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You are here: BAILII >> Databases >> The Law Commission >> Towards a Compulsory Purchase [2003] EWLC Apa (15 December 2003) URL: http://www.bailii.org/ew/other/EWLC/2003/286(APPENDIX_A).html Cite as: [2003] EWLC Apa

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APPENDIX A

THE IMPACT OF OUR RECOMMENDATIONS

A.1 At each stage of this project we have borne in mind the likely effects of our proposals. In addition to the proposals and consultation questions put forward in CP 165, we invited comment on the likely impacts of our proposals.^[1] We are very grateful to those who responded, and we have taken account of the responses received in formulating the recommendations in this report.

A.2 The Government asked us to have particular regard to the following:

(1) Construction of a single Compensation Code which will achieve the principle that "in all cases, a claimant should [be] properly compensated for all the losses incurred as a direct result of the compulsory purchase order". That approach will not differentiate between particular CPO powers used, implementation or lack of it, and whether or not land has been taken.

(2) Clarification of the extent to which CPO valuations should take account of (or disregard) the effects of the scheme underlying the proposal, and whether valuations should take account of development potential of the subject land.

(3) Clarification of the rules relating to compensation for severance/injurious affection (where land is taken) and the ensuring of parity of treatment between those from whom some land is taken and those from whom none is taken.

(4) Clarification of the principles relating to payment of compensation for disturbance (including, for business activities, the determining of the need for relocation or extinguishment), which principles will ensure reimbursement for all costs and losses genuinely incurred as a direct consequence of the dispossession.

(5) Provision of a mechanism whereby eligible claimants can require acquiring authorities to make advance payments without delay where an estimate has been made.

(6) Consideration of the issue of the award of compound interest on late compensation payments (linked to our separate examination of the power of the courts to award such interest) and, more particularly, clarification of the basis for interest payments on fees and taxes.

(7) Provision for compensation for losses incurred where (after the first notice date) compulsory purchase orders are abandoned, withdrawn, quashed or not confirmed.

A.3 We indicate below in broad terms the likely consequences of reform.

The benefits of a Code

A.4 We recommend a Compensation Code which should operate as a single and self-contained mechanism. We believe that if Parliament were to enact such a Code it would make the rules relating to identification of interests and assessment of compensation sums far more accessible and comprehensible. That will benefit professional advisers, acquiring authorities, businesses and individuals.

A.5 A number of the rules we recommend are intended to bring greater clarity to the law. Clarity and lack of ambiguity should reduce time expended on interpretation, facilitate and expedite negotiated settlements and reduce the number of contentious matters to be resolved by the Lands Tribunal.

A.6 The overriding principle is that of fair compensation, and the rules that we recommend are aimed at dealing fairly as between the authority and the landowner in determining who should bear what loss.

A.7 A more equitable and transparent set of rules should provide claimants (both businesses and individual citizens) with compensation solutions which feel fairer and are delivered more efficiently.

A.8 A large number of the recommended rules are designed to make the law clearer, but we would pick out particularly Rules 13, 13A, 14 and 14A which are a new set of rules relating to disregard of the "statutory project" and to the planning assumptions to be made in assessing compensation payable. Clarification of what matters are to be disregarded (both as to increases and decreases in value) should assist valuers in the computation of global compensation packages by reducing the complexity of the formulae and the range of variables which need to be addressed. Clarification of the rules relating to planning assumptions will simplify the certification process for local planning authorities and for the Lands Tribunal.

A.9 Many of the recommended rules incorporate changes to make the law fairer, but we would highlight:

Rule 2: Dispensing with the requirement to treat compensation as a single sum will allow fairer and more convenient calculations.

Rule 4: This rule would reduce (though not eliminate) the differential between an owner from whom land is taken and an owner from whom no land is taken.

Rule 5: This rule would make the law fairer because:

it is in our view wide enough to cover any losses properly flowing from the acquisition;

it spells out the circumstances in which a claim for relocation or extinguishment should be permitted, and replaces the "reasonable businessman" test;

it allows a claimant who may not be able to relocate a business due to personal circumstances to be adequately compensated; and

it allows for consequential loss to be awarded by the Lands Tribunal where, exceptionally, losses were reasonably incurred before the first notice date as a result of the compulsory purchase order.

Rule 19: This rule provides an effective remedy where the authority fails to make an estimate of compensation due, or makes one which is unreasonably low, by providing the County Court with power of enforcement. It should be read with the rule on interest, which allows the Lands Tribunal to award interest in recognition of unreasonable delay by the authority.

Rule 20: Additional benefits should accrue because only one forum will be needed for litigation where two are needed under the current law.

Rule 21: Under this rule compensation would usually run from a single date (the valuation date), but could run from different dates as appropriate to the cost or loss which is compensatable. This rule also allows the Lands Tribunal to award interest in respect of any unreasonable conduct by the authority.

Rule 22: This rule would reduce (though not eliminate) the differential between an owner from whom land is taken and an owner from whom no land is taken.

Note 1    CP 165, para 13.9.    [Back]