Compulsory Purchase & Compensation Flashcards
What are the rules for assessing compensation under LCA 1961
(1)No allowance shall be made on account of the acquisition being compulsory:
(2)The value - open market by a willing seller might be expected to realise in the light of the no-scheme principle
(3)The special suitability or adaptability of the land for any purpose shall not be taken into account
(4)Where the value of the land is increased by reason of unlawful use the amount of that increase shall not be taken into account
(5)Where land is, devoted to a purpose of such a nature that there is no general demand or market for land for that purpose, the compensation may the reasonable cost of equivalent reinstatement
(6)The provisions of rule (2) shall not affect the assessment of compensation for disturbance or any other matter not directly based on the value of land:
What is the no scheme principle
any increase or decrease in the value of land caused by the scheme or by the prospect of that scheme, is to be disregarded; assumed that the scheme was cancelled on the relevant valuation date; no prospect of the same scheme, or any other project. CPO scheme can distort the value of a property – for better or for worse
What are the CPO heads of claim?
Value of Land Taken
Injurious Affection
Disturbance
Loss Payments
Reasonable professional costs
What are the three tests when assessing disturbance compensation?
Causation
– was the loss caused by the acquisition
Remoteness
– Was the loss too “remote” – i.e. an indirect or knock-on effect of the dispossession.
Reasonableness
– Was the loss incurred “reasonably” or did the unreasonable
actions of the claimant cause or make the loss worse
What is the definition of the scheme
The scheme of development underlying the acquisition
What is Rule 5 LCA 1961?
Where the compensation on land or property may be assessed on the basis of the reasonable cost of equivalent reinstatement
When is ADR appropriate?
In all cases where through negotiation it has become clear that the matter (or parts of it) cannot be resolved without outside support
What does the CPA protocol say about what is expected of parties before a case goes to Tribunal
- Exchanged enough information to understand each others case
- Discussed each others viewpoint thoroughly and constructively, and
- Tried to reduce the number of issues the Upper Tribunal would have to decide on if referred to them
When can you get compensation even if you do not have a registered interest in the land?
- There is a limited right of compensation
- This may include tenancies at will, tenancies on sufferance and licences.
- Compensation should reflect disturbance items such as removal costs
(LCA 1973)
How do home loss payments work for residential owners?
- must have lived in the dwelling, or a substantial part of it, as your only or main residence, for a period of not less than 1 year
- your interest or right to occupy the property was freehold, leasehold or under certain statutory tenancies, contracts and licences
- Freeholder or a leaseholder with at least 3 years unexpired in England you are entitled to 10% of the market value of your interest, subject to a maximum payment of £78,000 and a minimum payment of £7,800 (from 1 October 2022). Any other claimant is entitled to a flat rate of £7,800.
- Paid on the date of displacement; or 3 months from the date of the claim; or the date on which the market value is agreed or determined
Severance and injurious affection – are they the same?
Severence is diminution of value of retained land due to the severing of land, IA is related to physical factors caused by the scheme
Under section eight CPA 1965 what is the size that may require the aquiring authority to purchase the land
If under half an acre of land is left severed then the owner of the land may require the acquiring authority to purchase the land along with the land subject to compulsory purchase:
Did you have reference to any case law in respect of rule 5?
- Sparks v Leeds City Council [1977] LT
- Four essentials of rule 5 to be satisfied
1. Devoted to a purpose
2. No general demand
3. Bona fide intention to reinstate another site
4. Those being satisfied the Tribunal should be exercised in the claimant’s favour
What are the major heads of claim within a Rule 5 case?
- Cost of an equivalent premises
- Disturbance
- Professional fees
- Statutory Loss Payments
What is the valuation date under rule 5?
the date when in all the circumstances the claimant can reasonably begin replacement
What is a Hybrid Bill?
- New legislation providing land acquisition, construction and planning powers within limits of deviation
- It has mixture of public and private Bill process
What are environmental statements and environmental minimum requirements?
- ES sets out the Proposed Scheme and its likely significant
environmental effects - EMR ensures that the environmental effects of the Proposed Scheme will not significantly exceed those assessed in the ES, the Secretary of State will establish a set of controls known as Environmental Minimum Requirements (EMR).
What accompanies a Hybrid Bill through Parliament?
- Plans and Sections of the Works
- A Book of Reference detailing the land interests affected,
- An estimate of expense
- An Environmental Statement
What is a book of reference?
- Lists all the land directly affected by the Bill
- Describes the owners and occupiers of, and those with an interest in, the directly affected land
What is the nominated undertaker?
The Promoter of the Bill will appoint a body responsible for delivering the Proposed Scheme under the powers granted by the Bill. This body is known as the ‘nominated undertaker’.
