Waters and Others v Welsh Development Agency

JurisdictionEngland & Wales
JudgeLORD NICHOLLS OF BIRKENHEAD,LORD WOOLF,LORD STEYN,LORD SCOTT OF FOSCOTE,LORD BROWN OF EATON-UNDER-HEYWOOD
Judgment Date29 April 2004
Neutral Citation[2004] UKHL 19
CourtHouse of Lords
Date29 April 2004
Waters

and others

(Appellants)
and
Welsh Development Agency
(Respondents)

[2004] UKHL 19

The Appellate Committee comprised:

Lord Nicholls of Birkenhead

Lord Woolf

Lord Steyn

Lord Scott of Foscote

Lord Brown of Eaton-under-Heywood

HOUSE OF LORDS

LORD NICHOLLS OF BIRKENHEAD

My Lords,

1

Compulsory purchase of property is an essential tool in a modern democratic society. It facilitates planned and orderly development. Hand in hand with the power to acquire land without the owner's consent is an obligation to pay full and fair compensation. That is axiomatic: Director of Buildings and Lands v Shun Fung Ironworks Ltd [1995] 2 AC 111, 125.

2

Unhappily the law in this country on this important subject is fraught with complexity and obscurity. To understand the present state of the law it is necessary to go back 150 years to the Lands Clauses Consolidation Act 1845. From there a path must be traced, not always easily, through piecemeal development of the law by judicial exposition and statutory provision. Some of the more recent statutory provisions defy ready comprehension. Difficulties and uncertainties abound. One of the most intractable problems concerns the 'Pointe Gourde principle' or, as it is sometimes known, the 'no scheme rule'. On this appeal your Lordships' House has the daunting task of considering the content and application of this principle.

3

In the Court of Appeal [2002] EWCA 924, [2003] 4 All ER 384, 414, para 116, Carnwath LJ, a judge with unrivalled expertise in this field, was moved to say at the conclusion of his impressive judgment:

'The right to compensation for compulsory acquisition is a basic property right. It is unfortunate that ascertaining the rules upon which compensation is to be assessed can involve such a tortuous journey, through obscure statutes and apparently conflicting case law, as has been necessary in this case. There can be few stronger candidates on the statute book for urgent reform, or simple repeal, than section 6 of and Schedule 1 to the [Land Compensation Act 1961].'

4

I echo Carnwath LJ's views. Meanwhile, until Parliament takes action I suggest your Lordships' House, so far as it may properly do so, should seek to simplify the law, always having in mind that the aim of compensation is to provide a fair financial equivalent for the land taken.

The appeal

5

This appeal concerns the basis on which compensation should be assessed for the compulsory acquisition of 225 acres of land belonging to the claimants. The land consists of low-lying farm land adjacent to the Severn estuary near Newport, Gwent.

6

The background to the acquisition was the construction of the barrage across the mouth of Cardiff Bay, undertaken pursuant to the Cardiff Bay Barrage Act 1993. The project was under active consideration for many years before then. It received governmental support in November 1985. In 1987 the Cardiff Bay area became an urban development area under the Local Government, Planning and Land Act 1980. The Cardiff Bay Development Corporation was established as an urban development corporation for the purpose of regenerating this development area. The corporation was empowered by the Cardiff Bay Barrage Act 1993 to carry out the barrage works.

7

The gestation period of the project was prolonged by problems. There were several abortive attempts to promote a parliamentary Bill. One item of controversy concerned the effect the barrage scheme would have on inter-tidal mudflats in the Taff/Ely estuary designated as a site of special scientific interest. The permanent inundation of Cardiff Bay would destroy these mudflats. The Nature Conservancy Council, succeeded later by the Countryside Council for Wales, vigorously opposed the project from the outset. So did the Royal Society for the Protection of Birds. The proposals would involve an unacceptable loss of nationally important bird habitats. The European Commission also exerted pressure. The new barrage would be incompatible with this country's obligations under E C Council Directives regarding the conservation of wild birds and their habitats.

8

Ultimately work on the barrage started in June 1994. The project proceeded on governmental assurances that compensatory provision would be made by creating suitable new wetland habitats. Several possible sites alongside the Severn estuary were considered and rejected. In January 1996 the Secretary of State for Wales announced the proposal for the Gwent Levels Wetland Reserve. This would be developed so that within five years it would qualify for Special Protection Area status. The site of this reserve, comprising 1000 acres, would be about ten miles up the coast from the Cardiff Bay barrage. It included the claimants' land.

