REVIEW OF
COMPULSORY
PURCHASE AND
LAND
COMPENSATION
Ian H Murning
Dundas & Wilson
Montagu Evans
Scottish Executive Central Research Unit
2001
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CONTENTS
Page No
TABLE OF STATUTES
ii
TABLE OF STATUTORY INSTRUMENTS AND CIRCULARS
iii
TABLE OF CASES
iv
BIBLIOGRAPHY
vi
GLOSSARY OF TERMS
vi
EXECUTIVE SUMMARY
vii-x
CHAPTER ONE INTRODUCTION
1
CHAPTER TWO SUMMARY OF THE SYSTEM OF COMPULSORY PURCHASE
3
CHAPTER THREE LITERATURE REVIEW
17
CHAPTER FOUR REVIEW OF CURRENT SCOTTISH PRACTICE:
32
• Who has powers of compulsory purchase?
• Number, type and use of compulsory purchase orders
• Scottish factors
32
32
35
CHAPTER FIVE RESEARCH ANALYSIS:
•
•
•
•
37
Survey Results: Acquiring authorities and the Scottish Executive
Survey Results: Organisations and professional bodies
Symposium
Questionnaire responses
37
39
41
42
CHAPTER SIX CONCLUSIONS
48
APPENDIX 1
TERMS OF REFERENCE
54
APPENDIX 2
KEY PROCEDURAL STEPS
60
APPENDIX 3
AUTHORITIES WITH POWERS OF COMPULSORY PURCHASE
61
APPENDIX 4
SUMMARY OF INFORMATION PROVIDED BY THE KEEPER –
REGISTERS OF SCOTLAND
63
APPENDIX 5
QUESTIONNAIRE
64
i
TABLE OF STATUTES
Page
Land Clauses (Consolidation) (Scotland) Act 1845
Section 17
Sections 36-49
Section 114
3, 9, 12, 19, 35
6
23
12
Acquisition of Land (Assessment of Compensation) Act 1919
13
Acquisition of Land (Authorisation Procedure) (Scotland) Act 1947
Second Schedule – Section 1(1)
3, 12
12
Land Compensation (Scotland) Act 1963
Section 12
Section 23
Section 40
19, 24
(x), 7
8
24
Compulsory Purchase Act 1965
19, 35
Land Compensation (Scotland) Act 1973
11, 13, 19, 24, 29
12
11
11
12
25
13, 24, 29
Sections 31 to 33
Section 34
Section 35
Section 43
Section 48
Part 1
Roads (Scotland) Act 1984
3
Housing (Scotland) Act 1987
3
Planning and Compensation (Scotland) Act 1991
Schedule 17
8
Town and Country Planning (Scotland) Act 1997
Sections 100 – 107
Section 101
Section 195
Schedule 14, Para 14
Schedule 14, Para 15
3
14
15
6
15
15
ii
TABLE OF STATUTORY INSTRUMENTS AND CIRCULARS
Page
Acquisition of Land (Rate of Interest after Entry) (Scotland) Regulation 1995
(SI 1995 No. 2791).
24
Compulsory Purchase by Public Authorities (Inquiries Procedure) (Scotland)
Rules (S.I. 1998 No. 2313)
5
S.D.D Circular 42/76. Compulsory Purchase Procedures
(viii), 4, 51
SODD Circular 36/97. Compulsory Acquisition of Land: Land
Compensation Rate of Interest.
25
iii
TABLE OF CASES
Argyle Motors (Birkenhead) Ltd v Birkenhead Corporation [1974] 1 All ER 201; 229 EG 1589
12
Director of Buildings and Lands v Shun Fung Ironworks (1995) 2 AC111, [1995].
All ER 846; [1995] 19 eg 147; [1995] RUR 124; [1995] ECGS 35; [1995] 1 EFLR 19
18
Horn v Sunderland Corporation [1941] 2 K.B. 26; [1941] 1 All E.R. 480; 110 L.J.K.B. 353;
165 L.T. 298; 57 T.L.R. 404: 85 S.J. 212; 39 L.G.R. 367
Metropolitan Board of Works v MacCarthy (1874) L.R. (H.L.)
243; 43 L.J.C.P. 385; 31 L.T. 1982
7, 10, 18
12
Pointe Gourde Quarrying and Transport Co v Sub-Intendent of Crown Lands [1947] A.C. 565
8
Stirling Plant (Hire and Sales) Ltd v Central Regional Council and the Secretary of State
for Scotland. Case Comment. S.P.E.L. 1995, 48, 35 [abbrev]; The Times Feb 9, 1995
4
Strathclyde Regional Council –v- Secretary of State for Scotland (1989) 27 S.P.L.P
5
Standard Commercial Property Securities Limited v Glasgow City Council (22 August 2000)
(http://www.scotcourts.gov.uk/opinions/NIMI508.Ltml)
iv
38
BIBLIOGRAPHY
Adams David, The Use of Compulsory Purchase Under Planning Legislation,
(1996) Journal of Planning and Environmental Law
21, 35
Craig, Sarah and Brown, Paul D., (1994), Home Loss and Disturbance Payments:
The Law, RICS in Scotland Library, p. 5
36
Compulsory Acquisition and Payment: A New Approach,
A Draft CLA Policy Paper, Country Landowners Association, London, Executive Summary, item 9
31
D.E.T.R. Inter Departmental Working Group on Blight. Final Report. December 1997
30
Development and Compensation: Putting People First, Cmnd. 5124
23
Gordon, W. M., (1989), Scottish Land Law, W. Green, Edinburgh, 29-01, 29-02
17, 19
McAllister, Angus, and Guthrie, T. G., (1992), Scottish Property Law, An Introduction, Butterworths,
Edinburgh, p. 237
19
McAuslan, Patrick, (1975), Land, Law and Planning, Weidenfield and Nicholson, London, p.697
26
McGregor on Damages
10
MHLG, (1969), Report of the Committee on Public Participation in Planning,(Skeffington Report),
HMSO, London
29
Report of the Urban Motorways Committee (HMSO July 1972)
26
RICS, (1995), Compensation for Compulsory Acquisition, RICS, London, p.41-42
29
RICS, Rowan-Robinson, Jeremy, et al, (1995),
"Compensation for the Compulsory Acquisition of Business Interests:
Satisfaction or Sacrifice?, RICS Research Paper Series, Vol. 1, No. 7
25, 27, 29
The Operation of Compulsory Purchase Orders (1996) (Goodchild)
18
Rowan-Robinson J (1990), Compulsory Purchase & Compensation;
The Law in Scotland, W Green, Edinburgh
17, 23
The Report of the Committee on Tribunals and Inquiries. The Franks Report,
Cmnd. 218, para, 278
26
Young, Eric, and Rowan-Robinson, Jeremy, (1985),
Scottish Planning Law and Procedure, William Hodge, Glasgow, p.404
quoting from The Future of Development Plans (HMSO 1965)
28
v
GLOSSARY OF TERMS
Betterment:
The increase in value of retained land due to the
acquisition of adjacent land by a body with
compulsory purchase powers.
Blight:
The reduction in value of land due to the prospect of
a scheme of development by a body possessing
compulsory purchase powers.
Equivalence:
The monetary payment required to put the claimant
in the same position as he would have been were it
not for the compulsory acquisition of his interest. It
is therefore neither more nor less than his loss.
Injurious Affection:
The reduction in value of retained land due to the
acquisition of adjacent land by a body with
compulsory purchase powers.
"Judge Made Impecunionsity Rule":
A loss which the claimant cannot mitigate because
of his financial position.
Pointe Gourde Principle:
Any change in the value of the claimant’s interest
which is caused by the scheme of the acquisition is
to be ignored in assessing compensation, (Pointe
Gourde Quarrying and Transport Co. v SubIntendent of Crown Lands)
Ryde's Scale:
The scale for surveyor’s fees agreed between the
RICS and the Valuation Office Inland Revenue
accepted by Government Departments and the
bodies
representing
most
acquiring
and
compensating authorities throughout the country.
Short Tenancies:
Tenancies of less than a year.
vi
EXECUTIVE SUMMARY
• Compulsory purchase has been little used in Scotland recently. This is partly due a lack of
public funds and partly as a result of a perception that the Scottish Ministers are reluctant to
confirm compulsory purchase orders. However, planning policies now support the
redevelopment of brownfield sites, particularly in town centres. Such sites are often in
multiple ownership and, in the future, compulsory purchase may be necessary for site
assembly. If the compulsory purchase system does not operate effectively, planning policies
may be frustrated. There may also be an increase in major infrastructure projects, which
may also require compulsory purchase to facilitate site assembly. There is a realistic
prospect, therefore, that the use of compulsory purchase powers will materially increase in
the future.
• Although no statistics are available, most public sector acquisitions of property are carried
out under threat of compulsory purchase. Acquiring authorities believe this threat assists
them to purchase land by agreement.
• The timetable for processing a compulsory purchase order is invariably protracted and
uncertain; this can adversely affect both claimants and acquiring authorities.
• The open market basis of compensation payable on compulsory purchase, which is directly
related to market evidence, is generally perceived to be fair. However, there is significant
support, mainly from the private sector, for payment of a premium to reflect the compulsory
nature of the acquisition. Some suggest that the additional cost of such a premium could be
off-set by the benefits of fewer objections to the compulsory purchase order.
• Disturbance payments are often a source of resentment. Some claimants believe that the
basis of this payment and the onus of proof to demonstrate a loss, often results in under
compensation. However, this must be balanced against the obligation upon the acquiring
authorities to satisfy the requirements of public accountability.
• The key concerns of the private sector regarding fees/costs are as follows:
-
If the acquiring authority withdraws the order, the claimant is not entitled to
reimbursement of the professional costs incurred by him. The acquiring authority
should be under an obligation to reimburse reasonable professional costs in the event of
the order being withdrawn.
