Compulsory Purchase and Certificates of Appropriate Alternative Development (CAAD)

Are neighbouring site CAADs material planning considerations? The theoretical planning prospects for land can considerably enhance its value when assessing compensation for the compulsory acquisition of such land. But what are the material planning considerations for decisions made in the theoretical ‘compulsory purchase world’? Is it an isolated exercise or can it include theoretical cumulative development impact of neighbouring sites also being compulsory acquired? The Upper Tribunal (Lands Chamber) in the Secretary Of State For Transport v Curzon Park Ltd & Ors [2020] UKUT 37 (LC) has recently provided important clarity to this question.

What is a Certificate of Appropriate Alternative Development (CAAD)?

Section 14 of the Land Compensation Act 1961 (“the 1961 Act”) provides that ‘appropriate alternative development’ may be considered when assessing the value of land for the purpose of compensation in respect of a compulsory acquisition of an interest in such land. The method of determining whether there is ‘appropriate alternative development’ is by way of application to the local planning authority under section 17 for what is called a ‘Certificate of Appropriate Alternative Development’ (CAAD).

The statutory question for the local planning authority as to whether there is ‘appropriate alternative development’ is (as set out at section 14(4)):

• Whether in the circumstances known to the market at the relevant valuation date, subject to the four factual statutory assumptions, planning permission for the development could at that date reasonably have been expected to be granted on an application decided on that date or at a time after that date?

The four factual statutory assumptions are:

1. That the scheme of development underlying the acquisition had been cancelled on the launch date;
2. That no action has been taken (including acquisition of any land, and any development or works) by the acquiring authority wholly or mainly for the purposes of the scheme;
3. That there is no prospect of the same scheme, or any other project to meet the same or substantially the same need, being carried out in the exercise of a statutory function or by the exercise of compulsory purchase powers; and
4. If the scheme was for use of the relevant land for or in connection with the construction of a highway (“the scheme highway”), that no highway will be constructed to meet the same or substantially the same need as the scheme highway would have been constructed to meet.

In determining the CAAD application, and subject only to the four factual statutory assumptions, the local planning authority must apply the ordinary planning principles as set out in section 70 of the Town and County Planning Act 1990 and section 38(6) of the Planning and Compulsory Purchase Act 2004. This means they must consider whether the proposed development was in accordance with the development plan and, if not, whether material considerations justified departing from that plan.

The Powers of the Upper Tribunal (Lands Chamber)

It is important to note that unlike a ‘real world’ planning application the rights of appeal or non-determination of a CAAD application is to the Upper Tribunal (Lands Chamber) and not the Planning Inspectorate. Section 18 of the 1961 Act provides the Tribunal’s powers on an appeal of a CAAD as follows:

(2) On any appeal under this section against a certificate, the Upper Tribunal— (a) must consider the matters to which the certificate relates as if the application for a certificate under section 17 had been made to the Upper Tribunal in the first place, and (b) must— (i) confirm the certificate, or (ii) vary it, or (iii) cancel it and issue a different certificate in its place, as the Upper Tribunal may consider appropriate.

The Tribunal is required to consider the CAAD application afresh and on its planning merits (akin to that of the powers of the Planning Inspectorate). It is also not constrained by the schedule of reasons given by the local planning authority in its decision on the CAAD application.

There are two important procedural issues to understand when appealing a CAAD application. The first is that it is the acquiring authority that should be the relevant respondent on such appeals and not the local planning authority whose CAAD decision is challenged.

The second issue is to identify the “relevant valuation date” against which the Tribunal is required to consider whether development is appropriate alternative development. Such date being the date for which compensation is determined under either the notice to treat or general vesting declaration procedures (ie. generally, the date of entry/vesting). However, if a blight notice is concerned and the section 18 appeal has been made before entry has been taken, and where the Tribunal is not being invited to determine the compensation payable at the same time, the terms of the CAAD must be determined on the basis of planning policy and law at the date of their determination.

Neighbouring CAADs are not material planning considerations

The Curzon Park case concerned several separate sites to be compulsory acquired for the new train station in Birmingham for the HS2 scheme. Each site owner had applied for a CAAD for a similar mixed use development containing maximum residential and student units.

In the ‘real world’ scenario if multiple planning applications are made, or permissions granted, for similar schemes on neighbouring sites then the cumulative effects of the proposed development would be a material planning consideration for each planning application. In the Curzon Park case it was accepted that in the ‘real world’ scenario if planning applications were made for each site, at or around the same time, they would not have been granted the same level of residential and student units across all sites.

In effect, if the cumulative impact of neighbouring theoretical appropriate alternative developments are not a material planning consideration, and each site is assessed in isolation, then the level of theoretical permissible development may be considerably more than that practicably permissible in the above ‘real world’ scenario. The result then being that each individual site receives a much greater valuation for compensation.

As a starting point, the Tribunal found that in ‘real world’ planning judgement CAADs are not a material planning consideration to proposed development across neighbouring sites. In other words, if a planning application was made on one site then the existence of a CAAD on another neighbouring site would not be materially relevant when assessing cumulative impacts across all sites. A CAAD being only theoretical development. Only ‘real’ planning applications and permissions being material planning considerations of cumulative impact.

The Tribunal further noted that only the four factual statutory assumptions altered the above explained ‘real world’ planning judgement. Any further factual assumptions can only be directed by statute.

Therefore, as the cumulative impact of theoretical appropriate alternative development of neighbouring sites to be compulsory acquired was not one of the four factual statutory assumptions, it was determined by the Tribunal that such theoretical cumulative effects of any neighbouring sites was not a material planning consideration for the planning judgement of each CAAD application. Each site is assessed in isolation with a potential windfall for landowners.

Lesson

A CAAD can add considerable value to land being compulsory acquired. This decision of the Tribunal that cumulative effects of neighbouring sites is not a material planning consideration on the CAAD application will enable landowners to maximise their land values beyond what may in the ‘real world’ be practicable.