9

In 1997 Land Authority for Wales used its statutory powers to acquire this site compulsorily, under the Land Authority for Wales (Gwent Levels Wetlands Reserve, Newport) Compulsory Purchase Order 1997. The Cardiff Bay Development Corporation provided the money needed for the acquisition. The claimants' land, along with other land, was vested in Land Authority for Wales on 25 February 1998, which is the valuation date. Land Authority for Wales thereupon transferred the land to the Cardiff Bay Development Corporation which, in turn, vested the site in the Countryside Council for Wales. Welsh Development Agency, the respondent to this appeal, is the successor to Land Authority for Wales under the provisions of the Government of Wales Act 1998. The history of the project is more fully set out in the judgment of the Court of Appeal: [2003] 4 All ER 384, 387-391, and in the decision of the Lands Tribunal [2001] 1 EGLR 185. The further detail is not material on this appeal. The dispute between the parties is primarily one of legal principle.

10

Detailed valuation evidence has not yet been submitted to the Lands Tribunal. The claimants put forward three different measures of valuation of the subject land. (1) Agricultural value, said by them to be £4,500 per acre at the relevant date. (2) Value as a nature reserve, said by the claimants to be £13,000 per acre. (3) A measure said by the claimants to comprise the 'particular value' of the land 'consequent upon its indispensable status vis-£-vis the Cardiff Development Scheme'. The President of the Lands Tribunal, Mr George Bartlett QC, described this measure of value as 'ransom value'. The claimants estimate that, valued on this basis, their land was worth £28,000 per acre.

11

There is no dispute over measures (1) and (2). In principle the claimants are entitled to the higher of these two measures of value, which ever that may prove to be. The Land Compensation Act 1961 allows a claimant the benefit of an actual or assumed permission for the authority's proposed development: sections 14(1), (2) and 15(1). The dispute is over measure (3). The issue is whether the claimants are entitled to compensation based on the increased value their land is said to have possessed because of its important ('indispensable') role as part of the compensatory wetlands provision required by the Cardiff Bay barrage project.

12

Faced with this dispute the Lands Tribunal, on the application of the claimants, considered two preliminary issues:

  • (1) Whether or not the intended use of the subject land as a nature reserve amounts to a purpose to which the land could be applied only in pursuance of statutory powers, or for which there is no market apart from the requirements of any authority possessing compulsory market powers. This issue is a reference to the 'disregard' provision in rule 3 of section 5 of the Land Compensation Act 1961.

  • (2) Whether the scheme underlying the acquisition is the intended use of the subject land as a nature reserve or the construction of the Cardiff Bay barrage; and whether or not it is necessary to discount for the purposes of valuation any increase in the value of the subject land due to the need to acquire it as a palliative measure because of the environmental consequences of the Cardiff Bay barrage, following Pointe Gourde Quarrying and Transport Co Ltd v Sub-Intendent of Crown Lands [1947] AC 565.

13

The President answered the first issue in favour of the claimants. Rule 3 does not apply in this case. The subject land has no special suitability or adaptability for the purpose of providing a nature reserve to compensate for the loss of the Taff/Ely SSSI. The President answered the second issue in favour of the acquiring authority. The subject land must be valued leaving out of account any effect on value of the adoption or implementation of the proposal to provide land for the development of a nature reserve to compensate for the loss of the Taff/Ely SSSI through the construction and impoundment of water by the Cardiff Bay barrage. The President added that the scheme underlying the acquisition was the Cardiff Bay barrage although, on his reasoning, this was not an issue which needed to be resolved.

14

The claimants appealed. The acquiring authority did not appeal against the President's decision on the first preliminary issue. The Court of Appeal, comprising Schiemann, Laws and Carnwath LJJ, dismissed the appeal.

'Value' in the Lands Clauses Consolidation Act 1845

15

The Lands Clauses Consolidation Act 1845 used the undefined expression 'value' as the yardstick for compensation. When assessing the amount of compensation regard should be had to the value of the land being taken: section 63. The Act did not enlarge on what was meant by 'value' in this context. On the face of the statute nothing could be simpler or fairer. In exchange for his land the owner should receive its financial equivalent. The financial equivalent, at least ordinarily, is the price obtainable by the owner if he had himself sold the land at the...

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