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|Judgments - Newell and Others (Original Appellants and Cross Respondents) v. Secretary of State for the Environment and Another (Original Respondents and Cross-Appellants)|
Fletcher Estates (Harlescott) Ltd. (Original Appellants and Cross-Repondents) v. Secretary of State for the Environment and Another (Original Repondents and Cross-Appellants)
HOUSE OF LORDS
Lord Browne-Wilkinson Lord Hope of Craighead Lord Clyde
OPINIONS OF THE LORDS OF APPEAL FOR JUDGMENT
IN THE CAUSE
NEWELL AND OTHERS
(ORIGINAL APPELLANTS AND CROSS-RESPONDENTS)
SECRETARY OF STATE FOR THE ENVIRONMENT AND ANOTHER
(ORIGINAL RESPONDENTS AND CROSS-APPELLANTS)
FLETCHER ESTATES (HARLESCOTT) LTD.
(ORIGINAL APPELLANTS AND CROSS-REPONDENTS)
SECRETARY OF STATE FOR THE ENVIRONMENT AND ANOTHER
(ORIGINAL REPONDENTS AND CROSS-APPELLANTS)
ON 17 FEBRUARY 2000
I have read the speech prepared by my noble and learned friend, Lord Hope of Craighead. For the reasons which he gives I would dismiss the appeals.
LORD HOPE OF CRAIGHEAD
The appellants in these conjoined appeals were at all material times the freehold owners of parcels of land at Sundorne to the east of Shrewsbury. I shall refer to them as "the landowners." It will be convenient to refer to the land owned by Joseph Newell, Elspeth Georgina Longmore and William Hugh Longmore, the Executors of J.V. Longmore, as "the Longmore land" and to the land owned by Fletcher Estates (Harlescott) Limited as "the Fletcher land." These parcels of land formed, in each case, part of larger areas of land in their respective ownerships.
On 30 January 1986 the Secretary of State for Transport gave notice of the making of draft compulsory purchase orders for the acquisition of land including the Fletcher land and the Longmore land for the purpose of constructing the A49 by-pass to the east of Shrewsbury. The date of entry in each case was 5 July 1990. The landowners then applied, on 19 October 1992 in respect of the Fletcher land and 4 December 1992 in respect of the Longmore land, under section 17(3) of the Land Compensation Act 1961 for certificates of appropriate development. On 8 May 1993 the Borough Council issued certificates under section 17(4)(a) of the Act. In the case of the Fletcher land the certificate was for residential development. In the case of the Longmore land it was for residential and industrial development. The Secretary of State for Transport appealed against those certificates under section 18 of the Act. On 4 July 1996, having considered the report by an Inspector following a public inquiry held under section 18(3) of the Act in Shrewsbury, the Secretary of State for the Environment allowed the appeals, cancelled the certificates which the Borough Council had issued and replaced them with certificates issued under section 17(4)(b). In the certificates which he issued the Secretary of State certified that, if the land were not proposed to be acquired by an authority possessing compulsory purchase powers, planning permission would have been granted for the road scheme for which the land was being acquired but that it would not have been granted for any other development.
The landowners applied to the High Court under section 21 of the 1961 Act to quash the decisions of the Secretary of State to issue certificates under section 17(4)(b) of the Act. On 10 June 1997 Dyson J. ordered that the applications be allowed and that the decisions of the Secretary of State be quashed. On 11 June 1998 the Court of Appeal (Nourse, Peter Gibson and Buxton L.JJ.) set aside the orders of Dyson J. and restored the decisions of the Secretary of State.
Two issues were argued before the Court of Appeal. The first issue related to the date at which the determination of the certificates of appropriate alternative development under section 17(4) had to be made. The question was whether this was the date when notice was given of the proposal to acquire the interest in land by the authority possessing compulsory purchase powers, as was held by Dyson J., or the date of entry to the land by the acquiring authority, as the Secretary of State had contended. The Court of Appeal affirmed the judgment of Dyson J. on this point. The second issue related to the assumption which has to be made by the local planning authority under section 17(4) when it is considering the question whether planning permission would have been granted for development if the land were not proposed to be acquired by an authority possessing compulsory purchase powers. The competing arguments on this issue were described by Dyson J. in the following passage in his judgment which, as Buxton L.J. observed in the Court of Appeal  Q.B. 1144, 1150C, provides a neat summary of the competing arguments:
Dyson J. upheld the landowners' argument, but the Court of Appeal disagreed with him on this issue. It held that, in making its determination, the local planning authority had to disregard the proposal for acquisition only and not any fact or policy attributable at any time in the past to the underlying scheme.