-
A review of the Ryde's Scale for surveyors fees is recommended to address perceived
current inadequacies of the system.
-
Claimants are reluctant to apply to the Lands Tribunal for Scotland because they are
responsible for all costs, if unsuccessful. Their maximum liability should be restricted to
their own costs. However, there is a need for some form of sanction to deter claimants
from making frivolous applications or behaving unreasonably.
• Very few applications are made to the Lands Tribunal for Scotland notwithstanding the
considerable time usually taken to agree compensation. After entry, it often takes years to
reach agreement on compensation.
vii
• There is no evidence of blight being a serious issue in Scotland although this may change
with the promotion of major infrastructure projects, such as the guided busways in
Edinburgh.
• Notwithstanding differences in legislation, the compulsory purchase system in Scotland
operates in a similar manner to the system in England and Wales. Fewer orders have been
promoted in Scotland and there have been no major Scottish infrastructure projects, such as
the Channel Tunnel Rail Link, which aroused so much public opposition. The Scottish
differentiating factors relate to custom and administration.
RECOMMENDATIONS
1.
Short term changes within the existing legislative framework
(a)
Procedures
(i)
The Scottish Ministers should provide a clear policy statement on the use
of compulsory purchase powers. If orders are to be used to support
planning policy objectives, it may no longer be appropriate to restrict their
use to cases of "last resort". Acquiring authorities should understand the
scope of their powers to exercise compulsory purchase powers in a
commercial context to allow them to assist with site assembly for town
centre development.
(ii)
Scottish Development Department Circular 42/76 should be revised and
updated. As well as providing a policy statement on the use of
compulsory purchase powers, the new circular should include guidance
on:-
(iii)
-
The desirability of pursuing a compulsory purchase order in advance
of either development plan approval or a grant of planning permission
for the project.
-
Matters to be covered by the acquiring authority in their Statement of
Reasons for making an order.
-
An "Easy Read" guide to compulsory purchase procedures. The
acquiring authority should be instructed to serve this guide with the
formal notification of the order on affected landowners/interest.
-
Clarification of the supporting documentation to be submitted by the
acquiring authority to the Scottish Ministers on notification of the
order.
-
Target time-scales for Ministerial decisions on confirmation of orders.
The Scottish Executive should consider the production of a Best Practice
manual.
viii
(b)
(iv)
The Scottish Executive should progress towards confirmation of an order
as soon as reasonably practicable. In particular, they should not delay the
procedure with attempts to reconcile disputes between the parties. The
proper forum for consideration of such disputes is a public inquiry.
Promotion of the order is the responsibility of the acquiring authority. It
is their responsibility to provide evidence to the public inquiry to support
confirmation of the order. The independence of the Scottish Ministers, as
decision-maker, should not only be preserved, but be seen to be preserved
to minimise the risk of a legal challenge of pre-confirmation procedures in
terms of the European Convention on Human Rights.
(v)
The Lands Tribunal for Scotland should be invited to review their
procedures to identify possible improvements to make the Tribunal more
accessible.
Compensation
• A review of Ryde's Scale of professional fees should be undertaken as soon as
possible.
(c)
Blight
• No short term measures are considered necessary in relation to current
provisions of blight.
2.
Areas for further investigation for consideration by the Scottish Ministers
(probably requiring legislation)
(a)
Procedures
• Consideration should be given to updating and consolidating the legislative
framework governing compulsory purchase procedures.
• A future review of compulsory purchase procedures should identify
opportunities to increase speed. This is of particular importance if local
authorities are to respond to commercial pressures when facilitating town
centre improvements.
• A number of significant issues are currently arising in practice regarding the
scope for local authorities to enter into indemnity agreements with private
companies. For example, whether a local authority is entitled to enter into an
agreement to acquire land compulsorily and then transfer title on to a
particular developer, who has agreed to indemnify the authority for the
acquisition costs.
• As local authorities rarely have the necessary finance or expertise to
implement major redevelopment projects, consideration should be given to
establishing a centrally funded agency to support authorities in the exercise of
compulsory purchase powers.
ix
(b)
Compensation
• The costs and benefits of paying a premium should be assessed and, if
payment of a premium is considered to be appropriate, there should be
guidance on how this should be calculated for all or certain categories of
claims.
• The rules of disturbance should be reviewed to ensure that there is a fair code
for claimants consistent with the requirements of public accountability.
• Consideration should be given to the possibility of claimants being entitled to
recover reasonable professional fees in the event of an acquiring authority
withdrawing an order.
• The system of awards of expenses by Lands Tribunal for Scotland should be
reconsidered to assess the benefits of restricting a claimants' maximum
liability to his own costs, if unsuccessful. However, the risk of encouraging
frivolous claims or unreasonable behaviour should be part of such an
assessment.
• Consideration should be given to whether there is a need for privatised
utilities to be required to obtain a "Public Interest Certificate" if they wish to
continue to benefit from the application of Rule 3. (Section 12 of the Land
Compensation (Scotland) Act 1963.)
(c)
Blight
• The Scottish Executive should monitor the operation of any amendments to
the blight provisions in England and Wales and, if appropriate, incorporate
those amendments into Scottish legislation.
x
CHAPTER ONE INTRODUCTION
Introduction
1.0
On 20 January 1999 the Scottish Executive commissioned this study into The operation
of the system of Compulsory Purchase and Land Compensation with a particular
emphasis on the Scottish Dimension. (The detailed terms of reference are included at
Appendix 1).
1.1
The objectives of the study are to:
• Establish how the system currently operates in Scotland; and
• Identify ways of improving its operation; this may comprise:-
short-term changes within the existing legislative framework; and
areas for further investigation with a view to the Scottish Parliament considering
a more fundamental scheme of reform (probably requiring legislation).
1.2
The study has been carried out by practitioners with practical experience of compulsory
purchase orders and the report reflects their knowledge of the operation of the system.
1.3
Although the study was commissioned before the establishment of the Scottish
Parliament, we have used post Scottish Parliament terminology to avoid confusion.
Compulsory Purchase
1.4
Views on the basic concept of compulsory purchasevary. On the one extreme, it may be
seen as an unreasonable interference with the individual citizen's right to do with his
property as he sees fit. At the other extreme, there is the concept that "ownership" is
subject to the overriding right of the State to acquire any property for the benefit of
society. However, even in the absence of compulsory purchase, outright ownership is an
illusion because all property interests are subject to a wide range of restrictions, such as
public health and planning legislation.
1.5
There is, however, general acceptance that it is reasonable for the State and other
appropriate bodies to have the power to acquire property by compulsion, where it can be
demonstrated that it is for the benefit of "society". It is not, however, possible to measure
in wholly objective terms the effectiveness of a system which includes a large measure of
subjective judgement about what is "fair" between the needs of society and the rights of
the individual. This comparative analysis requires consideration of: • the organisations who should have these powers
• the balance between the needs of society and the rights of individual ownership
• the basis of compensation where property is acquired by compulsion
1
1.6
There is also the related issue of blight which arises when there is an indication that
property might be subject to compulsory purchase and, as a result, the owner cannot sell
except at a greatly reduced price.
1.7
There is a general acceptance that "equivalence" is the appropriate basis for
compensation so that the person whose property is acquired is in no worse or better
position (in monetary terms based on the open market value of the interest) than he
would have been but for the acquisition. Some believe that to satisfy the concept of
"equivalence" the affected owner should receive a premium to compensate for the
compulsory element of the purchase.
Key Issues
1.8
This report will assess the following key issues:
• Procedures
Is there an appropriate balance between the rights of acquiring authorities and an
individual's right to oppose the proposed purchase? Are the timescales involved
reasonable?
• Compensation
Are the compulsory purchase financial provisions adequate? Are the timescales for
the payment of compensation prejudicial or beneficial to either side?
• Blight
Where a property is adversely affected by public works, or the threat of public works,
does the individual have sufficient rights to force the authority to purchase? Is there
an appropriate balance between those rights and the authority's rights to oppose the
purchase?
"The Fundamental Review of the Laws and Procedures Relating to Compulsory
Purchase and Compensation" by The Department of the Environment, Transport
and the Regions.
1.9
The DETR appointed an external advisory group to carry out a major study into
compulsory purchase and compensation in England and Wales. Following publication of
an Interim Report in January 1999, the Advisory Group’s Final Report was published in
July 2000. The Scottish Executive were represented on the working group and were,
therefore, fully aware of the results of that study. We have taken into account the interim
findings but we have not repeated their work.
The Minister's stated ambition is to achieve a system of compulsory purchase, which is
efficient, effective and fairer to all parties1.
1
DETR. Fundamental review of the laws and procedures relating to compulsory purchase and compensation. Interim Report.
January 1999.
2
CHAPTER TWO
SUMMARY OF EXISTING
COMPULSORY PURCHASE IN SCOTLAND
SYSTEM
OF
Introduction
2.0
The basic legislation in Scotland relating to compulsory purchase is the Land Clauses
(Consolidation)(Scotland) Act, 1845, which was enacted during a period of great
expansion in public works. The public work projects were usually promoted by private
companies. The practice had developed of promoters seeking parliamentary powers to
appropriate land. Without such powers, there was a risk of being held to ransom by any
one of the landowners whose property was involved. Parliament recognised the public
benefits arising from such schemes and was prepared to deprive landowners of their
private rights in the public interest, subject to payment of suitable compensation. As a
direct result of this activity in the mid-nineteenth century, there was an increasing
number of special Acts of Parliament, each setting out powers and procedures for
compulsory purchase of land in specific cases. Eventually, Parliament resolved to pass an
Act setting out a code for compulsory purchase of land, which would be incorporated by
reference in any subsequent legislation granting a general power of compulsory purchase.