What are limits of deviation and land outside limits
Limits of deviation are the maximum boundaries in which the railway and all associated works can be constructed as per the Bill. Land outside limits is that which falls outside of these boundaries.
Can you talk me through the parliamentary process of a Hybrid Bill
Through HoCs including:
Committee Stage - promotor/undertaker considers petitions & U&A’s offered
Through HoL
Back to HoC
Royal Assent
What are undertakings and assurances?
Offered to remove or nullify impact of petitions on Bill
Undertakings are legal contracts with obligations usually on both sides
Assurances are promises given by the SoS
All must be complied with
How is a compulsory purchase order justified?
It should satisfy that there is a public benefit as the Human Rights Act 1998 states that “no-one shall be deprived of possessions except in the public interest”
What are the main pieces of legislation for compulsory purchase and compensation?
Land Compensation Act 1961
Compulsory Purchase Act 1965
Land Compensation Act 1973
Acquisition of Land Act 1981
Compulsory Purchase (Vesting Declarations) Act 1981
What is the the Point Gourde principle?
- No scheme world.
- A principle of compensation law that compensation “cannot include an increase in value which is entirely due to the scheme underlying the acquisition.” Often called the “Pointe Gourde rule”. The rule requires the disregard of decreases in value caused by the scheme, as well as increases.
- Now Rule 3 of LCA 1961 s5 - special suitability
What is the principle of equivalence?
Came from Horn v Sunderland “at the root of statutory compensation, which lays down that the owner shall be paid neither less nor more than his loss”.
What principle did Horn v Sunderland set?
The principle of equivalence
What three tests for compensation did Shun Fung Ironworks case set for compensation assessment?
Three conditions:
- Causality
- Remoteness
- Reasonableness
In which case law were the “three tests” of disturbance set?
Shun Fung Ironworks
What is a Notice to Treat?
- A notice required to be given, under the Compulsory Purchase Act 1965, by an acquiring authority to all persons interested in or having power to sell and convey or release land proposed to be compulsorily acquired
- To be served within 3 years of confirmation of CPO
- 3 years to effect a notice, this can be extended by agreement
- title to land or interest will have to be conveyed , which usually follows the determination of compensation
When does a NTT cease to have effect
- 3 years following being served unless:
(a) compensation has been agreed or awarded
(b) GVD has been executed
(c) AA have entered on and taken possession of the land
(d) compensation has been referred to the Upper Tribunal
What is a General Vesting Declaration?
- A notice, under Compulsory Purchase (Vesting Declarations) Act 1981
- replaces the NTT and conveyance with one procedure “the vesting date” where title automatically vests
- PN, NOM, COS then vesting date follows 3 months after
- Does not apply to minor tenancies
What does s.52 LCA 1973 provide for claimant’s?
- provides a right to advance payment amounting to 90% of an acquiring authority’s initial estimate of compensation (or any agreed figure)
- Purpose is to put claimants in a financial position so that they can re-order their affairs as early as possible
What is the process of s.52 LCA 1973?
Pre-2017
- Claimant must make request in writing, giving particulars of his interest
- AP must be made within 3 months of written request, or if
expired before date of possession, on the date of possession.
- If AA’s estimate is less than proper compensation, AA must
pay balance;
- If final figure is less than the AP, then excess is recoverable.
Post-2017 legislation changes
- Within 28 days of receiving request AA to:
* Determine if they have enough information to estimate amount of compensation
* Require claimant to provide any further information
required
- AP must be made within 2 months
What is statutory blight?
The term used to describe a situation where a property is blighted in a legal sense, such as where it is in a development plan or within land safeguarded for a specific
purpose, for example the railway, or included within a compulsory purchase order.
What are the Crichel Down rules?
The Crichel Down Rules have been developed for over half a century and have been endorsed by previous governments. They cover circumstances when land bought by or under threat of compulsory purchase or statutory blight, but which is no longer needed for public purposes, may be offered back to the former owners, anyone who has taken over from
them, or sitting tenants.
What is a blight notice?
The statutory notice that a claimant can serve on the Secretary of State, asking the Government to buy your property.
If agreed, it constitutes a deemed NTT 2 months after the blight notice was received by the AA (meaning 3 years to negotiate compensation)
What are the statutory timeframes for an acquiring authority to respond to a blight notice?
2 months to agree to purchase, or serve a counter-notice
What is Part 1 of the Land Compensation Act 1973?
- If the value of property goes down because of the physical effects of the railway (noise, vibration, smell, fumes, smoke, artificial lighting, and any solid or liquid substance being released onto land).
- It applies for a party who owns a qualifying interest in the property on the date the scheme opens. You can only claim Part 1 compensation once the scheme has been open for 12 months.
Schedule 16 High Speed Rail Act – what are the general rules of use?