The Court of Appeal gave leave to appeal to the landowners against its decision that the orders of Dyson J. should be set aside. It granted leave to the Secretary of State to cross-appeal on the first issue as to the relevant date for the determination of the certificates. The Secretary of State presented cross-appeals on this issue, and they were conjoined with the appeals which had been presented on the second issue by the landowners. But in his written case the Secretary of State intimated that he no longer wished to pursue his cross-appeals on the first issue. In the result it was common ground before your Lordships that the relevant date for the determination of a certificate of alternative development under section 17(4) of the Act of 1961 is the date of the notice that the interest in land is proposed to be acquired by an authority possessing powers of compulsory acquisition. That is the date which is described in section 22(2) of the Act. The issue on which your Lordships heard argument was the second issue, as to the assumption which has to be made by the local planning authority when it is determining the application for a certificate.
The statutory framework
The certification by planning authorities of appropriate alternative development is an important part of the law relating to the assessment of compensation for the compulsory acquisition of interests in land which was consolidated by the Land Compensation Act 1961. Section 1 of that Act provides that questions of disputed compensation are to be determined by the Lands Tribunal. The provisions for determining the amount of compensation are set out in Part II of the Act. The basic rules are laid down in section 5. Among these rules are rule (1) which states that no allowance shall be made on account of the acquisition being compulsory, and rule (2) which states that the value of land shall, subject to the qualifications in the remaining rules, be taken to be the amount which the land if sold in the open market by a willing seller might be expected to realise. Section 9 adds to these basic rules another rule which is expressed in these terms (as amended by section 108 of and Schedule 11 to the Town and Country Planning Act 1968):
Applying the Pointe Gourde principle (Pointe Gourde Quarrying and Transport Co. Ltd. v. Sub-Intendent of Crown Lands  A.C. 565), the reverse situation is regulated by the common law. The compensation cannot include an increase in value which is due to the scheme underlying the acquisition. So the whole question must be approached upon a consideration of the state of affairs which would have existed if there had been no scheme.
But the value of land cannot be determined under these rules without making assumptions about the planning permission, if any, which would have been granted for the development of the land if it were not proposed to be acquired compulsorily. Section 14 provides that the assumptions which are to be made for the purpose of assessing compensation are those set out in sections 15 and 16, and that any planning permission which is to be assumed in accordance with any of the provisions of those sections is in addition to any planning permission which may be in force at the date of service of the notice to treat. These provisions must be read together with those in Part III of the Act relating to certificates of appropriate alternative development, with which they are linked in two ways. Section 14(3) provides that, in determining whether planning permission for any development could reasonably have been expected to be granted in any particular circumstances, regard shall be had to any contrary opinion expressed in relation to that land in any certificate issued under Part III. This is a reference to a certificate issued under section 17(4)(b), which is conveniently referred to as a negative certificate. Section 15(5) provides that, where a certificate has been issued under Part III, it shall be assumed that any planning permission which, according to the certificate, might reasonably have been expected to be granted in respect of the land or part thereof would be so granted. This is a reference to a certificate issued under section 17(4)(a), referred to as a positive certificate.
As Lord Bridge of Harwich explained in Grampian Regional Council v. Secretary of State for Scotland  1 W.L.R. 1340, 1343H-1344B:
The certification procedure which Part III lays down is set out in section 17. Subsection (1) of that section, as substituted by section 65(1) of the Planning and Compensation Act 1991, provides that, where an interest in land is proposed to be acquired by an authority possessing compulsory purchase powers, either of the parties may apply to the local planning authority for a certificate under that section. That subsection must be read together with section 22(2) of the Act of 1961, which prescribes the circumstances in which, for the purposes of sections 17 and 18, "an interest in land shall be taken to be an interest proposed to be acquired by an authority possessing compulsory purchase powers." There are three prescribed circumstances, namely (a) the publication or service of a notice of the making of a compulsory purchase order; (b) the service of a notice to purchase under any enactment; and (c) the making of an offer to negotiate for the purchase by or on behalf of the authority. In the present case the landowners' interests in the Fletcher land and the Longmore land respectively became interests in land which were "proposed to be acquired by an authority possessing compulsory powers" for the purposes of section 17 when the Secretary of State gave notice on 30 January 1986 of the making of the draft compulsory purchase orders.