This Act of 1845 remains the foundation of the law relating to the compulsory purchase
of land in Scotland.
2.1
Originally the legislation was enacted to assist private companies. In recent times,
powers of compulsory purchase have been mainly exercised by public authorities.
However, it is still open to companies or individuals to seek powers of compulsory
purchase by promotion of private legislation.
2.2
The power to exercise compulsory purchase of land is normally contained in a general
Act of Parliament, such as the Town & Country Planning (Scotland) Act 1997 or the
Roads (Scotland) Act, 1984. This enabling Act will incorporate by reference the
provisions of the Act of 1845 and the Acquisition of Land (Authorisation Procedure)
(Scotland) Act 1947.2 There are separate provisions relating to the acquisition of
wayleaves for pipelines, power cables and other services, which generally are exercised
by privatised utilities under powers derived from their legislation. As a result, statutory
powers in such cases are not all uniform or consistent, which means that the
compensation provisions vary depending on which body carries out the compulsory
acquisition. Further, there are provisions in the Housing (Scotland) Act 1987 which can
affect the amount of compensation payable in certain circumstances. For example,
compensation for houses below the tolerable standard is not to exceed the value of the
site of the house as a cleared site available for development.
2.3
The procedure for the exercise of powers of compulsory purchase is contained within the
Acquisition of Land (Authorisation Procedure)(Scotland) Act, 1947. This Act introduced
a standardised procedure, which was considered necessary to allow local authorities to
respond more effectively to the problems arising from war damage. In particular, this Act
introduced a procedure that allowed early entry to the land in advance of agreement on
compensation and/or transfer of title.
2
See paragraph 2.3.
3
2.4
Scottish Development Department Circular 42/76 on Compulsory Purchase Procedures
states "In some cases, for example, large urban sites in multiple ownership, it might be
appropriate to seek compulsory powers before attempting to purchase by agreement.
Those affected, in particular, residential occupiers and small business users should
however be given the fullest and earliest possible explanation of the authorities'
proposals". Although this might be interpreted to suggest that the acquiring authorities
should normally seek to purchase by agreement, as they normally do, they are not under
any legal obligation to do so and may, and occasionally do, serve a compulsory purchase
notice without prior warning. The courts have observed that "a compulsory acquisition
ought to be resorted to only when this is shown to be necessary"3. If there are objections
regarding the need for compulsory purchase, the acquiring authority will have to justify
their use of compulsory powers at a public inquiry.
2.5
This summary is sub-divided into the undernoted headings.
• Procedures. This section describes the procedures that must be followed to obtain
approval for a compulsory purchase order and to take title to the land.
• Compensation. This section describes the compensation payable to claimants
affected by an order.
• Blight. This section describes the operation of the blight provisions; they are
essentially compulsory purchase in reverse allowing certain categories of affected
interests to force an acquiring authority to purchase their interest.
Procedures
2.6
The key procedural steps are set out in Appendix 2. Those procedures are applicable
when the order has to be confirmed by the relevant Minister, now the Scottish Ministers.
The main steps are described in more detail below.
Resolution to Make an Order
2.7
Once an acquiring authority has resolved to acquire land under compulsory powers, they
must obtain full details of the relevant ownerships and other interests so that appropriate
notices can be served on all of the affected interests.
2.8
At this early stage, the Scottish Executive is prepared to comment informally on purely
administrative matters and on the draft order but not on the validity or merits of the order
(SDD Circular 42/76 Paragraph 13). This informal review is not an obligatory part of the
process but it is a service provided by the Scottish Executive to local authorities. In
practical terms, it is a valuable service because the local authority may not have had
recent experience of making an order and may wish to ensure that the order is
procedurally correct from the outset. Importantly, any comments made by the Scottish
Executive are made without prejudice to the subsequent consideration of the order when
submitted for confirmation.
3
Stirling Plant (Hire and Sales) Ltd –v- Central Regional Council and the Secretary of State for Scotland. SPEL 1995 48, 35
[abrev]. The Times Feb 9 1995.
4
Despite its practical value, this administrative service should now be treated with caution
in the context of a potential challenge of the procedures under the European Convention
on Human Rights. An objector may perceive any collaboration between the acquiring
authority and the Scottish Executive as undermining the independence of the Scottish
Ministers.
Service of Notices on Affected Interests
2.9
An acquiring authority must advertise their intention to make an order for two successive
weeks in a newspaper circulating in the area of the relevant land. They must also serve
notices on all of the owners, lessees and occupiers. These notices must include the date
of not less than 21 days from service of the notice by which any objections are to be
lodged with the Scottish Ministers. Authorities are requested to serve a full statement of
their reasons for making the order with those notices. This provides recipients of such
notices with a summary of the case, which will be advanced by the authority in seeking
to justify compulsory acquisition.
Objections to an Order
2.10
If objections are lodged within the statutory period and are not subsequently withdrawn,
the Scottish Ministers will generally hold a public inquiry to consider outstanding
objections. The inquiry will be held under the 1998 rules.4 A Reporter appointed by the
Scottish Ministers holds the public inquiry and then reports to the Scottish Ministers.
Objections which relate solely to compensation are irrelevant as any dispute about the
amount of compensation is to be decided at the Lands Tribunal for Scotland.
Confirmation of an Order
2.11
Following consideration of the outstanding objections, including the Reporter's report,
the Scottish Ministers may confirm the order with or without modifications or they may
decline to confirm the order.
Legal Challenge
2.12
If the order is confirmed, there is a right to apply to the Court of Session within 6 weeks
of the date of the decision of the Scottish Ministers to challenge the validity of the order.
This right of challenge is only available to parties who fall within the legal category of "a
person aggrieved". An acquiring authority is unlikely to be a person aggrieved.5 The
grounds of challenge are:
• that the order is outwith the powers of the relevant Act; or
• that the interests of the applicant have been substantially prejudiced by noncompliance with certain statutory procedural requirements.
4
5
Compulsory Purchase by Public Authorities (Inquiries Procedure) (Scotland) Rules (S.I. 1998 No. 2313)
Strathclyde Regional Council –v- Secretary of State for Scotland (1989) 27 S.P.L.P.
5
Entry
2.13
Once an order has been confirmed the acquiring authority have the right to purchase the
land within three years but they are not obliged to do so. An acquiring authority may
proceed to take entry and title in one of two ways:
• By general vesting declaration:6
This procedure is most commonly adopted in Scotland. Its main advantage is that it
allows title to transfer in the shortest possible time. If all occupiers' consent, it allows
the acquiring authority to take entry and title 28 days after confirmation of the order.
Without that consent, the authority must provide a minimum notice of two months of
their intention to use this procedure. On expiry of the two month period, they may
serve notice on affected parties of their intention to take entry and title after a
minimum period of 28 days. So, without occupiers' consent, the minimum period is
three months. The effect of a general vesting declaration is threefold:
(i)
At the end of the specified period, the land vests in the acquiring authority.
This includes the right to enter and to take possession.
(ii)
Compensation provisions are triggered as if a notice to treat (see below) had
been served but, in this case, the acquiring authority has no power to withdraw.
(iii)
The valuation date is the date of vesting.
Subject only to certain tenancies, this is a convenient procedure to obtain a single
clear title where there might previously have been a number of different interests.
• By service of a notice to treat.7
Service of a notice to treat on affected parties provides notice of the acquiring
authority's intention to implement the order. Although the authority can take entry in
the shortest possible timescale under this procedure, that is, 14 days after service of
the notice of entry, title can only be taken after determination of compensation. The
procedure is less popular because title may not follow for some considerable time.
Service of a notice to treat allows either party to insist upon determination of
compensation with the onus on the claimant to deliver particulars of the claim.
Failure to do so may result in the matter being referred to the Lands Tribunal for
Scotland. The authority may withdraw the notice at any stage within six weeks of
receipt of the claim for compensation. Although the authority may take entry in
advance of determination of the compensation claim and transfer of title, interest on
the compensation will run from date of entry to date of payment.
This procedure is little used in Scotland mainly because of the possible delay in
obtaining a clear title while the compensation is negotiated/determined. In addition
separate title has to be taken to each interest with the possible result of a multiplicity
of titles.
6
7
Section 195 of Town & Country Planning (Scotland) Act 1997
Section 17 of Land Clauses (Consolidation) (Scotland) Act 1845
6
Commentary
2.14
At the outset, the procedures and timetable relating to the Resolution and Notices stages
are relatively certain and they are within the control of the acquiring authority.
2.15
At the Objections and Confirmation stages, the timetable is primarily in the hands of the
Scottish Ministers and it becomes more uncertain. They will normally have regard to
requests to sist the public inquiry to allow the parties to seek a negotiated settlement, but
this can result in one party delaying the process despite the other party's wish for a
speedy resolution. Typical periods involved at this stage are 2/3 years.
2.16
The position on timing is more uncertain if there is a legal challenge to confirmation of
an order. For instance, in one case the period between making the order and the vesting
date was over seven years.
2.17
At the final stage of Entry, the acquiring authority has control and can take entry to the
land on giving only very short notice. The three-year period within which an approved
compulsory purchase order can be implemented, when the acquiring authority may take
entry at very short notice, can cause considerable uncertainty. As only certain categories
of affected owners have the right to serve blight notices, this uncertainty can cause
serious difficulties to those who cannot serve such notices. Although acquiring
authorities are obliged to make an advance payment on request, it can take a considerable
time, in some cases several years, before the compensation is finally determined.
Compensation
The Rules for Assessing Compensation
2.18
The rules for assessing compensation for the land are contained in section 12 of the Land
Compensation (Scotland) Act 1963. There are six statutory rules:
1.
