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Case No: LATRF/1999/1161/A3
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE LANDS TRIBUNAL
Royal Courts of Justice
Strand, London, WC2A 2LL
Wednesday 19th April, 2000
B e f o r e :
LORD JUSTICE STUART-SMITH
LORD JUSTICE MUMMERY
and
LORD JUSTICE TUCKEY
- - - - - - - - - - - - - - - - - - - - -
|
BOLTON
METROPOLITAN BOROUGH COUNCIL
|
Appellant
|
|
-
and -
|
|
|
TUDOR
PROPERTIES LTD & ORS
|
Respondents
|
- - - - - - - - - - - - - - - - - - - - -
(Transcript of the Handed Down Judgment of
Smith Bernal Reporting Limited, 180 Fleet Street
London EC4A 2HD
Tel No: 0171 421 4040, Fax No: 0171 831 8838
Official Shorthand Writers to the Court)
- - - - - - - - - - - - - - - - - - - - -
Mr David Holgate QC (instructed by Nabaro Nathanson for the
Appellant)
Mr Andrew Gilbart QC (instructed by Messrs Kippax Beamont Lewis for the
Respondent)
- - - - - - - - - - - - - - - - - - - - -
Judgment
As Approved by the Court
Crown Copyright ©
LORD JUSTICE MUMMERY:
This is an appeal on a point of law by Bolton Metropolitan Borough Council
(the Council) against the award by the Lands Tribunal (Mr NJ Rose FRICS) on 28
June 1999 of £2,211,202 compensation to Tudor Properties Limited (Tudor)
and £60,186 to Messrs McGrath and Walsh (trading as McGrath Plant Hire) in
respect of the compulsory purchase of 11.186 ha (27.64 acres) of freehold land
on the outskirts of Bolton by the Bolton (Watersmeeting) Compulsory Purchase
Order (the CPO). The hearing took place at Bolton Town Hall on 24-27 November
and 22 December 1998.
The Tribunal, having refused permission to appeal, stated and signed a case on
16 August 1999 at the request of the Council. Permission to appeal was granted
by this Court on 20 October 1999.
The Facts
The land in question consists of more than a dozen plots in the northernmost
part of the Tonge Valley about 1.25 miles from Bolton town centre. I shall
refer to it as the Tudor Land. It is immediately south of the A58 (Crompton
Way) from which there is no access by road.
In 1980 the Tonge Valley was established as a project area with the object of
reclaiming derelict land and premises, improving access, landscaping and
re-generation as a major area of industrial development and employment.
In 1987 the aims of the project were reviewed. A strategy statement was
produced confirming that the area was suitable for industry and employment
purposes in a parkland setting taking advantage of the water features.
In 1990 the Council approved the "Tonge Valley Development Framework" to
improve the landscape quality of the valley; to enhance undevelopable land; to
provide informal recreation space; and to achieve "the comprehensive and
integrated redevelopment of the Tonge Valley Project Area, primarily for
industrial and other appropriate employment.. generating uses ....through an
active partnership between the public and private sectors."
About £4.1m of public funds has been spent since then in carrying out
new and improved highway infrastructure to improve access within the valley and
for land assembly and reclamation projects. From 1993 most of this progress was
led and delivered by the Council and by Bolton City Challenge Partnership
Limited. These activities encouraged development throughout the valley. In
particular, road access to and from the A666 (Blackburn Road) was achieved by
the widening and extension of a cul de sac (Tippings Lane) between 1993 and
1995 to create a crescent called Watersmeeting Road at the northern end of the
valley. In the Spring of 1995 a cross valley link (Britannia Way) was completed
to release the development potential of the Union Road area.
In 1991 the Council had approved a planning brief specifically for the
Watersmeeting area, within the context of the Tonge Valley project area and as
part of the Council's City Challenge strategy. The re-development was expected
to be achieved through negotiations between interested parties. (No compulsory
purchase orders have been made elsewhere in the Tonge Valley).