The procedure which section 17 lays down deals with the making of the application for the certificate and its determination by the local planning authority. The relevant provisions, as substituted (in the case of subsection (4)) by section 65 of the Act of 1991, are these:
"(3) An application for a certificate under this section-
(4) Where an application is made to the local planning authority for a certificate under this section in respect of an interest in land, the local planning authority shall, not earlier than 21 days after the date specified in the statement mentioned in paragraph (c) of subsection (3) of this section, issue to the applicant a certificate stating either of the following to be the opinion of the local planning authority regarding the grant of planning permission in respect of the land in question, if it were not proposed to be acquired by an authority possessing compulsory purchase powers, that is to say -
and for the purposes of this subsection development is development for which the land is to be acquired if the land is to be acquired for purposes which involve the carrying out of proposals of the acquiring authority for that development."
Section 17(7) provides that, in determining whether planning permission for any particular class of development would have been expected to be granted, the local planning authority shall not treat development of that class as development for which planning permission would have been refused by reason only that it would have involved development otherwise than in accordance with the development plan.
It is now necessary for me to say a bit more about the facts in order to set the scene for an examination of the issue as to the assumption which the local planning authority must make when it is determining the application for a certificate.
A scheme for an improvement of the A49 to the east of Shrewsbury was originally proposed as part of the 1952 Shrewsbury Town Map. A protected route for an A49 by-pass was first defined across the Fletcher land and the Longmore land in November 1970. The effect of this, in terms of Article 9 of the Town and Country Planning General Development Order 1963 as amended, was that any planning application affecting land within 220 feet of the proposed route had to be referred to the Minister of Transport. Between 1963 and 1971 planning permission for residential development was refused on six occasions on various parcels of land owned by Fletcher Estates Limited because of the proposal for the by-pass.
During the early 1970s, in response to a Department of the Environment Circular directing local authorities to release more land for housing, Shropshire County Council drew up advisory plans for the development of four areas in and around Shrewsbury. One of these, the Sundorne Advisory Plan, was adopted by the County Council in May 1973. This plan included land for housing to the west of the protected route for the by-pass and to the north of it. But land on the protected route and to the east of it was excluded from the proposed housing development. The Shropshire County Structure Plan, which was approved in February 1980, required the urgent identification of additional housing land. In 1984 a public inquiry was held into the scheme for the by-pass. Consideration was given to an alternative route identified by the objectors which lay to the east of the Fletcher land and the Longmore land. In 1985 it was confirmed that the A49 by-pass would be built on the alignment of the preferred route across the Fletcher land and the Longmore land which had been defined in 1970. In the Shrewsbury Urban Area Local Plan, which was adopted in June 1985, the preferred route for the A49 by-pass across the Fletcher land and the Longmore land was protected and it was thus shown as not available for any other development. The Plan allocated a large area of land for development for housing at The Moveage in the urban area of Shrewsbury.
From this brief history it can be seen that the scheme for the A49 by-pass can be traced back to 1952, when the improvement scheme was first included in the Shrewsbury Town Map. By 1970 the route for the by-pass had been clearly identified. From that date onwards until the date when the notice of the making of the proposed compulsory purchase orders was published this had the effect that the Fletcher land and the Longmore land was excluded from consideration as land for residential and other development. This was on the ground that they lay on the route of the proposed by-pass. The larger areas of land to the east in the same ownership were also excluded from development. Other land was identified as suitable for development to meet the need for more land for housing in the area.
The Inspector concluded, after considering the evidence led at the public inquiry under section 18(3) of the Act of 1961, that there was no reasonable basis for considering residential development as appropriate on any part of the Fletcher land or residential and industrial development as appropriate on any part of the Longmore land as at 30 January 1986, which was the date of the publication of the notice of the proposed compulsory purchase orders, if it was to be assumed that the by-pass would have been built on the alternative route to the east which was considered and rejected at the 1984 inquiry. The Secretary of State for the Environment, acting on the same assumption, accepted the Inspector's conclusions on this point when he decided to cancel the certificates issued by the local planning authority and to replace them with negative certificates.
The issue in this appeal
It is now possible to identify more precisely the issue which divided the parties to this appeal, bearing in mind that they were agreed that the relevant date for determining the content of the certificates of alternative development is the date of publication of the notices of the proposed compulsory purchase orders.
The issue relates to the meaning and effect of the direction in section 17(4) of the Act of 1961 that the local planning authority must issue its opinion regarding the grant of planning permission in respect of the land in question "if it were not proposed to be acquired by an authority possessing compulsory purchase powers." It is plain that the assumption which the local planning authority is directed to make by this subsection requires it to ignore the fact that an interest in the land is proposed to be acquired by an authority possessing compulsory purchase powers as described in section 22(2). This involves disregarding the publication of the notice of the proposed compulsory purchase order, which is the circumstance referred to in section 22(2)(a) that is relevant to this case. The question is - how much else must the local planning authority disregard when making its assumption?