- at least 28 days notice required
- may not stay in possession longer than 1 year post-completion of works
- Unless the owners of the land and the nominated undertaker otherwise agree, must provide for land to be restored to its former condition
- If not former condition then LPA also needs to agree
- compensate the owners and occupiers for any loss which they may suffer
Schedule 2 High Speed Rail Act – what are the general rules of use?
The nominated undertaker may:
(a) survey or investigate land which is within the Act limits or which may be affected by the works;
(b) protect or remove any flora or fauna on land which may be affected by the carrying out of the works;
- at least 7 days notice required
- compensate the owners and occupiers for any loss which they may suffer
If a blight notice is accepted what is a claimant entitled to?
- The unblighted value of their property
- Reasonable disturbance including SDLT
- Stat loss payments
- Professional fees
Who is eligible to serve a blight notice?
- Must have a qualifying interest (freeholder or leaseholder of 3 years+)
- At least 6 months occupation
- Property partly (25%+) or fully in safeguarding area
- Reasonable efforts made to sell the property
What is safeguarding?
- a planning mechanism used to ensure land which has been identified for development in the future is protected from conflicting development
- It may be applied in local development plans, or safeguarding directions may be made in relation to significant infrastructure projects
What is the duty to mitigate?
- cannot claim for an avoidable loss
- onus on AA to prove claimant has failed to mitigate
- claimant required to act reasonably
- claimant won’t be prejudiced for their financial inability to mitigate
What is the burden of proof?
- The onus is on the claimant to justify their disturbance claim
- Important to keep a detailed record of losses sustained and costs incurred
- Also keep all relevant documentary evidence such as receipts, invoices and fee quotes.
- Keep a record of the amount of time spent on matters
Explain the concept of betterment?
- The enhancement of value of land resulting from an acquiring authorities scheme
- on HS2 that will clearly be seen around stations
- shall be set-off against compensation to be paid
What is severence/injurious affection?
- Under Section 7 of the 1965 Compulsory Purchase Act
- Claimants are entitled to compensation for damage to the land retained caused by severing or physical factors
- Any loss or damage sustained should be claimed, in addition to the value of the land taken
Would an affected party be entitled to any compensation for the execution of works if no land had been taken?
- Entitled to make a claim under Section 10 of 1965 Compulsory Purchase Act
- Claimants are entitled to compensation for damage to the land retained if their legal rights are interfered with
- Reduction in the value of the claimant’s land as a result of the interference
- Eligibility under McCarthy Rules
Can you explain what the McCarthy Rules are in relation to s.10 LCA 1965?
- Rule 1: The injurious affection must be the consequence of the lawful exercise of statutory powers otherwise the remedy is by legal action.
- Rule 2: The injurious affection must arise from that which, if done without statutory authority, would give rise to a cause for action.
- Rule 3: The value of the land or interest must be directly affected by physical interference with some legal right, public or private, that the claimant is entitled to make use of in connection with the claimant’s property.
- Rule 4: The damage must arise from the execution of the works and not from their authorised use.
Would an affected party be entitled to any compensation for the use of public works if no land had been taken?
- Part 1 of Land Compensation Act 1973
- Compensation for depreciation in the value of an interest in land which is attributable to the use of public works
- claim made no earlier than 12 months after scheme opening to the public
- limited to depreciation in the value caused by the use of the land or works attributable to ‘physical factors’
- noise, vibration, smell, fumes, smoke, artificial lighting, and the discharge on to the land
Talk me through the process of possession of land?
- Understand the reason for the possession (GVD, 16)
- Stakeholder engagement throughout
- Plan for possession (understand the land, the interested parties, dates, times, attendees, risks and any mitigation plan)
- pre-possession site inspection
- possession (documents completed and signed, keys and relevant documents collected as necessary, photographic record of condition completed, pre-agreed arrangements to secure land carried out)
Tell me about when you have assessed market value for compulsory purchase?
- I have assessed in line with Rule 2 section 5 LCA 1961
- market value (the best price which they can reasonably get in the open market)
- with no-scheme principle
- valuation date being the date of vesting
Tell me about when you have assessed disturbance for compulsory purchase?
- I have assessed in line with Rule 6 section 5 LCA 1961
- Rule 2 should not affect disturbance compensation
- value to claimant not acquiring authority i.e. is the claimant using the land to carry out a business
- Underlying disturbance is principle of equivalence
- disturbance should be consistent with land value
- generally those who have been displaced but those not in occupation may also claim costs of acquiring an alternative property if within 1 year
Tell me about statutory loss payments?
‘Basic’ and ‘Occupiers’ loss payments to be paid to claimants other than residential occupiers and residential owner-occupiers
- BLP is 7.5% of the value of the interest max £75,000
- OLP is max £25,000 different calculations
Home Loss Payment for residential occupiers
- HLP is 20% of value of interest max £78,000 or £7,800 for lesser interests
What are the conditions for the application of rule 5 LCA 1961?
- Sparks v Leeds City Council [1977] LT
- Four essentials of rule 5 to be satisfied
1. Devoted to a purpose
2. No general demand
3. Bona fide intention to reinstate another site
4. Those being satisfied the Tribunal should be exercised in the claimant’s favour
Also if a dwelling has been modified for a disabled person then they are entitled to compensation on basis of Rule 5
What types of building contract are you aware of?
In the UK:
- New Engineering Contract (NEC) forms of contract
- Joint Contracts Tribunal (JCT) forms of contract
construction projects with private funding often employ JCT contracts, whereas those with public funding use NEC contracts
What were the conditions in the JCT contract?
- The payment provisions were the most pertinent to what I was carrying out which was facilitating payment for agreed works on time
- Valuation by contractor, agreed/disagreed with QS and payment made within 28 days of the contractors valuation
What do you mean by compensation code principles?
Principles established by case law
- Principle of equivalence
- No scheme principle
- Rules for compensation under LCA 1961
- Rules for Rule 5 to apply
What did you recommend to your client in the Rule 5 case?
- Where costs were incurred during the project build which fell outside of the contract
- I considered these with support from a QS
- Using disturbance tests (causal/remoteness/reasonable)
- Made recommendation with that scrutinisation as supporting evidence
What kind of thing fell outside of the agreed building contract on your Rule 5 case?
- A new, larger entrance sign
- Did not provide equivalence
- Recommended to my client that I would reject the claim
What statutory planning assumptions are there relating to property value compensation?
- Any planning permission in force at time of NTT can be considered
- Hope of planning permission can be considered at the valuation date with cancellation assumption (date of NoM)
- Claimant can apply for a CAAD (S.17 LCA 1961) which should be regarded as planning permission
What are accommodation works?
- Comprise anything which is carried out or paid for by the acquiring authority, usually situated on claimants retained land, in order to reduce the claim for severance, injurious affection and/or disturbance
- Examples are fences, ditches, gates, cattle grids, holding pens, new water supplies and new bridge or underpass crossings
- No statutory right to have accommodation works provided but it is normal practice for acquiring authorities to suggest and discuss because compensation otherwise payable is reduced as a result of the works
What is a Statement of Reasons?
- The acquiring authority will usually prepare a document known as a Statement of Reasons for making the CPO.
- This sets out the authority’s reasons for seeking to acquire the land and will accompany the CPO.
What is the entitlement for compensation?
Mortgagees
Easements and restrictive covenants - IA s.10 CPA 1965
TAW/Holding over - disturbance payment under s31 LCA 1973
Tenant less than 1 year - value of interest, disturbance, S&IA s20 CPA 1965
Tenant more than 1 year plus freehold - entitled to all heads of claim
Material detriment counter notices section 53 what is it?
Section 53 Land Compensation Act 1973
- agricultural land interest
- interest more than 1 year
- served 2 months from NoM
- unable to farm land
- 2 months AA to respond
- deemed NTT
Material detriment counter notices schedule A1 what is it?
Schedule A1 Compulsory Purchase Vesting Declaration Act 1981
- part only of house, building, factory
- required to buy whole
- GVD only
- served 28 days from NoM
- 3 months AA to respond
Material detriment counter notices if land left severed is less than 1/2 acre?
- Serve material detriment counter notuce
- Section 8(2) Compulsory Purchase Act 1965
- no statutory procedure of time limit for claiming
What are U&A’s ?
- Commitments given by the Promoter during the
passage of the Bill which are included on the Register
of Undertakings and Assurances held by the
Department for Transport and finalised at Royal
Assent. - The purpose of the Register is to record
the commitments which have been given
concerning the implementation of the project
following Royal Assent. - All commitments included on the Register will be binding on the nominated undertaker and the Secretary of State.
- included on the EMR
What differentiates an undertaking and an assurance?
These are labels given to reflect a difference in the way that different types of commitment are enforced.
- The term ‘undertaking’ is used to describe two
kinds of commitment: (i) an undertaking given to
Parliament (breach of which would be addressed
through a recourse to Parliament); or (ii) a
commitment which has effect as a legally binding
contract and is therefore enforceable by the
courts. - ‘Assurance’ is the term used to describe any
other commitments. These are unilateral
commitments given directly to Petitioners or
affected parties which do not have the status of
legally binding contracts enforceable by the
courts, but are made binding on the project by
being included on the Register. Enforcement is
through the Secretary of State. The Secretary of State is answerable to Parliament for securing compliance.