In 1992 the project envisaged a Watersmeeting leisure and craft village
initiative, including leisure space for a multi-screen cinema, health club,
night club, restaurant and garden centre.
In October 1992 Tudor obtained outline planning permission to redevelop its
land by the erection of industrial, business or warehouse buildings. In June
1995 it also obtained outline permission for a mixed use development of
business, leisure and housing. This was followed in December 1995 by planning
consent for commercial/leisure development, a revised scheme to meet the
planning authority's desire for a mixed leisure redevelopment for the site.
In June 1995 the Council and Bolton City Challenge Partnership undertook a
competitive process to select a development partner to carry out a
re-development of Watersmeeting for commercial leisure purposes. One of the 5
schemes for redevelopment of the Watersmeeting site was submitted by Tudor in
August 1995. (The City Challenge Partnership was a vehicle used by the Council
to administer City Challenge funds awarded to it by government and to carry out
its City Challenge strategy).
In November 1995 THI plc was approved by the Council as the preferred
developer of the Watersmeeting site. THI offered to acquire the Tudor Land
under an option agreement of 19 December 1995 for £1.3m. The option was
not exercised. In December 1995 THI obtained outline planning approval for
commercial leisure purposes-cinemas, ten pin bowling, bingo, night club, health
and fitness club, family entertainment centre, comprising restaurants and
associated car parking.
On 20 December 1995 the Council made the CPO with certain stated objects: to
ensure the comprehensive redevelopment of the site within the timescale of
Bolton's City Challenge under one ownership; in order to avoid piecemeal
development; to achieve the proper planning of the area; to resolve problems of
complex land ownership and to overcome complex physical constraints to
development.
The CPO was confirmed on 24 July 1996 and implemented by a general vesting
declarations on 28 July 1997. The land was then transferred to THI
(Bolton)Limited who commenced work on the project. The entry date was 28 May
1997. That is the agreed date for the valuation.
The Dispute
The dispute over the assessment of compensation centres on the application to
this case of the Pointe Gourde principle (see [1947] AC 565 at 572 )
that
"....compensation for the compulsory acquisition of land cannot include an
increase in value which is entirely due to the scheme underlying the
acquisition."
The critical question of fact for the decision of the Tribunal was: what was
the scope of the scheme underlying the acquisition of the land under the CPO?
The Tribunal's factual answer to this question must be examined with the
following points in mind.
1. The Pointe Gourde principle is not a principle of valuation. It is
a principle of law. If the principle was not applied by the Tribunal or was
misinterpreted or if the Tribunal reached a conclusion which no reasonable
tribunal could reach (e.g. because there was no evidence to support it), the
decision is erroneous in law. But a decision is not legally wrong simply
because this court, if it had been the decision making body (which it is not),
would have taken a different view of the evidence and arrived at a different
conclusion on the scope of the underlying scheme.
2. The purpose of the principle is to prevent the compensation for the value
of the land on compulsory acquisition from being inflated by the very scheme
which gives rise to the acquisition. (See Widgery LJ in Wilson -v-
Liverpool Corporation [1971] 1WLR 302 at 310A.) An enhancement in
value resulting entirely from the underlying scheme has to be ignored. The
principle does not, however, require the valuer to ignore an increase in value
attributable to factors other than the underlying scheme, such as the
pre-scheme value of the land for development.
3. In order to ascertain what is to be ignored by the valuer it is first
necessary to delimit the scope of the scheme. The compulsory acquisition itself
cannot be the scheme which underlies it: JA Pye (Oxford) Limited -v-
Kingswood BC [1998] 2 EGLR 159 at 162M. The compulsory acquisition of the
relevant land presupposes that there was an underlying scheme of development,
in consequence of which the CPO was made.
4. The underlying scheme need not, as a matter of law, be confined to the
area of land compulsorily acquired or to the specific purposes of the CPO. The
acquisition may be only a small part of the underlying scheme: Bird and
Bird -v- Wakefield MBC (1976) 33 P&CR 478. Nor is it necessary for
the underlying scheme to provide for the compulsory acquisition of any land for
the purpose for which the CPO is ultimately made: see p 487.
5. A "scheme" (also referred to in some of the authorities as a "project" or
"undertaking") is neither a technical term nor a legally precise concept. A
scheme may take shape over a number of years. It may be regarded as a scheme
even before it is fully fledged. Its impact on land values may therefore
increase as it passes through various stages from vague beginnings to a final
form.
6. The Tribunal must ascertain the existence and extent of the underlying
scheme from a consideration of all the relevant evidence about the past,
present and future activities. It must then determine, as a matter of fact,
whether those activities are properly to be regarded as part of the underlying
scheme: Wilson -v- Liverpool Corporation [1971] 1 WLR 302 at 310B. Only
when that factual question has been decided is it possible to answer the next
question which is one of valuation: what part of the market value of the land
acquired is entirely attributable to the enhancing effect of the scheme
underlying the acquisition? Answering that question involves imagining a state
of affairs antedating the scheme-a "no scheme world" (as it was described in
Wards Construction (Medway) Limited -v- Barclays Bank plc (1994)
68 P&CR 391 at 396, 397) and ascertaining what "bargain....would have been
made between the claimant and a prospective developer-purchaser had the
acquiring authority not intervened."
7. These fact finding and valuation questions have been entrusted by
Parliament to
"...a specialist and expert tribunal, well able to understand the realities of
a complicated factual and transactional situation.....a finding by a
tribunal....cannot be shown to be perverse just because a possible alternative
was open to the tribunal but not adopted by it" : per Buxton LJ in Pye
(supra) at 163A-B.
The Possible Underlying Schemes.
Before the Tribunal only two possible underlying schemes were canvassed in
evidence and argument.
1. The Wider Scheme.
The Council's case is that the underlying scheme to be disregarded is the
regeneration project or undertaking for the Tonge Valley as a whole since
1980, including, in particular, the public infrastructure and reclamation works
carried out in the 1990s at public expense through City Challenge funding
mechanisms, such as the North/South Watersmeeting Road Link. It was all a
single scheme. Without those works the land would only have been suitable for
low grade industrial and storage purposes. It would not have been suitable for
leisure development and would only have been worth £250,000.
2. The Narrower Scheme.
Tudor's case is that the underlying scheme to be disregarded is limited to the
leisure development to be carried out by the Council's selected development
partner, THI, and the assembly of land for that purpose. Even disregarding the
enhancement of value attributable to that scheme, Tudor's land was worth
£6.415 million on the claimants' case (£172,000 for the McGrath land)
and £1,253,438 on the Council's case (£23,027 for the McGrath land
).
Decision of the Lands Tribunal
The Tribunal accepted Tudor's case on the scope of the underlying scheme. It
found as a fact that the scheme to be disregarded in assessing the compensation
payable was the narrower scheme described as "the leisure development of the
Watersmeeting site by THI." It was common ground that the value of the
property was to be as at 28 May 1997 with the benefit of the planning
permission granted to THI in December 1995.
The Tribunal set out all the relevant factual background, summarised the rival
contentions and evidence and gave three reasons for its conclusion on the scope
of the underlying scheme.
The Council submits that no one of the three reasons constitutes in itself a
sufficient ground to support that conclusion reached by the Tribunal.
An appeal only lies to this court on a point of law. It must be established by
the Council that, in finding for the narrower scheme, the Tribunal misconstrued
the relevant law or reached a perverse decision-one which no reasonable
Tribunal properly directing itself could have reached.
Does the Tribunal's finding of fact on the scope of the underlying scheme
disclose an error of law?
Mr Holgate QC, who appeared for the Council, did not contend that the
Tribunal's decision on this point was perverse and insupportable in the sense
that the only decision which a reasonable tribunal could reach was the wider
scheme advanced by the Council. His case was that none of the three reasons
given by the Tribunal was legally valid, that the Tribunal had not indicated
that any one reason was sufficient in itself to support its conclusion on the
identification of the underlying scheme and that, if any one of the three
reasons was legally erroneous, the decision of 28 June 1999 must be set aside:
Simplex GE (Holdings) Limited -v- Secretary of State (1989) 57 C& PR
306. He also submitted that the Tribunal had failed to comply with its duty to
give reasons explaining how it had applied the Pointe Gourde principle
to this case.
He accepted that, if he was right in his criticisms of the Tribunal's
reasons, this court could not itself determine the scope of the scheme. As
that is a question of fact the proper course would be to remit the matter to
the Lands Tribunal, as the fact finding body, for re-determination in
accordance with this court's opinion on the questions of law raised by the
appeal.
The Three Reasons.
The three reasons given by the Tribunal (on pages 15 and 16 of its decision)
for rejecting the Council's case were these.
1. Other Tonge Valley Improvements.
The Tribunal concluded that
" there is no evidence to suggest that other parts of the Tonge Valley
improvements, such as road infrastructure, were dependent on the development of
the Watersmeeting site for leisure or any other purpose. Indeed that work was
committed and carried out before the acquiring authority resolve to seek
compulsory powers for the subject land."
Mr Holgate QC contended that this was an immaterial consideration and that the
Tribunal had adopted a legally incorrect test in order to decide whether public
sector works pre-dating the CPO are to be taken into account as forming part of
the underlying project. There is no legal principle that justifies or
authorises the exclusion of such earlier works from the concept of a scheme to
be disregarded on the Pointe Gourde principle. It was also inconsistent
with the authorities. A scheme, which is not a precise concept and which could
have an evolutionary aspect, might cover a much wider area and include
purposes going beyond those of the CPO. It was unnecessary for the underlying
scheme to provide for or to be dependent on the compulsory acquisition of any
land affected by the scheme.
He argued that the Tribunal had failed to have regard to the material
consideration, made out in the unchallenged evidence of the Council's expert
witness, Mr Hubbard, that it was the earlier works in other parts of the Tonge
Valley which had enabled the leisure development on the Watersmeeting site to
go ahead. This point was not dealt with by the Tribunal in its reasons. The
Tribunal therefore failed to comply with its duty under Rule 50(1) of the Lands
Tribunal Rules 1996 to explain how it had applied the Pointe Gourde
principle to this case.
2. Private Sector Point
The Tribunal concluded that
" ...the objectives for the Watersmeeting site were expected to be achieved by
the private sector assembling the land required through discussion between the
relevant owners."
Mr Holgate QC contended that this was also an immaterial consideration to the
identification of the underlying scheme and whether it was limited to the
leisure development of the Watersmeeting site or comprised a much wider area of
the Tonge Valley. It ignored the fact that the underlying scheme can be wider
than the CPO and need not have envisaged that the Tudor land might be
compulsorily acquired. This approach was in conflict with the authorities.
It also disregarded material considerations in the evidence namely a
statement in December 1992 that the Council would investigate the making of a
CPO on the Watersmeeting site as from April 1993; the availability of funding
to enable the Council to acquire land on the site; and land acquisitions which
the Council had, prior to the CPO, already undertaken in the Tonge Valley
pursuant to its scheme for the regeneration of the area, including the
Watersmeeting site.
3. The Expert Evidence Point
The Tribunal concluded that
"....the evidence of the experts in this case points to the narrower no- scheme
as being the more appropriate. Mr MA King FSVA [the claimants' expert] did
not refer to the wider no-scheme world at all; Mr CC Hubbard BSc FRICS [the
Council's expert] dealt with both worlds. At the commencement of his cross
examination Mr Hubbard was asked which of the two bases he preferred. He
replied that he was not a lawyer and that it was for the lawyers to argue which
of the no-scheme worlds was relevant. Later it was put to him that the narrower
no-scheme world was the only proper approach. To this he replied:
"When I prepared my valuation it was the preferred route, but I considered a
wider no-scheme world had to be on the agenda too."
"The identification of the scheme is a matter of fact, not law. In my judgment
it is significant that the only evidence in support of the wider scheme was
given by Mr Hubbard, but when he prepared his valuation Mr Hubbard preferred
the narrower scheme..."
Mr Holgate QC argued that this reason ignored the fact that Mr King did not
even consider the Pointe Gourde point in his report. There was
originally a challenge to the accuracy of the Tribunal's statement of Mr
Hubbard's evidence, but this was not pursued at the hearing.
Conclusion.
In my judgment there was no error of law in any of the Tribunal's reasons for
its conclusion on the scope of the scheme underlying the acquisition of the
Tudor land by the CPO. The reasons given by it under Rule 50(1) of the Lands
Tribunal Rules 1996 were proper and sufficient for the parties and for this
court to understand the grounds on which the decision on the relevant issue was
reached by the Tribunal.
It is worth repeating that the identification of the underlying scheme
involves the application of a legal principle to the available material in
order to arrive at a factual conclusion. Did the Tribunal, which has special
expertise in matters relevant to land valuation, apply the correct legal
principle to the evidence in this case without commission of a vitiating legal
error?
(1) The available material included the opinions of experts. The function of
Mr Hubbard and Mr King was to assist the Tribunal in understanding and
interpreting the documentary evidence. Although it was for the Tribunal and
not for the experts to decide the factual dispute on the scope of the
underlying scheme, the Tribunal was entitled, in determining that dispute, to
conclude that the expert evidence supported an "appropriate bargain" on the
basis of the narrower scheme. There was no error of law in the Tribunal's
treatment of the experts' evidence in arriving at its factual conclusion. Mr
King's opinion was that the scheme to be disregarded comprised the proposals of
THI, the selected developer. Mr Hubbard referred in his evidence to two
possible schemes the effects of which should be disregarded. He approached the
matter firstly on the basis that the relevant scheme was the redevelopment of
the land at Watersmeeting for the leisure development eventually implemented by
THI. He also dealt with the alternative wider interpretation of the plans and
resulting works for the Tonge Valley as a whole, including the construction of
the Watersmeeting Road and other significant regeneration works in the Tonge
Valley. He said in cross examination that when he prepared his valuation the
narrower scheme was the "preferred route." He did not express the wider scheme
as his preferred view. The Tribunal was entitled to take account of this
evidence in reaching its conclusion on the issue of the scope of the scheme to
be disregarded.
(2) In determining the scope of the underlying scheme the Tribunal correctly
considered the potential relevance of earlier improvements in other parts of
the Tonge Valley, such as the road infrastructure. The Tribunal was entitled to
find as a fact that these works were carried out before the Council resolved to
seek and use compulsory powers for the acquisition of the Tudor Land. The
Tribunal was entitled to treat this as one of the factors relevant to the
scope of this scheme. There was no rule of law preventing the Tribunal from
taking this approach in this case. Nor did the Tribunal incorrectly act upon
or lay down any rule of law that such improvements made before the CPO could
never be relevant to the determination of the scope of the underlying
scheme.
(3) The fact that the objectives for the Watersmeeting site were to be
achieved by the private sector was also a factor which the Tribunal was
entitled to regard as relevant to the determination of the scope of the scheme
underlying the CPO in this case. The Tribunal was entitled to treat the
reliance by the Council on land assembly by the private sector rather than by
compulsory acquisition as tending to show that there was no single overall
scheme underlying the CPO. The Tribunal did not commit the legal error of
assuming or holding that the scheme could never, as a matter of law, be wider
than the CPO itself or that the scheme, as a matter of law, had to envisage
the compulsory acquisition of the Tudor Land.
In the light of these conclusions it is unnecessary to express any view on the
submissions on either (a) the application to this case of the decision in
Simplex GE (Holdings) Limited -v- Secretary of State (1989) 57 P
&CR 306 or (b) section 6 of and Schedule 1 to the Land Compensation Act
1961.
For these reasons I would dismiss this appeal.
LORD JUSTICE TUCKEY
- I agree
LORD JUSTICE STUART-SMITH
I also agree.
Order: Appeal dismissed with the detailed assessment of costs;
£20,000 to be paid on account.
(Order does not form part of the approved judgment)
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