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Towards a Compulsory Purchase Code: (1) Compensation

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Towards a Compulsory Purchase Code: (1) Compensation The Law Commission Consultation Paper No 165 TOWARDS A COMPULSORY PURCHASE CODE: (1) COMPENSATION A Consultative Report London: TSO The Law Commission was set up by section 1 of the Law Commissions Act 1965 for the purpose of promoting the reform of the law. The Law Commissioners are: The Right Honourable Lord Justice Carnwath CVO, Chairman Professor Hugh Beale, QC Mr Stuart Bridge Professor Martin Partington, CBE Judge Alan Wilkie, QC The Secretary of the Law Commission is Mr Michael Sayers and its offices are at Conquest House, 37-38 John Street, Theobalds Road, London WC1N 2BQ. This Consultative Report, completed on 24 June 2002, is circulated for comment and criticism only. It does not represent the final views of the Law Commission. The Law Commission would be grateful for comments on this Consultative Report before 24 October 2002. Comments may be sent either – By post to: Jonathan Teasdale Law Commission Conquest House 37-38 John Street Theobalds Road London WC1N 2BQ Tel: 020-7453-1214 Fax: 020-7453-1297 By e-mail to: [email protected] It would be helpful if, where possible, comments sent by post could also be sent on disk, or by e-mail to the above address, in any commonly used format. It may be helpful, either in discussion with others concerned or in any subsequent recommendations, for the Law Commission to be able to refer to and attribute comments submitted in response to this Consultative Report. Any request to treat all, or part, of a response in confidence will, of course, be respected, but if no such request is made the Law Commission will assume that the response is not intended to be confidential. The text of this Consultative Report is available on the Internet at: http://www.lawcom.gov.uk 93-244-01 THE LAW COMMISSION TOWARDS A COMPULSORY PURCHASE CODE: (1) COMPENSATION CONTENTS Paragraph Page PART I: INTRODUCTION 1 Terms of reference 1.1 1 Background 1.2 1 CPPRAG Review 1.2 1 Law Commission – preliminary work 1.5 2 The DTLR Policy Statement 1.7 3 The Law Commission’s approach 1.9 4 Preserving the balance 1.13 4 Comparative sources 1.18 6 Scope of the project 1.21 7 Two stages 1.21 7 Making and authorisation 1.24 7 The Compensation Code 1.26 8 PART II: THE EXISTING LAW 11 Introduction 2.1 11 Historical context 2.2 11 The 1845 Act 2.2 11 The Scott Committee and the 1919 Act 2.5 12 From 1945 to 1961 2.7 13 From 1961 until today 2.12 15 Towards privatisation 2.12 15 Legislative change 2.15 15 The Human Rights Act 2.18 17 The law today 2.24 18 Sources of current law 2.25 18 (1) Powers of compulsory purchase 2.26 19 (2) Making and authorisation 2.29 19 (3) Implementation 2.31 21 (4) Determination of compenstion 2.34 21 (5) Compensation rules 2.35 22 iii Paragraph Page PART III: THE COMPENSATION CODE – INTRODUCTION 23 Introduction 3.1 23 The existing law 3.2 23 General principles 3.2 23 Equivalence and fairness 3.2 23 Outline of existing rules 3.3 24 Standard heads of compensation 3.3 24 Other rules 3.6 24 Government policy 3.7 25 The new Code – overview 3.12 27 The new Code – core principles 3.18 28 PART IV: THE COMPENSATION CODE – CORE PRINCIPLES (1) 30 Introduction 4.1 30 (1) Statement of right to compensation 4.2 30 Proposal 1: Right to compensation 4.4 31 (2) Preliminary issues 4.5 31 (i) General objective 4.6 31 (ii) Traditinal terms 4.12 32 (iii) Single global figure 4.13 33 Proposal 2: Heads of compenation 4.14 33 Consultation issues 4.14 33 (3) Market value 4.15 34 Existing law 4.15 34 Policy Statement 4.18 35 Proposal 3: Market value 4.19 35 Consultation issues 4.19 36 (4) Disturbance 4.20 36 Existing law 4.20 36 Sources of law 4.20 36 General principles 4.22 36 The traditional test 4.22 36 Typical heads of claim 4.25 37 Relocation or extinguishment 4.26 38 The “reasonable businessman” test 4.29 39 Other disturbance issues 4.34 40 Failure to mitigate 4.34 40 Personal circumstances 4.36 41 Pre-acquisition losses 4.39 42 Presumption of value for money 4.41 42 Consistency 4.43 43 iv Paragraph Page “Disturbance” in other jurisdictions 4.44 43 Policy Statement 4.49 44 Discussion 4.54 46 (1) Causation 4.55 47 (2) Failure to mitigate 4.58 48 (3) Personal circumstances 4.59 48 (4) Reasonableness and relocation 4.60 48 (5) Partial relocation 4.63 49 (6) Starting date 4.65 49 (7) Other points of detail 4.66 49 Proposal 4: Disturbance 4.68 50 Consultation issues 4.68 51 PART V: THECOMPENSATION CODE - CORE PRINCIPLES (2) 53 Introduction 5.1 53 (1) Effects on retained land 5.2 53 (a) Severance and injurious affection 5.3 53 Existing law 5.3 53 Statute 5.3 53 A single holding 5.7 55 Accommodation and mitigation works 5.8 55 Measure of compensation 5.9 55 Loss of land value 5.9 55 Market value 5.11 56 Other valuation rules 5.14 57 “Before and after” valuation 5.15 58 Subsequent events 5.16 58 Comparisons 5.17 58 Policy Statement 5.21 59 Discussion 5.23 60 (b) Betterment 5.27 61 Introduction 5.27 61 Existing law 5.28 61 Comparisons 5.31 62 Policy Statement 5.33 62 Discussion 5.34 63 Proposal 5: Injury to retained land 5.35 63 Consultation issues 5.35 64 (2) Equivalent reinstatement 5.36 65 Existing law 5.36 65 Comparisons 5.43 66 Policy Statement 5.46 67 v Paragraph Page Discussion 5.49 68 Proposal 6: Equivalent reinstament 5.54 69 Consultation issues 5.54 70 (3) Incidental rules 5.55 70 (a) Prospects of lease renewal and effect of rehousing tenants 5.56 70 (b) Illegal uses 5.59 71 Existing law 5.59 71 Comparisons 5.60 71 Policy Statement 5.62 71 (c) Enhancements with a view to increased compensation 5.63 72 Existing law 5.63 72 Comparisons 5.65 72 Policy Statement 5.67 73 Discussion 5.68 73 (d) Consistency and mitigation 5.69 73 Proposal 7: Incidental rules 5.70 74 Consultation issues 5.70 75 (4) Date for assessment 5.71 75 Background 5.71 75 Procedures 5.71 75 Valuation date 5.73 76 Fixing of interests 5.75 76 The present law 5.75 76 Changes between notice to treat and entry 5.79 77 Different heads of compensation 5.81 78 Disturbance 5.82 78 Other heads 5.84 79 A practical approach 5.86 80 Equivalent reinstatment 5.89 81 Proposal 8: Date of assessment 5.91 81 Consultation issues 5.91 82 PART VI: THE NO-SCHEME RULE – HISTORY 83 Introduction 6.1 83 The “no-scheme rule” 6.1 83 The concept 6.4 84 The policy issues – overview 6.6 84 The development of the rule 6.14 86 Historical review 6.14 86 Consultation issues 6.16 88 (1) The preferred version of the rule 6.19 88 Variety of formulations 6.19 88 vi Paragraph Page Three competing views 6.20 89 Competing approaches 6.22 90 Problems of the “underlying scheme” 6.22 90 Two contrasting cases 6.23 90 Staged schemes 6.25 91 The immediate project approach 6.26 91 The preferred version 6.29 92 (2) Should the rule (in any form) be reproduced in the new Code? 6.30 92 General considerations 6.30 92 Precedent 6.30 92 A planned event 6.31 92 Justification in the cases 6.35 93 Decreases in value 6.37 94 Increases in value 6.39 94 Case law or statute 6.41 95 (3) Should the acquiring body’s purpose be entirely disregarded 6.42 95 The case for “equivalence” 6.42 95 Privatised utilities 6.44 96 Commercial interests 6.47 97 A wider issue 6.52 98 (4) What is the scope of the scheme? 6.54 99 The pre-1947 cases 6.55 99 Wilson and after 6.56 100 Variety of projects 6.60 101 The planning framework 6.62 101 The 1959 Act 6.62 101 Certifying the planning project 6.64 102 The new planning system 6.67 103 Linking the compensation rules to the planning system 6.71 104 Defining the scheme in the new Code 6.73 104 (5) Ransom strips 6.77 106 The problem 6.77 106 Other examples 6.79 106 A policy issue 6.81 107 PART VII: THE NEW CODE- DISREGARDS AND ASSUMPTIONS 108 Introduction 7.1 108 The existing rules 7.2 108 Clearing the decks 7.2 108 The CPPRAG Review 7.5 109 The content of the new Code 7.7 110 General approach 7.7 110 vii Paragraph Page Provisional Proposals 7.9 111 Defining the “scheme” or “project” 7.10 111 Should the project be defined in the order documents? 7.13 111 Cancellation assumption 7.18 113 No other statutory project for the same purpose 7.20 113 Increases in value 7.22 114 Decreases in value 7.23 114 Blight and purchase notices 7.28 115 Proposal 9: Disregarding the project 7.29 115 Consultation issues 7.29 117 Planning status 7.30 118 General approach 7.30 118 “Planning status” defined 7.30 118 The 1961 Act 7.31 118 Planning status as a fixed factor 7.33 118 Planning status in the new Code 7.37 119 Date of assessment 7.39 120 Appeals 7.40 120 Efficiency 7.41 121 Human Rights 7.43 121 Proposal 10: Planning status 7.46 122 Consultation issues 7.46 124 Third Schedule rights 7.47 125 PART VIII: COMPENSATION – RELATED ISSUES 126 Introduction 8.1 126 (1) Compensation for interference with rights 8.3 126 Easements and covenants 8.3 126 Discussion 8.7 128 Proposal 11: Interference with easements etc.
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