeed, would produce as high a price in the open market as a sale of the property with the benefit of an actual grant of the planning permission. The open market can be expected to attribute a premium to certainty or, conversely, to apply a discount to reflect a lack of certainty. The difference between the Tribunal's £608,000 on a certainty basis but £400,000 on a hope basis recognised that market reality. So why did the Tribunal apply an extra-statutory assumption in awarding compensation of £608,000 and why did the Court of Appeal confirm the Tribunal's decision?
It may be that part of the thinking was based on the jurisprudence relating to the burden of proof in civil cases. The party on whom lies the burden of proving a relevant fact can succeed in discharging that burden on the so-called "balance of probabilities". If the existence of the fact is more probable than not, the burden of proof is satisfied. But this is to do with proof of historic fact. It has nothing to do with valuation. A search for the market value of land at a particular date must take account of the attributes of the land at that date. Absent statutory intervention there is no warrant for adding attributes that the land does not possess nor, for that matter, for subtracting attributes that the land does possess. The land in the present case had a promising potential for the grant of planning permission but it did not have the benefit of an actual grant of planning permission. To transform a probability of planning permission into a certainty of planning permission on the footing that the civil standard of proof, the balance of probabilities, has been satisfied misunderstands, in my respectful opinion, the nature of the valuation exercise that Rule (2) of section 5 requires.
Another suggested source of the proposition that a grant of planning permission should be assumed is the so-called Pointe Gourde principle (see Pointe Gourde Quarrying and Transport Co. Ltd v Sub-Intendent of Crown Lands [1947] AC 565). The Pointe Gourde case has been analysed by Lord Walker (paras 10, 18 and 19 of his opinion) and by Lord Collins (paras 118 to 127 of his opinion). I am in respectful agreement with the opinion expressed by each of them that the principle is one of statutory interpretation (Lord Walker at para 11, Lord Collins at para 127) relating to the "value to the seller" concept underlying the assessment of compensation. In Waters v Welsh Development Agency [2004] 1 WLR 1304 I expressed my own view of the Pointe Gourde principle but my view did not attract support from my colleagues. I find myself, however, in complete agreement with what Lord Walker and Lord Collins have said about Pointe Gourde in their respective opinions in the present appeal. I agree that the principle provides no warrant for a valuation of the land with which this case is concerned on the basis that a grant of planning permission was a certainty. I would, therefore, for the reasons given by my noble and learned friends allow the appeal.
My Lords,
I have had the privilege of reading in draft the opinion of my noble and learned friend Lord Collins of Mapesbury. Lord Collins deals clearly and comprehensively with all the issues in this appeal. I am in full and respectful agreement with his reasoning, and having studied his draft opinion I have been doubtful whether it would serve any useful purpose to publish the opinion which I had already prepared. But concurrent opinions have their supporters as well as detractors (Dr F A Mann, The Single Speech (1991) 107 LQR 519; James Lee, A Defence of Concurring Speeches [2009] PL 305) and it may be worthwhile to make some observations on the Pointe Gourde principle.
The statutory background and the Pointe Gourde principle
In this appeal there has been a good deal of debate about what the Pointe Gourde principle is, and whether it is relevant to the determination of the appeal (see Pointe Gourde Quarrying and Transport Co Ltd v Sub-Intendent of Crown Lands [1947] AC 565). In my opinion it is an imprecise...
To continue reading
Request your trial
-
Transport for London v. Spirerose Ltd., [2009] N.R. Uned. 206 (HL)
...{ color: #000000; font-size: 12.0000pt; font-weight: bold; font-family: 'Times New Roman'; } Transport for London v. Spirerose Ltd., [2009] N.R. Uned. 206 (HL) MLB unedited judgment Transport for London (London Underground Limited) (appellants) v. Spirerose Limited (in administration) (resp......
-
Decision Nº LCA 129 2013. Upper Tribunal (Lands Chamber), 04-12-2014
...v Wolverhampton City Council [2012] 1WLR 2264 Trocette Property Co Ltd v GLC [1972] 28 P&CR 408 Transport for London v Spirerose Limited [2009] UKHL 44 MWH Associates Limited v Wrexham Borough Council [2011] UKUT 269 and [2012] EWCA Civ 1884 East End Dwellings Co Ltd v Finsbury Borough Coun......
-
Decision Nº ACQ 126 2009. Upper Tribunal (Lands Chamber), 16-09-2010
...of Leeds, for the acquiring authority The following cases are referred to in this decision: Transport for London v Spirerose Ltd [2009] 4 All ER 810, Urban Edge Group Ltd v London Underground Ltd [2009] RVR 361, LT Thomas Newell Ltd v Lancaster City Council [2010] UKUT 2 (LC), LT Pointe Gou......
-
Bocardo SA v Star Energy UK Onshore Ltd
...this simple phrase, resulting in the firmly-established "value to the owner" principle. This was explained by Lord Collins in Transport for London v Spirerose Ltd [2009] 1 WLR 1797 , paras 119-129, in his exposition of the Pointe Gourde principle (see Pointe Gourde Quarrying & Transport ......
-
Compulsory purchase and compensation update – 2015
...statute, the Court of Appealcame to the same conclusion having regard to case law –specifically Transportfor London v. Spirerose Ltd (2009) 1 WLR 1797 and Waters v. Welsh DevelopmentAgency (2004) 1 WLR 1304. The relevance of this decision is, therefore, not diminishedpost 2011.It is also we......
-
Compulsory purchase and compensation update – 2013
...PlanningPaper type Technical paperIntroductionThe House of Lords decision in Transport for London v. Spirerose Ltd [2009] 1 WLR1797 is one of the most important in recent years and makes significant changes to theplanning assumptions to be made when valuing land which is subject to compulsor......