No allowance shall be made on account of the acquisition being compulsory.
This makes it clear that no additional payment or allowance (apart from other specific
provisions) or, indeed, any reduction is to be made because the land is being acquired
under compulsion.
2.
The value of the land shall subject as hereinafter provided be taken to be the
amount which the land if sold in the open market by a willing seller might be
expected to realise.
Most land transactions are carried out on this basis of open market value. This rule
provides a clearly understood basis for assessing the monetary compensation, which is
directly related to market evidence. It has been said8 that the compensation is meant to
put the claimant in, so far as possible in monetary terms, the same position after as prior
to the compulsory acquisition.
8
Horn v Sunderland Corporation [1941] 2 K.B. 26; [1941]1 All E.R. 480; 110 L.J.KB. 353; 165 L.T. 298; 57 T.L.R. 404; 85 S.J.
212; 39 L.G.R. 367
7
Compensation for the value of land taken is generally in accordance with the planning
position which would have been relevant if the acquisition was not in accordance with
the statutory code; the following points are highlighted:
• The claimant is paid the full development value, which includes all potential hope
value that would be included by the market. Although we are not aware of instances,
this could give rise to practical difficulties where planning permission is highly
speculative. In those instances, landowners will often sell at or about the current use
market value preserving a "clawback" if a materially more valuable planning position
is implemented, often within a specified time-scale. If the land is sold without
"clawback", the additional hope value is typically only a modest addition to the
current market value. Claimants might well be aggrieved that they were forced to
sell by compulsion without the benefit of being able to include the possibility of a
speculative increase in value.
• In addition to the planning position assuming no compulsory acquisition, it is to be
assumed, in accordance with section 23 of the 1963 Act, that planning permission
would be available for the use proposed by the acquiring authority.
3.
The special suitability or adaptability of the land for any purpose shall not be
taken into account if that purpose is a purpose to which it could be applied only
in pursuance of statutory powers or for which there is no market for that
purpose apart from [the special needs of a particular purchaser or] the
requirements of any authority possessing compulsory purchase powers.
This provision excludes any increase in value due to the "scheme", that is, the proposed
development, if that "scheme" could only be carried out in pursuance of statutory
powers.
The Planning and Compensation Act 1991, Schedule 17, removed the phrase[the special
needs of a particular purchaser or]. Accordingly, the special needs of a particular
purchaser can be taken into account, if the market would have taken into account those
needs.
Rule 2 provides for an open market valuation, which includes the value for other
potential uses, including the use proposed by the acquiring authority. However, Rule 3
excludes the increase in value attributable to the "scheme".
Historically, the inter-relationship between Rule 3 and the Pointe Gourde principle,9
which states that compensation for the compulsory acquisition of land cannot include an
increase in value which is entirely due to the scheme underlying the acquisition, caused
considerable difficulties in practice. However, this no longer appears to be a material
issue, probably because of the absence of any Scottish acquisitions where this issue has
arisen.
9
Pointe Gourde Quarrying and Transport Co –v- Sub-Intendent of Crown Lands [1947] A.C. 565
8
4.
Where the value of land is increased by reason of the use thereof or of any
premises thereon in a manner which could be restrained by any court or is
contrary to law or is detrimental to the health of the occupants of the premises
or to the public health the amount of that increase should not be taken into
account.
If, for example, land were being used without appropriate planning permission, then any
additional value attributable to the unlawful use would be excluded from the
compensation.
5.
Where land is and but for the compulsory acquisition would continue to be
devoted to a purpose of such a nature that there is no general demand or market
for land for that purpose compensation may if the Lands Tribunal for Scotland is
satisfied that reinstatement in some other place is bona fide intended be assessed
on the basis of the reasonable cost of the equivalent reinstatement.
This provision which applies to subjects such as churches for which there is no general
market demand is rarely used in practice. It should be noted that this basis of
compensation is payable only where the Lands Tribunal for Scotland is satisfied that
reinstatement is bona fide intended and it is for the claimant to demonstrate their
intention to do so. Further, the cost is for the equivalent reinstatement (i.e. a similar
building) but not an exact replication. The few numbers of CPO’s means it is not
possible to state whether the very limited use is because this type of acquisition rarely
occurs or if they are avoided by acquiring authorities due to the potential expense. The
Rule does nevertheless provide a mechanism which can preserve a use (such as a
Church) which would otherwise almost certainly be lost if compensation were assessed
on the basis of Rule 2.
6.
The provisions of rule (2) shall not affect the assessment of compensation or
disturbance or any other matter not directly based on the value of land.
This means that the open market value of the land calculated under Rule (2) is
established separately from other losses, such as disturbance payments, which are
payable in terms of the Lands Clauses (Consolidation) Acts. These payments are based
on the subjective " loss to the claimant", which is personal to him and not on the
objective "market loss".
Certificate of Appropriate Alternative Development
2.19
Where land is acquired by compulsion for a use which does not have a substantial market
value, the claimant can apply for a certificate of appropriate alternative development to
establish what development might be permitted were it not for the compulsory
acquisition. This is to allow the landowner to obtain the same value as he would have
had were it not for the compulsory acquisition.
2.20
The application is made to the planning authority. Like an application for planning
permission, it will be determined in the context of the statutory development plan. The
applicant may apply for a specified use and he may require the planning authority to
specify what alternative uses would be appropriate. It is essentially a "fictitious" exercise
9
for valuation purposes. Nevertheless, the planning authority must determine the
application in terms of the relevant provisions of the development plan and any other
material considerations. If the land is zoned in the plan for the scheme, the development
plan appraisal can be problematic. The applicant has a right to appeal to the Minister in a
similar way to an appeal against a refusal of planning permission or the imposition of
conditions on a planning permission. The terms of the certificate will then be taken into
account in assessing the compensation payable. This matter was not raised in our survey
as a material issue by either the acquiring authorities or claimants/professional advisors.
The respondents appeared to have little or no experience of these certificates.
Disturbance
2.21
Disturbance payments can include a wide range of items, such as:
• Professional fees for acquiring alternative premises.
• Costs of adapting alternative premises, including carpets, curtains and shelving.
• Removal costs.
• Loss of profits, either temporary or permanent.
2.22
There are three major issues:
• The claimant is under an obligation to minimise his loss. This principle is based on
the legal proposition in respect of damages that:
"The plaintiff must take all reasonable steps to mitigate the loss consequence
upon the defendant's wrong and cannot recover damages for any such loss
which he could thus have avoided but has failed, through unreasonable action
or inaction to avoid. Put shortly, the plaintive cannot recover for avoidable
loss".10
• The claim must be consistent with the basis of compensation.11 In particular, a
claimant who receives development value under Rule 2 cannot also claim disturbance
under Rule 6. He is entitled to the greater of either the development value under Rule
2 or the current use value under Rule 2 and disturbance under Rule 6.
• Losses must be reasonably quantifiable. They must be a direct consequence of the
acquisition and not be too remote.
2.23
Although, in principle, the basis of disturbance seems to be fair, its operation in practice
may sometimes cause resentment. For example, a claimant is likely to have the loss of a
fitted carpet assessed to take account of wear and tear and thus only receive a proportion
of its replacement cost. If a new carpet is preferred at his alternative house, he will have
to make up the difference. In practice, the payment would normally be only the cost of
10
McGregor on Damages
Horn –v- Sunderland Corporation [1941] 2 K.B. 26; [1941]1 All E.R. 480; 110 L.J.KB. 353; 165 L.T. 298; 57 T.L.R. 404; 85
S.J. 212; 39 L.G.R. 367
11
10
adapting and refitting the existing carpets and, for example, he may well feel that the
colour is unsuitable.
2.24
Professional fees form part of the disturbance claim and can therefore be recovered as
part of the compensation. However, if a purchase does not proceed, acquiring authorities
are not under any obligation to pay abortive fees, in the absence of a formal agreement to
reimburse fees. This can leave claimants out-of-pocket. In addition Ryde's Scale, on
which surveyors fees are based, is often considered to be inadequate and surveyors may
well charge claimants a higher fee, which again can leave them out-of-pocket.
Injurious Affection
2.25
If a claimant retains land, which is reduced in value as a result of the compulsory
acquisition of his other land, he is entitled to claim compensation for this loss. If,
however, the compulsory acquisition results in an increase in the value of his remaining
land, known as betterment, this is off-set against the compensation. This is the only
situation in which betterment is charged at 100%. (if it is equal or less than the amount of
compensation). Only owners in this category incur this charge. Other owners, who do
not have land taken, but benefit from the works, retain the betterment.
Other Payments
2.26
There were concerns that certain proprietors affected by the use of public works suffered
losses for which they were not compensated under the 1845 - 1963 statutory provisions.
These concerns were addressed in the Land Compensation (Scotland) Act 1973. The
main provisions are:
Home Loss Payments
2.27
This is an additional payment to the owner/occupier who loses his home. Occupation
must have been for a minimum period of 1 year. The payment is presently 10% of the
market value, subject to a minimum of £1,500 and a maximum of £15,000. Tenants
receive a flat rate of £1,500.
Disturbance Payments for Tenants
2.28
Where land is subject to a tenancy, the acquiring authority may purchase the landlord's
interest and simply allow the tenancy to expire, in which case the tenant will have no
right to any compensation. Sections 34 and 35 of the 1973 Act introduced "disturbance"
payments, which are available for all properties and not only houses. The payment covers
the reasonable expenses of removal and, if the claimant were carrying on a trade or
business, the loss incurred in the cost of having to relocate.
11
Short Tenancies
2.29
A short tenancy is one with no greater interest than for a year or from year to year. If an
acquiring authority purchase a landlord's interest and do not then allow a short tenancy to
expire before they take entry, the tenant will be entitled to compensation on the statutory
basis.12 The compensation payable would historically reflect the short-term nature of the
tenancy. However, this was amended by section 43 of the 1973 Act. Section 43
provides that no account is to be taken of the consequences of the acquiring authority's
scheme on the value of the interest being acquired.
Agricultural Land
2.30
"Farm loss payments" are payable under the 1973 Act.13 They are an additional payment
of the average annual profit of the agricultural land that has been acquired.
Compensation for the execution of works where no land is acquired
2.31
2.32
The Land Clauses (Consolidation) (Scotland) Act, 1845 made no provision for payment
of compensation for injurious affection for the execution of the works in circumstances
where no land is taken. The House of Lords considered this issue in 1874 in the English
case of Metropolitan Board of Works –v- McCarthy14. The law was subsequently
amended by statue in terms of the Acquisition of Land (Authorisation Procedure)
(Scotland) Act, 194715 to permit payment of compensation for injurious affection where
no land is taken. The statutory rules are complex and they were re-stated in 1974 by Lord
Wilberforce in Argyle Motors (Birkenhead) Ltd –v- Birkenhead Corporation16. Each of
the following four rules must be satisfied before a successful claim can be made:
Rule (i)
The injury done must be by reason of what is authorised by Act of
Parliament.
Rule (ii)
The injury must arise from that which would, if done without the authority
of Act of Parliament, have been actionable at law.
Rule (iii)
The damage must arise from a physical interference with some right,
public or private, which the claimant, as owner of an interest in property,
is, by law, entitled to make use of in connection with such property, and
which gives an additional market value to such property.
Rule (iv)
The damage must arise from the execution of the works and not by their
subsequent use.
The basis of compensation is the diminution in the value of the claimants land, that is, a
payment to put the claimant in the same position as he would have been in without the
12
Section 114 of the 1845 Act.
Sections 31 to 33
14
Metropolitan Board of Works –v- MacCarthy (1874) L.R. (H.L.) 243; 43 L.J.C.P. 385; 31 L.T. 1982
15
Section 1(1) of the Second Schedule to the Act
16
Argyle Motors (Brikenhead) Ltd v Birkenhead Corporation [1974] 1 All ER 201
13
12
works. The operation of the rules was not commented on in our study interviews,
probably because of their limited application in practice.
Compensation for use of works
2.33
Part 1 of the Land Compensation (Scotland) Act, 1973 provides for the payment of
compensation due to certain physical factors for the use of public works where no land
has been taken. There are detailed provisions regarding those interests entitled to
compensation. In summary, the provisions only apply to dwelling houses, agricultural
properties or other subjects, the rateable value of which does not exceed £21,500. The
basis of the claim is the reduction in value of the interest at the date when the works are
first commissioned.
Time of Payment
2.34
After an acquiring authority has taken entry and acquired title to the land, the claimant no
longer has an effective interest in the land, only a claim for compensation. It can take
many years for the compensation to be agreed or determined but claimants are entitled to
an advance payment of 90% of the agreed estimated compensation, or, in the absence of
agreement, 90% of the acquiring authority's estimate.
2.35
The advance payment is without prejudice to the claimant's compensation claim and
interest at the statutory rate is payable from the date of entry until settlement, taking into
account any advance payments made to the claimant.
Commentary
2.36
Prior to 1919, compensation was based on "value to the owners" and typically included a
premium of 10% for urban subjects and 20% for rural subjects to take account of the
compulsory nature of the acquisition. This premium was removed by the Acquisition of
Land (Assessment of Compensation) Act 1919, which introduced the six basic rules for
assessing compensation.
2.37
The debate about the appropriateness of a premium for compulsory acquisition has gone
on for 150 years. To some extent, the element of compulsion has been recognised in the
Land Compensation (Scotland) Act 1973, which introduced some additional payments, in
particular, home loss payments, to reflect the element of compulsion. However, many
claimants feel aggrieved that they only receive the open market value for their property
without monetary recognition of the fact that they are forced to sell at a time not of their
choosing.
2.38
The application of Rule 3 in assessing a claim for compensation means that acquiring
authorities, including private utilities, can purchase land compulsorily at a consideration
which excludes the value of the Scheme if that scheme could only be carried out in
pursuance of statutory powers. This may generate significant profit for shareholders of
private utilities.
13
2.39
The requirement for claimants to demonstrate and minimise their losses for a claim for
disturbance means that, in practice, acquiring authorities can make it very difficult for
claimants to obtain full recompense. If a claimant cannot prove his loss, it is unlikely to
be allowed. On the other hand, acquiring authorities require full details of claims to
enable them to assess properly the claim for compensation and to demonstrate that public
monies have been spent properly. As losses are on an equivalent and not a replacement
basis, claimants may suffer a financial loss when they are forced to relocate as a result of
the acquisition. This is a difficult area in which to strike a fair balance between claimants
obtaining fair compensation and the acquiring authority accounting for public
expenditure.
Blight
2.40
The term blight can be used to describe a number of different situations. In the context
of compulsory purchase, it describes the situation whereby the saleability of property, at
its market value, is adversely affected by the prospect of its' compulsory acquisition for a
public sector scheme. If the landowner is in a position to wait until the authority acquires
his property, he will be compensated for his land on the basis of a value that ignores any
blighting effect of the proposal. However, if he needs or wants to sell his property in
advance of its' compulsory acquisition, he may find that it can only be sold at a depressed
value because of the blighting effect of the prospect of compulsory acquisition. Of
course, a public sector proposal could have a positive effect on the market value of a
property. A statutory remedy is contained within the Town & Country Planning
(Scotland) Act 199717 which contains a power to serve a blight notice in certain
circumstances, as described below.
Qualifying Interest
2.41
A person wishing to serve a blight notice must demonstrate that he has a qualifying
interest in the relevant land on the date of service of the notice. The qualifying interests
are as follows:
• Resident owner/occupiers of whole or part of the property
• Owner/occupiers of non-residential properties, the annual value which does not
exceed an amount prescribed by order by the Scottish Ministers, currently £21,500
• Owner/occupiers of whole or part of an agricultural unit. The effect of agricultural
de-rating means that farmers are not capped at an annual value, currently £21,500
• Crofters
17
Sections 100-107
14
Qualifying Land
2.42
A blight notice can only be served by someone with a qualifying interest in relation to
blighted land. The relevant land must therefore qualify as blighted land. The statutory
categories of blighted land are set out in Schedule 14 to the Town & Country Planning
(Scotland) Act 1997. The categories are as follows:
(i)
(ii)
(iii)
(iv)
(v)
Land allocated for public authority functions in development plans, etc.
New towns and urban development areas
Housing action areas
Roads
Compulsory purchase
In relation to compulsory purchase, there are three situations in which a blight notice can
be served.
1.
In respect of land authorised by a special enactment to be compulsorily
acquired.18
2.
If a compulsory purchase order is in force and the acquiring authority have the
power to serve, but have not served, a notice to treat in respect of the land.19
3.
The prescribed notice in two successive weeks in the newspaper circulating in the
area intimating the making of the order has been published and the order has been
submitted to the Scottish Ministers for confirmation.20
Attempts To Sell
2.43
The claimant must be able to show that the interest in the land falls within paragraphs 14
or 15 of Schedule 14, as described above, and that the powers of compulsory purchase
remain exercisable, or, that he has made reasonable endeavours to sell his interest in the
land. In either case, however, he must show that he has been unable to sell his interest
except at a price substantially lower than would have been expected if there had been no
blighting proposal in existence or proposed. The onus is on the claimant to demonstrate,
and not merely assert, that this provision has been satisfied.21
Counter Notices
2.44
The acquiring authority can object to a blight notice by service of a counter notice. Their
objection may be referred to the Lands Tribunal for Scotland for a determination on
whether the blight notice is valid. If no counter notice is served, the counter notice is
withdrawn, or if the counter notice is rejected by the Lands Tribunal, the acquiring
authority is deemed to be authorised to acquire compulsorily the claimant's interest and
to have served a notice to treat. Compensation for the land acquired is assessed on the
18
Paragraph 14 of Schedule 14 to the 1997 Act.
Paragraph 15 of Schedule 14 to the 1997 Act.
20
Paragraph 15 of Schedule 14 to the 1997 Act.
21
Section 101 of the 1997 Act
19
15
normal compulsory purchase basis. The order cannot be withdrawn by an acquiring
authority following service of a counter notice.
Commentary
2.45
Blight has not been a serious issue in Scotland in recent years because of the low
incidence of large-scale projects. Nevertheless, the threat of compulsory purchase can
have serious consequences on those affected and a reasonable balance should be struck
between the rights of the individual and the potential cost to acquiring authorities.
2.46
This issue also raises the question of the appropriate balance to be struck between
publicity for public sector projects and the potential blighting effect of such publicity.
This is not a new issue. However, it may have to be revisited if current policy support for
full public participation in development planning continues in an era of public-private
partnership for the delivery of new public projects. The private sector is increasingly
involved in the delivery of traditional public sector projects, such as schools, hospitals
and bridges. Acquiring authorities are now expected to assist with land assembly for
policy preferred town centre development. An earlier requirement that the development
plan should designate land required for compulsory acquisition was repealed but there
may be merit in alerting communities to the potential effects of urban regeneration
projects or major infrastructure projects during the development plan process. Of course,
not all such projects would have a blighting effect. Many should result in betterment.
16
CHAPTER THREE LITERATURE REVIEW
In this section the various analyses and views in textbook commentaries, articles, legal texts and
other studies are brought together and reviewed.
Introduction
3.0
The concept of compulsory purchase by the State goes back a long way. Erskine in his
Institute says: "It is another legal limitation or restraint on property, that it must give
way to the public necessity or utility. This universal right in the public over property is
called by Grotius dominium eminens : in virtue of which the supreme power may compel
any proprietor to part with what is his own.......The persons deprived of their property
ought to have a full equivalent for quitting it."22
3.1
It has been said that "compulsory purchase is one of the harshest impositions by the State
upon its citizens".23 A citizen's abstract view of the reasonableness of compulsory
purchase in benefiting the wider community may suddenly change with the realisation
that it is his own property that is affected. Even worse can be the situation where,
although adversely affected by nearby acquisitions, there may be no legal redress or
compensation for a reduction in the value of property brought about either by the
presence or use of a public scheme.
3.2
This is a continuing controversy. Some commentators suggest fundamental concerns as
to the legitimacy of the present system. There is evidence of persistent widespread
dissatisfaction with the compulsory purchase process and compensation extending over a
long number of years. Anecdotal evidence suggests that land has been taken by
compulsion and dispossessed proprietors have remained deeply dissatisfied with the
compensation paid. However, this is in stark contrast to the fact that most 'acquisitions',
estimated at well over ninety percent, carried out in Scotland by acquiring authorities are,
paradoxically, purchases by agreement without recourse to formal compulsory purchase
powers. These are the so-called 'purchases in the shadow of compulsory powers', in most
cases of which, compensation is assessed as though compulsory powers had been
exercised. Against these unfocussed feelings of dissatisfaction, a deeper analysis requires
to be made to establish why so many claimants settle the purchase price voluntarily and
without duress, if there are serious problems with assessments of compensation under the
current compensation code. The studies show that this sub-culture of acceptance
operates widely across the country irrespective of the land, nature of the development or
purpose of the acquisition. Evidence of this acquiescence might be the very rare need of
authorities to resort to formal powers in the absence of agreement or the even rarer
recourse to have cases of disputed compensation decided by the Lands Tribunal for
Scotland.
3.3
It is possible, perhaps, that the collective attitude of society or the community against
compulsory purchase is not mirrored in the attitude of most individuals whose land is
purchased for some public purpose, and who are, in fact, content with their deal with the
acquiring authority.
22
23
Gordon, W. M., (1989), "Scottish Land Law", W. Green, Edinburgh, 29-01
Rowan Robinson J (1990) Compulsory Purchase and Compensation; The Law in Scotland.
17
3.4
The majority of orders are promoted where an authority requires rights in particular
parcels of land. Some orders are made in circumstances where the existing owner has
failed to maintain a property, for example, a listed building, and the authority wants to
rectify the situation.
3.5
The Goodchild Report found that the vast majority of orders in the first category were
pursued to conclusion.24 Commencement of the compulsory purchase procedure for
those in the second category usually resulted in the owner taking the necessary repair
action and the orders were subsequently withdrawn. So the threat of compulsory
purchase can be utilised effectively as pre-emptive action.
The Doctrine of Equivalence
3.6
It is clear that the State should pay appropriate and adequate compensation to a claimant
following the exercise of compulsory purchase powers.
3.7
If there is one doctrine which pervades and underpins most thinking on compulsory
purchase and land compensation it is that of equivalence. This was stated by Scott L.J. in
Horn –v- Sutherland Corporation25 [1941]
"what it gives to the owner compelled to sell is compensation – the right to be
put, so far as money can do it, in the same position as if his land had not been
taken from him. In other words, he gains the right to receive a money
payment not less than the loss imposed on him in the public interest, but on
the other hand not greater"
and later:
"The statutory compensation cannot and must not exceed the owner's total
loss, for, if it does, it will put an unfair burden upon the public authority or
other promoters, who on public grounds have been given the power of
compulsory acquisition, and it will transgress the principle of equivalence
which is at the root of statutory compensation, which lays it down that the
owner shall be paid neither less nor more than his loss".
Further in Director of Buildings and Lands –v- Shun Fung Ironworks
Nicholls stated:
26
[1995] Lord
"The purpose of these provisions in Hong Kong and England, is to provide
fair compensation for a claimant whose land has been compulsorily taken
from him. This is sometimes described as a principle of equivalence. No
allowance is to be made because the resumption or acquisition was
compulsory; and land is to be valued at the price it might be expected to
realise if sold by a willing seller, not an unwilling seller. Subject to these
qualifications, a claimant is entitled to be compensated fairly and fully for his
24
The Operation of Compulsory Purchase Orders (1996) (Goodchild); see below at 2 K.B.26; [1941] 1All E.R.480
Horn –v- Sunderland Corporation [1941] 2 K.B. 26; [1941] 1 All E.R. 480; 110 L.J.K.B. 353; 165 L.T. 298; 57 T.L.R. 404; 85
S.J. 212; 39 L.G.R. 367
26
Director of Buildings and Lands –v- Shun Fung Ironworks (1995) 2 AC111, [1995]. All ER 846; [1995] 19 eg 147; [1995]
RUR 124; [1995] ECGS 35; [1995] 1 EFLR 19.
25
18
loss. Conversely, and built into the concept of fair compensation, is the
corollary that a claimant is not entitled to receive more than fair
compensation; a person is entitled to compensation for losses fairly
attributable to the taking of his land, but not to any greater amount. It is
ultimately by this touchstone, with its two facets, that all claims for
compensation succeed or fail".
Procedures in Scotland
3.8
Scotland has a distinctive system of law and education as well as its own structure of
central and local government, and a rich culture reflecting the historical development of
the country. Within the UK it enjoys considerable autonomy in many of these areas,
including compulsory purchase and land compensation, which are now devolved to the
new Scottish Parliament. Whilst the equivalent and parallel legislation has been
consolidated in England and Wales27, the Lands Clauses Consolidation (Scotland) Act
1845, now 155 years old, "remains to this day the basic provision on the procedure for
acquisition of land and assessment of compensation. Its first provision is to the effect that
it is incorporated, except so far as expressly varied or excepted, in all Acts authorising
the taking of lands passed after its date,… ."28 Although consolidation of the legislation
in England and Wales means it is easier to follow, nevertheless it does not seem to have
made the system any more "user friendly".
3.9
It is worth noting that most statutes authorising compulsory acquisition also authorise
purchase by agreement.
3.10
A single body of rules on the assessment of compensation where land is authorised to be
acquired compulsorily exists in the Land Compensation (Scotland) Act 1963 as amended
and as supplemented by the Land Compensation (Scotland) Act 1973. Disputes as to the
proper amount of compensation are referred by either party to the Lands Tribunal for
Scotland for determination or on a voluntary reference by agreement of both parties.
3.11
Although the detailed rules may be complex, the rationale behind compulsory purchase
compensation is straightforward: its purpose is to put the owner (or other claimant), so
far as money can achieve it, in the same position as if the compulsory purchase had not
taken place.29
3.12
Alongside, and woven into this doctrine of equivalence, are the other major issues to be
addressed, namely the efficiency and effectiveness of compulsory purchase order
procedures, and the way in which these procedures assist or hinder the achievement of
equivalence, accessibility of appeal procedures including the determination of disputed
compensation, and the problems surrounding the application of the blight provisions in
major infrastructure projects.
27
Compulsory Purchase Act 1965
Gordon, W. M., (1989), Scottish Land Law, W. Green, Edinburgh, 29-02
29
McAllister, Angus, and Guthrie, T. G., (1992), "Scottish Property Law, An Introduction", Butterworths, Edinburgh, p. 237
28
19
The English and Welsh Experience
3.13
In 1994 the Department of the Environment commissioned a pilot study by Oxford
Brookes University on how the compulsory purchase procedure should be researched.
This work contained a detailed literature review, based on English law and procedure,
but it has remained unpublished. This 1994 report was used as the foundation for a much
more extensive and comprehensive study by the Property Valuation and Management
Department within the City University Business School. The Department of the
Environment also commissioned this later study. The principal findings of that report
(the Goodchild Report) can be summarised as follows:
• the compulsory purchase process from commencement to the payment of
compensation takes a long time. The length of time is dependent on the purpose of
the order, but average times for the four main purposes of acquisition were found to
be:
Highways:
Planning (England & Wales):
Housing :
Public Utilities:
9 years
6 years
4 years
3 Years
• the survey of claimants revealed that there was a high degree of dissatisfaction with
the compulsory purchase process and with the level of compensation paid, with
owners of businesses being particularly dissatisfied. Within the study sample, 60%
of claimants found the process to be stressful, with the worst stage being the long
wait for the compensation to be settled.
• the English Lands Tribunal is not seen as an effective forum for the settling of
compensation disputes. Generally, claimants are unwilling to resort to the Tribunal
for fear of an unfavourable award having severe cost implications. Whilst
professionals hold the Tribunal in high regard, the lack of an effective and more
accessible appeals procedure retards negotiation. Less than 1% of all claims are
referred to that Tribunal.
• most owners take professional advice, but cannot recover the costs incurred at the
most critical preliminary stages.
The main recommendations were as follows:
• All owner occupiers who have their land acquired should receive an element of
compensation additional to open market value. This would provide an incentive for
owners to co-operate with the acquiring authority as well as protecting them against
the uncertainties of valuation practice.
• The compulsory purchase process should be changed so that acquiring authorities
assume the obligations that they currently take on when they serve notice to treat, at
the time of resolving to make the order. Acquiring authorities would need to ensure
that they have funding available when they make the order, thereby reducing blight.
20
• On blight, the acquiring authorities should have an option to make annual payment to
owners while the property is under threat of compulsory purchase, instead of being
required to buy at the time chosen by the owner.
• A code of conduct should be drawn up for the negotiation and payment of
compensation claims.
• An alternative local forum should be established for resolving compensation claims.
• Further research should be carried out on the preliminary stages of the compulsory
purchase process and the lodging of objections.
• A requirement for better data concerning orders should be maintained by
government.
3.14
All of these findings and recommendations seem relevant for study in the Scottish
context as they are relevant to many of the issues identified earlier.
Frequency of Use of Compulsory Purchase
3.15
Some additional background information arises from a national survey of local
authorities' use of compulsory purchase powers, which was published in 1996.30 This
survey concentrated on the use of compulsory purchase under the planning legislation,
and was aimed at authorities throughout Britain. It found that the use of compulsory
purchase powers under planning legislation was highest in Scotland. Since the Scottish
experience appeared concentrated in the industrialised Central Belt, it was suggested that,
perhaps, compulsory purchase under British planning legislation is primarily an urban
phenomenon, mainly associated with the process of redevelopment and regeneration.
These orders were overwhelmingly used as instruments to promote urban regeneration on
brownfield sites rather than urban expansion onto greenfield sites. Authorities were
asked to recommend improvements and the most numerous suggestions by far concerned
speeding up and simplifying compulsory purchase procedures. References were made to
Scottish authorities expressing concerns about procedural delays within the Scottish
Executive. Those concerns seemed to focus on the informal service offered to check local
authority documentation before formal submission of the order to the Minister. However,
as this audit service is not a formal requirement, it understandably receives lower priority
than the department's statutory work. Although planning authorities expressed concern
about the protracted timescale of compulsory purchase, the single most important reason
for the limited use of planning orders was financial. Lack of financial resources was the
most stated deterrent to the use of planning orders.
DETR Interim Report
3.16
The Interim Report on The Fundamental Review of the Law and Procedures Relating
to Compulsory Purchase and Compensation was published in January 1999. The
30
Adams, David, The Use of Compulsory Purchase under Planning Legislation (1996) Journal of Planning and Environmental
Law.
21
imperative for the review arose as a result of detailed consideration of compulsory
purchase issues in a number of forums:
•
•
•
•
•
The Blight Review
Urban Regeneration
Environment, Transport and Regional Affairs Select Committee
RTPI Study
Other Evidence
Powerful support for the view that the existing compulsory purchase regime is, for
whatever reason, failing to support delivery of essential public benefits came in July
1999 with the publication of the Environment, Transport and Regional Affairs
Committee (ENTRAC) report on housing. In the report the Committee said that it was:
"… … very concerned about the problems of land assembly and the failure
to bring brownfield land into use for housing. The traditional way of
dealing with these problems is the Compulsory Purchase Order which has
been little used in recent years. It is slow. A streamlined compulsory
purchase order would be very helpful and is urgently required".
3.17
A symposium was held in London on 22 February 1999 to review the DETR Interim
Report when various papers were presented.
3.18
The major issues emerging from the symposium included the following:
3.19
Procedures tend to be slow and uncertain, creating stress and worry for all those
involved, and, in addition, making planning and project management very difficult for
acquiring authorities.
3.20
On compensation, broadly speaking the market value basis of compensation is
considered to be satisfactory. However,
• There is a feeling that an additional payment, probably a percentage of the value,
should be paid to all property owners or, perhaps, only to a restricted category, such
as owner/occupiers.
• If the compensation were seen to be more generous it could be possible to present
compulsory purchase positively to the extent that, if it were sufficiently high,
owners/occupiers might welcome compulsory purchase.
• A Manual of Best Practice should be published. This should promote the objective
that acquiring authorities should act (and be seen to be acting) fairly and not be
perceived as attempting to purchase on the best possible terms. Further, there should
be an obligation on acquiring authorities to include an "easy read" with the statutory
notice advising claimants that the cost of professional fees could be included with the
claim, subject to certain reservations.
3.21
On blight, serious consideration should be given to a property purchase guarantee and
compensation scheme as discussed in the Interdepartmental Working Group on blight.
22
3.22
The DETR Interim Report identifies a Programme of Further Work (Chapter 9, 9.1 –
9.7) where key issues are identified for resolution, examination or further work. The
DETR Final Report had not been published at the time of completion of this report and
has not therefore been taken into account by us.
Compensation
3.23
In the days when Scottish juries31 assessed the compensation for compulsory acquisition,
practice seems to have been that the award for urban properties would be market value
plus 10% and for rural properties plus 20%, although there were apparently instances of
100% additions.32
3.24
Amongst others, the RICS33 supports the concept of an additional allowance over and
above open market value to be paid for all claims in respect of non-residential land to
reflect the fact that the acquisition is compulsory. A study in Aberdeen (RICS, RowanRobinson et al 1995) also recommends that a supplement should be paid. The RICS also
suggest that a supplementary allowance to compensation should be paid to the occupier
of agricultural, industrial and commercial property, when part of his land is taken and
there is damage by way of severance and injurious affection.
3.25
Regulating the use of land which stops short of outright acquisition (or expropriation)
gives no general right to compensation. This is a long standing principle and represents a
policy decision as to the way in which the cost of certain measures is to be borne by
society. An example of regulation not giving rise to compensation would be "yellow
line" parking restrictions on a street outside a house or the making of a 'one way' order on
a road which reduces trade in an adjacent shop.
3.26
The policy is to deny recompense for certain losses on the principle that such are an
incident of property ownership.
3.27
Regulation is linked closely to the concept of injurious affection, which is depreciation of
land caused by what happens on other land.
"Most development, whether public or private, affects other property in its
vicinity, sometimes beneficially and sometimes adversely. This is one of the
normal hazards of property ownership. Where the development and its use
cause nuisance the remedy generally open to those affected is an action at
common law. But substantial injurious affection can be caused by the use of
public developments where the landowner has no redress because the use is
immune from such action. This is particularly true when the use is for a
road or an aerodrome......."34
31
Lands Clauses Consolidation (Scotland) Act 1845, section 36-49
Rowan-Robinson J (1990), Compulsory Purchase & Compensation; The Law in Scotland, W Green, Edinburgh
33
Royal Institution of Chartered Surveyors, (1995), Compensation for Compulsory Acquisition, RICS, London, pp. 1-3
34
Development and Compensation: Putting People First, Cmnd. 5124
32
23
Depreciation Caused By The Use Of Public Works
3.28
Some recognition that depreciation caused by public works should be compensated was
introduced in the early 1970s and, in that instance, it was the use of the public works
rather than their presence which gave rise to compensation. The public backlash resulting
from the great urban motorway programme of the sixties was very significant. The use,
by very heavy traffic, of the new major motorways and interchanges, like spaghetti
junction near Birmingham, created interference with and depreciation to properties
nearby. There was no right to compensation from the authority (unless in nuisance) for
the intrusive effects of the presence or use of these public works. This caused distress to
many thousands of property owners who were bearing the brunt of the effect of
improvements to the trunk road and motorway network carried out to benefit the
community. Questions were asked about the extent to which the community was
benefiting at the expense of these private property owners whose properties had been
permanently depreciated in value. The government's response, which can be reviewed in
Development and Compensation, Putting People First35, was to appoint a committee and,
as a result, legislation followed36. This was the birth of a new right for certain classes of
affected proprietor to compensation for depreciation to property caused by the use of
public works from one or more of seven physical factors. While Part 1 of the 1973 Act
was a welcome extension of rights to compensation, there were surprisingly few claims.
There was no provision for loss of view and, accordingly, a substantial part of any
depreciation to a dwelling resulting from public works might go unrelieved. This is
because the common law offers no protection to landowners for depreciation due to loss
of view resulting from private development. It is understood that some public authorities
defend these new claims under Part 1 of the 1973 Act, where no land has been acquired,
more vigorously than general claims for compensation under the Land Compensation
(Scotland) Act 1963, where land has been acquired. After a slow start, large numbers of
claims under Part 1 of the 1973 Act were submitted, often by agents specialising in such
claims nationwide.
3.29
If there is a delay in payment of compensation by an acquiring authority, the loss is
regarded as being one of interest on monetary compensation, although the asset from
which it has been derived may be appreciating (or depreciating) in a wholly different way
from the interest payment. This can result in unfairness to a claimant who, although
receiving interest on the unpaid compensation, may be out of the property market
through no fault of his own at a time of steeply rising property values and thereby incur a
loss.
3.30
The rate of interest on outstanding compensation payments is prescribed by regulations
made by HM Treasury under section 40 of the Land Compensation (Scotland) Act 1963.
Until the end of 1995 the interest rate payable was specifically prescribed in a series of
Statutory Instruments. With effect from 31 December 1995 a new method of
determination was prescribed by the Acquisition of Land (Rate of Interest After Entry)
(Scotland) Regulations 1995 (SI 1995 No. 2791). This does not set a specific rate but
instead sets out a formula by which authorities may calculate the payable rate for any
period or periods after the new Regulations came into force. The rate is bank base less
0.5% on the appropriate reference day. The reference days are 31 December, 31 March,
35
36
Development and Compensation: Putting People First, Cmnd. 5124
Land Compensation (Scotland) Act 1973
24
30 June and 30 September.37 Provision is made for annual payments of interest to a
claimant where it exceeds a specified amount (£1,000).
Advance Payments
3.31
Because of the potential for unfairness to the claimant, it is essential that any delay in
paying compensation be minimised by the use of the advance payment procedure. There
is some, if not overwhelming, support for a mandatory advance payment by the acquiring
authority immediately on entry or on the making of a general vesting declaration.
3.32
The right to an advance payment of compensation was introduced in 197338 and arises
where an acquiring authority has taken possession of any land. In this context
'possession' includes vesting by means of a general vesting declaration. The advance
payment, which must be made within three months of a valid claim, is either 90% of the
agreed compensation or, if not agreed, the amount of compensation estimated by the
acquiring authority.