Mr. Ouseley Q.C. for the Secretary of State accepted that the assumption extended to the proposal that the land was to be acquired by an authority possessing compulsory purchase powers for the purposes of the A49 by-pass as it stood at the relevant date. As at that date the route for the proposed by-pass was shown as a protected route on the Shrewsbury Urban Area Local Plan. He accepted that it would not be possible to make sense of section 17(4) if that proposal could be taken into account by the local planning authority when it was considering the content of the certificate, as this was the same proposal as that which had led to publication of the notices that the land was to be acquired compulsorily. He accepted that, if the planning status of the land was to be considered on the basis that it was to be assumed that the land was not proposed to be acquired compulsorily on the relevant date, the proposal underlying that acquisition as it stood at the relevant date must also be disregarded. So, when the assumption was made that the section 22(2)(a) notices had been cancelled, the underlying proposal which led to the publication of those notices must also be assumed to have been cancelled as at the relevant date
Mr. Purchas Q.C. for the landowners submitted that the statutory assumption required the local planning authority to disregard not only the underlying proposal as it stood at the relevant date but also all the effects of that proposal which had arisen before that date. According to his argument it was necessary, in order to give effect to the statutory assumption, to eliminate all the consequences of the safeguarding of the proposed route for the by-pass from the date when the proposal first began to affect the planning history of the land which was proposed to be acquired. If one was able to look back and to remove the consequences of the designation of the route for the by-pass as a protected route, other land in the immediate area of the Fletcher land and the Longmore land would have been released for housing development prior to the relevant date. This would have enabled the view to be taken on the relevant date that planning permission for the development of these parcels of land also would have been granted if the land was not proposed to be acquired compulsorily. In short, the local planning authority must disregard the effects and incidents of the proposal as a whole, irrespective of whether they occurred on, before or after the relevant date. The policies and facts should be assumed to be those which would have been applicable if the scheme for the proposed by-pass had never been conceived in the first place.
Mr. Purchas submitted that his approach was supported by the reasons which Lord Bridge gave for the decision in Grampian Regional Council v. Secretary of State for Scotland  1 W.L.R. 1340, 1345A-1346C. He accepted that the argument which was rejected in that case was a narrower argument than that for the Secretary of State in the present case. But he said that the essential reasoning which was expressed in Lord Bridge's judgment as to the purpose for which section 17(4) had been enacted supported his argument that it was not just the proposed acquisition that had to be disregarded. It was necessary to consider as a whole what would have happened if the land had not been proposed to be acquired at all.
The decision in Grampian
In my opinion it is clear, from an examination of the facts and the arguments in the Grampian case, that their Lordships were concerned in that case with a different issue from that which has been argued in this appeal. It is not just that the argument which Mr. Ouseley advanced for the Secretary of State in the present case is not the same as that which was advanced for the Regional Council in Grampian. The argument which Mr. Purchas advanced for the landowners is also different, as he sought to widen the scope of the statutory assumption to include matters which did not arise on the facts which were before the House in Grampian.
The Grampian case concerned an area at Westhill, near Aberdeen, for which planning permission in principle was given in 1972 for the building of a new town. It was envisaged that the new town proposals would require the provision of a secondary school and at least two primary schools in the Westhill area. The development proceeded, and in due course a secondary school and one primary school were built on sites which had belonged to the developer. The Regional Council, which had power to acquire these sites compulsorily as education authority, offered to purchase the two sites from the developer. The developer applied to the local planning authority for certificates of alternative development so that compensation for the acquisition could be assessed. The local planning authority issued negative certificates on the basis that, if there had been no proposal to acquire the land, they would nevertheless have granted planning permission only for the erection of the two schools. The developer appealed to the Secretary of State for Scotland, who issued positive certificates on the basis that, if he had to disregard the proposal to acquire, he must also disregard the fact that the two sites had been allocated by the developer for the erection of the two schools in the plans which had accompanied the plans in their application for outline planning permission.
Counsel presented the same arguments in the Court of Session when the Regional Council appealed against the Secretary of State's decision to issue positive certificates. They were summarised in these words by Lord Dunpark 1984 S.C. 1, 13, (1983) 47 P. & C.R. 540, 552:
Having considered these arguments Lord Dunpark observed, at p. 553, in a passage which was quoted with approval by Lord Bridge  1 W.L.R. 1340, 1345C-D: