Greenweb Ltd v London Borough of Wandsworth [2007] EWLands LCA_118

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You are here: BAILII >> Databases >> England and Wales Lands Tribunal >> Greenweb Ltd v London Borough of Wandsworth [2007] EWLands LCA_118_2006 (17 September 2007) URL: http://www.bailii.org/ew/cases/EWLands/2007/LCA_118_2006.html Cite as: [2007] EWLands LCA_118_2006, [2007] 3 EGLR 67, [2007] RVR 349, [2007] 50 EG 110

LCA/118/2006

LANDS TRIBUNAL ACT 1949

COMPENSATION – purchase notice – land in use as public open space – terrace of houses on
land demolished during second world war – whether Third Schedule rights to be assumed – held
they were – compensation £1,600,000 – Land Compensation Act 1961 ss 14(1) and 15(3)

IN THE MATTER OF A NOTICE OF REFERENCE

BETWEEN

GREENWEB LIMITED

Claimant

and

LONDON BOROUGH OF WANDSWORTH

Acquiring
Authority

Re: Site 9-15 Orville Road
Battersea
London SW11

Before: The President and P R Francis FRICS

Sitting at Procession House, 110 New Bridge Street, London EC4V 6JL

on 5 September 2007

John Male QC instructed by Lovells for the claimant

Reuben Taylor instructed by M B A Walker, Borough Solicitor, for the acquiring authority

The following cases are referred to in this decision:

Horn v Sunderland Corpn [1941] 2 KB 26

Director of Building and Lands v Shun Fung Ironworks Ltd [1995] AC 111

Northern Metco Estates Ltd v Perth & Kinross District Council 1993 SLT (Lands Tr) 28

Dutton v Blaby District Council [2006] RVR 203

Pioneer Aggregates (UK) Ltd v Secretary of State for the Environment [1985] 1 AC 132

Ivens & Sons (Timber Merchants) Ltd v Daventry District Council (1975) 31 P & CR 480

The following further cases were cited in argument:

Cynon Valley Borough Council v Secretary of State for Wales [1986] JPL 760
Petticoat Lane Rentals Ltd v Secretary of State for the Environment [1971] 1 WLR 1112
Trustees of the Walton-on-Thames Charities v Walton and Weybridge Urban District Council
(1969) 20 P & CR 250; (1970) 21 P & CR 411

DECISION

1. This is a claim for compensation for the deemed compulsory acquisition of land
following the service of a purchase notice. The land is 0.22 acre in area, and on it there were
built in the 1880s a terrace of nine 3-storey dwellinghouses of brick construction abutting the
public highway and a 2-storey commercial building. During the second world war the
buildings sustained bomb damage and were demolished. Following clearance of the land four
prefabricated houses were erected on the land. These were in existence on 1 July 1948. They
remained there for a long time, but they had been removed by 1978. On 6 June 1979
Wandsworth Borough Council gave itself deemed planning permission for use of the subject
land as a temporary public open space. The permission was for 5 years, and the reason for the
time limit was that the site was ultimately required as a school extension. In 1979 or 1980 the
council laid out on the subject land and land to the west of it (an area of perhaps 7 times that of
the subject land) an area of public open space known as Fred Wells Gardens. On 3 September
1980 it gave deemed planning permission for this development. The development was
described as a “local park” with recreational facilities. The park has continued in existence and
in use as a public open space up to the present. It occupies most of the area between Orville
Road to the east, Vicarage Crescent to the north, Lombard Road to the west and the
embankment of the West London Extension railway line to the south. Included within the park
are the sites of former houses fronting Vicarage Crescent and Lombard Lane, but excluded is
the site of a former primary school on Vicarage Crescent, which has been developed since the
park was laid out with a block of 14 flats.

2. At the time that Fred Wells Gardens were laid out the subject land was owned by the
Greater London Council, and the GLC was given notice of the intention to incorporate the land
into the park, but it appears that no lease for this purpose was entered into. With the demise of
the GLC the subject land was transferred to the London Residuary Body, who, despite
representations from Wandsworth, sold it on the open market in 1988, advertising it as “land
with residential development potential”. On 13 June 1997 Wandsworth opened negotiations
for purchase of the site from its then owner. On 18 April 2000, since the land was proposed to
be acquired by the council, the owner made application under section 17 of the Land
Compensation Act 1961 for a certificate of alternative development, specifying as the
development dwelling houses or day nursery or a mix of the two. On 7 June 2000 he applied
for planning permission for the erection of five 2-bedroom mews houses. The council failed to
determine either application, and the owner appealed. A public inquiry was held in February
2001 (a few days after the land had been transferred to the present claimant for the sum of
£30,000), and on 15 May 2001 the Secretary of State for the Environment, Transport and the
Regions, accepting the recommendations of the inspector, dismissed both appeals. The effect,
as far as the section 18 appeal was concerned, was that the deemed nil certificate stood:
planning permission would have been granted for any development for which the land was
being acquired but not for any other development.

3. Following this decision a purchase notice was served by the claimant, and the acquiring
authority accepted it. Accordingly they are deemed to be authorised to acquire compulsorily
the claimant’s interest in the land and to have served notice to treat, and compensation falls to
be assessed under the 1961 Act.

4. The claim for compensation is based on the contention that under section 15(3) of the
Act planning permission is to be assumed for development falling within paragraph 1(1)(a) of
the Third Schedule of the Town and Country Planning Act 1990, and such development would
encompass both the rebuilding of the nine houses and the commercial building that formerly
stood on the land and also the four prefabs. The acquiring authority say that the claimants
cannot rely on section 15(3). They accept, however, that if the planning permissions are to be
assumed they would be capable of implementation. In the course of the hearing, before we had
heard any evidence, complete agreement on values was reached between the parties on three
alternative bases:

(a) With an assumed planning permission for the rebuilding of the 9 houses and the
commercial building: £1,600,000.

(b) With an assumed planning permission for the rebuilding of the four prefabs with
additional hope value for a more profitable development: £1,200,000.

5. The relevant statutory provisions are these. Section 5 of the 1961 Act provides that the
provisions in sections 6 to 16 are to have effect with respect to the assessment of compensation
for the land acquired. Section 14(1) provides:

“Assumptions as to planning permission

14. (1) For the purpose of assessing compensation in respect of any compulsory
acquisition, such one or more of the assumptions mentioned in sections 15 and
16 of this Act as are applicable to the relevant land or any part thereof shall
(subject to subsection (3A) of this section) be made in ascertaining the value
of the relevant interest.”

Section 15 includes the following:

15. (3) Subject to subsection (4) of this section, it shall be assumed that, in respect
of the relevant land or any part of it, planning permission would be granted -

(a) subject to the conditions set out in Schedule 10 to the Town and
Country Planning Act 1990, for any development of a class specified
in paragraph 1 of Schedule 3 to that Act; and

(b) for any development of a class specified in paragraph 2 of Schedule 3
to that Act.

(4) Notwithstanding anything in subsection (3) of this section –

(c) where, at any time before the said date, an order was made under
section 102 of the said Act of 1990 in respect of the relevant land or
any part thereof, requiring the removal of any building or the
discontinuance of any use, and compensation became payable in
respect of that order under section 115 of that Act, it shall not by virtue
of the said subsection (3) be assumed that planning permission would

be granted, in respect of the relevant land or that part thereof, as the
case may be, for the rebuilding of the building or the resumption of the
use.”

In subsection (4)(c) “the said date” is the date of notice to treat. The conditions set out in
Schedule 10 do not need to be referred for present purposes.

6. The classes of development specified in paragraphs 1 and 2 of Schedule 3 are:

“1. The carrying out of -

(a) the rebuilding, as often as occasion may require, of any building which was
in existence on July 1, 1948, or of any building which was in existence before
that date but was destroyed or demolished after January 7, 1937, including
the making good of war damage sustained by any such building;

(b) the rebuilding, as often as occasion may require, of any building erected after
July 1, 1948 which was in existence at a material date;

(i) affect only the interior of the building, or do not materially affect the
external appearance of the building, and

(ii) are works for making good war damage,

so long as the cubic content of the original building is not substantially exceeded.

2. The use as two or more separate dwellinghouses of any building which at a
material date was used as a single dwellinghouse.”

7. The contention advanced by Mr John Male QC for the claimants is simple. The terrace
of houses and the commercial building were in existence on the land on 7 January 1937 and
was destroyed or demolished after that date, and the prefabs were in existence on the land on 1
July 1948. Accordingly planning permission for the rebuilding of these buildings is to be
assumed under section 14(1) and 15(3)(a). For the acquiring authority Mr Reuben Taylor
submits that the assumption in section 15(3)(a) is not, or ought not to be treated as being,
“applicable” within the terms of section 14(1). Under the purchase notice procedure, he says, a
landowner is able to divest himself of land that he cannot use beneficially and could be a
burden on him by transferring the land and such burden as it represents to the local planning
authority. He is to be compensated as though the land had been compulsorily acquired from
him. Compensation for compulsory acquisition is to be assessed so as to give effect to the
principle of equivalence: to ensure that the claimant is compensated fairly and fully for his loss
but does not receive more than fair compensation. Reliance is placed on the well-known
passages in Horn v Sunderland Corpn [1941] 2 KB 26 at 42 (in the judgment of Scott LJ) and
Director of Building and Lands v Shun Fung Ironworks Ltd [1995] AC 111 at 125 (in the
speech of Lord Nicholls of Birkenhead). To give effect to the principle of equivalence, the
starting point, Mr Taylor says, is the value that the land would have had in the no scheme
world. The land would not have had a residential value in the no scheme world, and so the
statutory provisions must be operated in order to ensure that compensation is not paid as

though it did have such a value: and that means that the assumption in section 15(3)(a) is not,
or ought not to be treated as being, applicable.

8. There are two answers of a general nature to the acquiring authority’s contention that
section 14 should be treated as being subject to the principal of equivalence as it has been
articulated in the cases or as conferring a discretion on the Lands Tribunal as to whether in any
particular case to apply the assumptions contained in sections 15 and 16. The first is that the
language of the provisions does not permit this. Section 14(1) provides that “such one or more
of the assumptions mentioned in sections 15 and 16 of this Act as are applicable to the relevant
land or any part thereof shall…be made.” Sections 15 and 16 lay down assumptions (“it shall
be assumed”) “where” or “if” a particular state of affairs exists (see section 15(1) and (5) and
section 16(1)-(4)). In terms of section 14(1) any one of those assumptions is “applicable”
where the assumption is required to be made because the state of affairs that is specified in
relation to it exists (for example, where a section 17 certificate has been issued: see section
15(5)). Expressed in these terms there is no scope for refusing as a matter of discretion to
apply an assumption when the state of affairs that requires it to be made exists. In the case of
Third Schedule development, there is no need for “where” or “if” in the subsection since the
provision is of universal application. It is required to be assumed that planning permission
would be granted for any class 1 or class 2 development. That is an assumption that, by reason
of the words used, is “applicable to the relevant land”.

9. The second answer is that, as Mr Taylor accepted, there is simply no authority that even
begins to suggest that the application of the assumptions in sections 15 to 16 is discretionary.

10. There is in any event, in our view, nothing in Mr Taylor’s submission that it is
inappropriate, under the scheme of the legislation, to apply the assumption in section 15(3) in
the case of a purchase notice since this would be to give the claimant of land that he is
offloading on to the acquiring authority compensation far in excess of the value of the land. In
order to understand the scheme of the legislation, and how section 15(3) fits into it, it is
necessary to refer to the legislative history and the function of the Third Schedule.

11. Paragraph 1 of the Third Schedule was enacted in substantially the same form as
paragraph 1 of the Third Schedule to the Town and Country Planning Act 1947, paragraphs 2
to 8 of which specified other classes of development. In the 1947 Act paragraphs 1 and 2 were
included in Part I of the Schedule under the heading “Development included in existing use for
purposes other than compensation under section 20.” Paragraphs 3 to 8 were included in Part
II under the heading “Development included in existing use for all purposes.”

12. Under the 1947 Act development value was nationalised. Part VII of the Act provided
for the payment of development charge on the carrying out of operational development, but
operations of the descriptions in the Third Schedule were (under section 69(2)) excluded for
this purpose. Part VI of the Act provided for payment to be made out of central funds under a
scheme to be made by the Treasury where an interest in land was depreciated in value by virtue
of the provisions of the Act. The measure of the depreciation was the difference between the
unrestricted value of the land (the value that it would have had if the Act had not been passed)

and its restricted value (the value of the land assuming that planning permission would be
granted for Third Schedule, existing use, development): section 61(2).

13. In addition to Parts VI and VII of the 1947 Act, certain provisions within Parts III and V
are to be noted. Under section 20 in Part III compensation was payable where planning
permission was refused for any development falling within Part II of the Third Schedule. Such
development included, for instance, the alteration of a building (paragraph 3 of the Schedule).
Development within Part I was excluded for this purpose. But under section 19 a purchase
notice could be served where land had become incapable of reasonably beneficial use, with
compensation being payable as though the land had been compulsorily acquired.
Compensation for compulsory acquisition was dealt with under Part V. Section 51(2)
provided:

“The value of [any interest compulsorily acquired] shall be ascertained on the
assumption that planning permission would be granted under Part III of this Act for
development of any class specified in the Third Schedule to this Act, but would not be
so granted for any other development.”

Where planning permission was revoked or modified (under section 21) the same assumption
was to be made in assessing compensation for the revocation or modification (section 22(7)).

14. The function of the Third Schedule was thus to identify those classes of development of
which the value was not nationalised. No development charge was payable in respect of such
development; no payment out of central funds was to be made in respect of the value of such
development; and in assessing compensation where land had been compulsorily acquired, or
was deemed pursuant to a purchase notice to have been compulsorily acquired, it was to be
assumed that planning permission would be granted for such development. These provisions
ensured that the value of development in any of the classes within the Third Schedule remained
with the landowner. The right under section 19 to serve a purchase notice where land had
become incapable of reasonably beneficial use was clearly not there only for the purpose of
enabling a landowner to divest himself of land that was useless to him or potentially
burdensome. It provided an opportunity for him to realise the value retained by him under Part
I of the Third Schedule (an opportunity that was not open to him under section 20, by virtue of
which only the Part II value could be realised).

15. The body charged with the operation of development charges and payments out of central
funds for the depreciation in land values was the Central Land Board, and under section 1(3)(d)
of the Lands Tribunal Act 1949 any dispute arising in relation to the determination of
development value by the Board was to be referred to the Lands Tribunal. The Town and
Country Planning Act 1953 denationalised development value by abolishing development
charges and discontinuing payments under Part VI, so that the function of the Third Schedule
became limited to the assessment of compensation (under section 20, where planning
permission was refused for Part II development, or where land had been, or was deemed to
have been, compulsorily acquired or where planning permission was revoked or modified).
The underlying purpose of the schedule - to identify those classes of development for which
the landowner retained the value - was, it is clear, unaffected.

16. The Town and Country Planning Act 1959 enacted as sections 2 and 3 the provisions that
shortly afterwards became sections 14 and 15 of the 1961 Act. The assumption of planning
permission for Third Schedule development, contained in section 51(2) of the 1947 Act, was
thus retained by a combination of sections 14(1) and 15(3). Section 15(3) as originally enacted
provided:

“Subject to subsection (4) of this section, it shall be assumed that planning permission
would be granted, in respect of the relevant land or any part thereof, for development
of any class specified in the Third Schedule to the Town and Country Planning Act,
1947 (which relates to development included within the existing use of land).”

17. In the principal Town and Country Planning Acts that have succeeded the 1947 Act (the
Acts of 1962, 1971 and, the one now currently in force, 1990) the Third Schedule remained the
Third Schedule and only minor drafting alterations were made to it. The headings of the two
Parts of the Schedule were changed from those in the 1947 Act to reflect its more limited role
after the abolition of Part VI payments and development charge. In the 1990 Act Part II is
headed “Development ranking for compensation under section 114”. Section 114 was the
successor provision to section 20 of the 1947 Act. However, the Planning and Compensation
Act 1991 repealed section 114 and Part II of the Third Schedule, so that since the repeal no
compensation has been payable in respect of the refusal of planning permission for Part II
development nor has it any longer to be assumed when determining compensation for
compulsory acquisition that permission for Part II development would be granted.

18. Part I of the Third Schedule was not, however, repealed by the 1991 Act. In the light of
the amendments made by the 1991 Act, therefore, the fact that it was not repealed shows a
conscious intention that in assessing compensation for compulsory purchase (including deemed
compulsory purchase) it should continue to be assumed that planning permission would be
granted for Part I development. It was, as we have said, part of the scheme of the legislation
that a claimant under a purchase notice should receive compensation that reflected the value of
Third Schedule development and that element of the scheme undoubtedly remains, with the
assumption now limited to the two classes of development in Part I.

19. Reference was made in argument before us to the fact that successive General
Development Orders up to the Town and Country Planning (General Development) Order 1977
had given permission for the rebuilding of war damaged buildings but that such permission was
no longer contained in the 1988 GDO. We cannot see, however, that this can have any bearing
on the construction of the 1961 Act or to its proper application.

20. Mr Taylor sought to place reliance on a Scottish Lands Tribunal purchase notice case,
Northern Metco Estates Ltd v Perth & Kinross District Council 1993 SLT (Lands Tr) 28. That
case concerned a site previously owned by British Railways Board on part of which two pairs
of Victorian cottages had stood but had been demolished, it appears, between 1977 and 1983
(see at 29F-G, 31C). Compensation was claimed principally on the basis of the value of the
site for leisure development, but there was an alternative claim on the basis that the
landowner’s rights under the Sixth Schedule (the equivalent in the Town and Country Planning
(Scotland) Act 1972 of the Third Schedule) would permit the rebuilding on the site of the four

former cottages with four modern houses on individual plots. The Tribunal rejected this
contention. At 37H-I it said:

“On the facts in this case the Tribunal finds that at the date of the notice to treat the
existing use was not residential. That had been abandoned. Development of the land
for residential purposes would then require planning permission as a material change
of use. The rights granted by planning permission or by permitted development attach
not to any individual but to the land itself. The Sixth Schedule rights attaching to the
reference subjects had been extinguished by abandonment, and any action by the
owners of the land, such as making application for planning permission for residential
use, will have no effect since their intentions are not indicative of the actual planning
rights accruing to the land.”

21. In Dutton v Blaby District Council [2006] RVR 203 this Tribunal (N J Rose FRICS) said
(at paragraph 27) that it did not find the decision of assistance because it did not appear that the
Tribunal’s attention had been drawn to section 30(2) of the Town and Country Planning
(Scotland) Act 1972, which provided (as in section 75 of the 1990 Act) that planning
permission for a building carried with it planning permission for use of the building. Under
section 75 the planning permission that is to be assumed under paragraph 1 of the Third
Schedule would carry with it the right to use the building for residential purposes. A valid
permission capable of implementation cannot be abandoned (see Pioneer Aggregates (UK) Ltd
v Secretary of State for the Environment [1985] 1 AC 132), so that there can be no question, in
our judgment, of abandoning the planning permission that is required to be assumed for Third
Schedule development under section 15(3). Nor can we read into the description of the
development in the Third Schedule any implication that there must be some sort of continuity
of use from the original development until the time of the assumed permission. It is of course
the case that the assumed permission may be incapable of implementation. Thus in Ivens &
Sons (Timber Merchants) Ltd v Daventry District Council (1975) 31 P & CR 480 this Tribunal
(Douglas Frank QC) held that it was not possible under the paragraph 1 assumed permission to
rebuild a house that had formerly stood on the land after spoil to the depth of 20 feet had been
deposited on the land. But if (as in the present case) the planning permission for paragraph 1
development would be capable of implementation, there is in our judgment no reason for not
giving effect to the assumption of such permission under section 15(3).

22. The result is that the claimant is entitled to compensation on the assumption that planning
permission would be granted for the rebuilding of the terrace of houses and the commercial
building and also for the rebuilding of the prefabs.

23. Both parties were keen to point out what they saw as the merits of the case. Mr Taylor
stressed that the buildings in relation to which compensation was claimed had been demolished
over 60 years ago, that the land had been in use for public open space purposes for approaching
30 years, had been refused planning permission for residential development on appeal and had
been the subject of a nil certificate on appeal under section 18. It made no sense in these
circumstances, he said, that someone who had bought the land for £30,000 in 2001 should now
be paid compensation amounting to £1.6m. Mr Male pointed out that the Third Schedule rights
attaching to this land were those that applied generally and that on the bombed site on the

opposite side of Orville Road fourteen terrace houses had been rebuilt following a
determination by Wandsworth Borough Council in 1987 that such development was permitted
under Class XI of the 1977 GDO. The council moreover had had the chance to buy the subject
land when it was put up for sale by the London Residuary Body.

24. That the claimant should succeed in this claim is the inevitable result of the legislation,
for the reasons that we have set out. It has undoubtedly achieved a remarkable windfall gain.
This has arisen because the land was sold out of public ownership into a market that has
substantially forgotten about the Third Schedule and the value attaching to Third Schedule
rights. The fact is that the Third Schedule rights attaching to the subject land have given it a
residential value throughout the time since the provisions of the 1947 Act came into force. It is
clear, however, that not all those concerned with the land have been aware of this. The LRB
appear to have been alive to the true position because they offered the land for sale as a
potential residential development site, but the seller of the land in 2001 was presumably
unaware of it, thus enabling the claimant to acquire the land at a bargain price. In its report
“Towards a Compulsory Purchase Code: (1) Compensation” (Law Com no 286, December
2003) the Law Commission said this about Third Schedule rights, which it had discussed in an
earlier consultation document:

“8.34 We commented that the survival of these rights in the 1961 Act seems an
unnecessary complication. Our provisional proposal was simply to repeal section
15(3) and (4), without replacement. Only one respondent opposed this proposal,
largely on the grounds that such rights were an established part of the ‘existing use’
value of land. However, we remain of the view that their historical value has been
largely superseded, and that they are an unnecessary complication in a modern code.”

The facts of the present case and its outcome may be thought to add weight to that view.

25. We determine the compensation, therefore, at £1,600,000. That determination is made
on the assumption that planning permission would be granted for the rebuilding of the 9 houses
and the commercial building that stood upon the land on 7 January 1937 but were demolished
after that date. If that assumption were not to be made but it was to be assumed that planning
permission would be granted for the rebuilding of the four prefabs, the compensation would be
£1,200,000. If neither assumption were to be made the compensation would be £15,000.

26. The parties are now invited to make submissions on costs, and a letter about this
accompanies this decision, which will become final when the question of costs has been
determined.



LCA/118/2006

LANDS TRIBUNAL ACT 1949 COMPENSATION – purchase notice – land in use as public open space – terrace of houses on land demolished during second world war – whether Third Schedule rights to be assumed – held they were – compensation £1,600,000 – Land Compensation Act 1961 ss 14(1) and 15(3)

IN THE MATTER OF A NOTICE OF REFERENCE

BETWEEN	GREENWEB LIMITED	Claimant

and

LONDON BOROUGH OF WANDSWORTH		Acquiring Authority

Re: Site 9-15 Orville Road Battersea London SW11

Before: The President and P R Francis FRICS

Sitting at Procession House, 110 New Bridge Street, London EC4V 6JL on 5 September 2007

John Male QC instructed by Lovells for the claimant Reuben Taylor instructed by M B A Walker, Borough Solicitor, for the acquiring authority

© CROWN COPYRIGHT 2007

1



	Dated 17 September 2007

	George Bartlett QC, President

	P R Francis FRICS

	11

England and Wales Lands Tribunal