3.33
The previously mentioned Aberdeen study39 included a reference to advance payments
and identified a number of difficulties. Firstly, no advance payment is made until
possession is taken. Secondly, the acquiring authorities are very particular about proof of
the claimant's title, which delays the statutory three-month period for the advance
payment. Statutory interest is payable from vesting date but this is considered to be
significantly less than the property investment return. The acquiring authorities' estimate
of compensation is invariably extremely cautious compared with the sum eventually
agreed. The report recommended that advance payments should be based on a multiplier
of annual value and available from the date of confirmation of the order.
3.34
The RICS recommends that statutory interest on unpaid compensation should be paid
annually on a compound basis, whether or not it exceeds the current limit of £1,000, if so
requested by the claimant.
Home Loss Payments
3.35
These are additional payments for certain classes of homeowner who are dispossessed
from their property. The thinking behind this is well expressed in the following extract:
"12.18....It will not be sufficient to assume that in the case of those who
have to move, the cost of compensation or rehousing fully reflects the
burden that is put on them. Many individuals are attached to their
particular house or their particular neighbourhood and would not freely
move simply for the market value of their property. They suffer an
additional loss - sometimes called loss of householders surplus - which is
real for them but for practical purposes very difficult to value in specific
cases.
37
SODD Circular 36/1997 Compulsory Acquisition of Land: Land Compensation Rate of Interest
Land Compensation (Scotland) Act 1973, section 48
39
RICS, Rowan-Robinson, Jeremy, et al, (1995)., "Compensation for the Compulsory Acquisition of Business Interests:
Satisfaction or Sacrifice?, RICS Research Paper Series, Vol.1, No7.
38
25
.......The non-Departmental members of the Committee recommend the
establishment of an additional head of compensation, payable to the
occupiers of dwellings, in recognition of the real personal disturbance that
is inflicted on them when they are required to move........To attempt to tailor
such payments to individual circumstances would be a matter of
considerable complexity............the amounts will at present therefore have
to be set by some general and fairly arbitrary formula........."40
3.36
After 16 November 1990 and subject to a minimum of one years residence, the home loss
payment for qualifying owners is assessed at 10% of the market value of the dwelling
acquired, subject to a minimum payment of £1,500 and a maximum of £15,00041.
Qualifying tenants receive a flat rate of £1,500.42 In England it has been widely
suggested that all property compulsorily acquired should be compensated with a similar
additional payment to induce owners to co-operate with acquiring authorities. Views of
Scottish practitioners appear to echo those sentiments.
Will increased compensation increase public acceptance of development?
3.37
There is a suggestion in the Franks Report43 that there might be a connection between
increased compensation and decreased public complaints about development:
"One final point of great importance needs to be made. The evidence which
we have received shows that much of the dissatisfaction with the procedures
relating to land arises from the basis of compensation. It is clear that
objections to compulsory purchase would be far fewer if compensation
were always assessed at not less than market value....we cannot emphasise
too strongly the extent to which these financial considerations affect the
matters with which we have to deal(para 278)" 43
Although this Report was concerned with the dissatisfaction with the operation of a two
priced market, nevertheless the findings support the assumption that there is a link
between the amount of compensation and the public perception of compulsory purchase.
3.38
Notwithstanding that fact, the 1960's saw the public participation explosion in planning
and an increase in organised opposition to major public developments.44 Perhaps the
improvements in the compensation provisions introduced by the Land Compensation Act
1973 simply did not go far enough:
"to bring about a fair balance between provision for the community as a
whole and the mitigation of harmful effects on individual citizens, and it
does not, as the White Paper claimed it would, put people first. They will
still have the same upsetting impact on all our lives. Noises, smells, danger
and visual pollution will still be there, even though a little more money
40
Report of the Urban Motorways Committee (HMSO July 1972)
Land Compensation (Scotland) Act 1973 - the Home Loss Payment was a multiplier of the rateable value of the house (until
abolition) and revised by S.I. following each revaluation by the Assessor
42
Craig, Sarah and Brown, Paul D., (1994), "Home Loss and Disturbance Payments : The Law", RICS in Scotland Library, p. 5
43
The Report of the Committee on Tribunals and Inquiries Cmnd 218 (HMSO 1957)
44
McAuslan, Patrick, (1975), "Land, Law and Planning", Weidenfield and Nicholson, London, p.697
41
26
changes hands. The loss of a beloved home in a cherished spot will still be
just as hard to bear under the Bill's proposals."45
3.39
The link between the amount of compensation and claimant satisfaction was examined in
the previously mentioned Aberdeen study46 which examined a town centre
redevelopment in Aberdeen for which the acquiring authority promoted a compulsory
purchase order for the scheme. The findings included:
• Bank Charges: All four of the claims for bank charges were resisted by the
acquiring authority. Two were alleged to result from the claimants' impecuniosity and
thus were too remote. Another claimant had major difficulties in obtaining bridging
finance to enable her to minimise her loss.
• Total Extinguishment Of Business The acquiring authority resisted a claim for total
extinguishment notwithstanding agreement that the claimant had to relocate over one
mile away.
• Redevelopment Clauses: The landlords of two claimants served notices to quit in
accordance with 'redevelopment clauses' in the leases immediately before the
properties were vested in the acquiring authority, which had the effect of reducing the
compensation to the tenant. Arguably in the absence of the scheme such notices
would not have been served but this was not accepted by the acquiring authority or
by the Lands Tribunal for Scotland.
• Capital Gains Tax: Compulsory acquisition of property counts as a taxable event for
CGT which therefore occurs at a time not of the claimants' choosing. The inability to
claim retirement relief from CGT on a disposal of a business on or after a 60th
birthday because of a compulsory acquisition shortly before that age was said by the
acquiring authority to be inadmissible. This has now been overtaken by recent case
law.
• The Value Of The Heritage: There were widely differing views as to the effect of
blight on the value of the heritage, causing delay and anxiety to the claimants.
3.40
The Aberdeen study proposals include the following:
• If a property is occupied, the period between execution of the vesting declaration and
entry should be extended to three or four months.
• Loans at favourable rates should be available to claimants to ease hardship incurred
in relocation.
• The "judge made impecuniosity" rule should be abolished.
• Acquiring authorities should adopt a helpful and sympathetic attitude to claimants.
45
H.C. Deb., Vol. 847, col. 73 (Mr Whitlock ) second reading on the Land Compensation Bill later enacted as the Land
Compensation Act 1973
46
RICS Rowan Robinson, Jeremy, et al, (1995) supra
27
• There is a six year time limit for referring a case of disputed compensation to the
Lands Tribunal for Scotland following execution of a general vesting declaration. A
swifter automatic referral of disputed claims to the Tribunal or to arbitration after
certain periods is recommended.
Compensation for Planning and Blight
3.41
Blight requires to be set in an appropriate planning and compensation framework. The
fundamental principle is that most of the rights to develop are vested in the State, not in
the landowner. This is illustrated by the following:
"A planning refusal does not of itself confer any right to compensation. On
the other hand, revocations of planning permissions or interference with
existing uses do rank for compensation, since they involve the taking away
of an existing legal right. In cases where, as a result of a planning decision,
land becomes 'incapable of reasonably beneficial use', the owner can serve
a purchase notice upon the local authority requiring it to buy the property.
In all cases, ministerial confirmation is required. The circumstances in
which a purchase notice can be served include:
• Refusal or conditional grant of planning permission;
• Revocation or modification of planning permission;
• Discontinuance of use
A purchase notice is not intended to apply in a case where an owner is
simply prevented from realising the full potential of his land. This would
imply the acceptance in principle of paying compensation for virtually all
refusals and conditional permissions. It is only if the existing and permitted
uses of the land are so seriously affected as to render the land incapable of
reasonably beneficial use that the owner can take advantage of the
purchase notice procedure."47
3.42 The circumstances in which blight notices can be served are different as demonstrated by
the following:
"'Planning blight has been described as 'the depressing effect on existing
property of proposals which imply public acquisition and disturbance of the
existing use' of the property. The announcement, for example, of the line of
a proposed road may well mean that land in the path of that road becomes
either completely unsaleable in the open market or saleable only at a price
lower than it would otherwise have fetched"48
and further, the following two paragraphs:
Cullingworth, J. Barry, and Nadin, Vincent, (12th Edition 1997), Town & Country Planning in the UK, Routledge, London,
p.123
48
Young, Eric, and Rowan-Robinson, Jeremy, (1985), "Scottish Planning Law and Procedure", William Hodge, Glasgow, p.404
quoting from The Future of Development Plans (HMSO 1965)
47
28
"210.When a plan shows that land or property is likely to be needed for
future use by a public authority possessing powers of compulsory purchase,
its value may be greatly affected. In extreme cases, it may be rendered
unsaleable, and hardship may be caused to those who need to sell for
personal or other reasons....The danger we have to face is that widespread
publicity for proposals at this stage may have a serious blighting effect on
property....
212. There is thus a conflict between, on the one hand, the desirability of
giving full publicity at an early stage to proposals the planning authority
are considering, so as to stimulate informed public discussion and, on the
other hand, the need to avoid causing hardship to individuals by the casting
of blight over land or property that may not be acquired for many years or,
at all." 49
3.43
In 1995 the RICS commented that consideration should be given to ways in which the
blight procedures can be speeded up to allow those who, either need to move swiftly, or
have an opportunity to relocate to an alternative property, to be able to do so. The RICS
found that there were difficulties in persuading the relevant authorities to accept valid
notices promptly, rather than waiting until the expiry of the statutory two month period
or serving a 'protective' counter-notice. The RICS also commented that the substantial
waiting time for a hearing at the Lands Tribunal for cases of disputed compensation
defeats the purpose of the blight provisions. The RICS recommend the introduction of a
right to serve a notice requiring the purchase of a property in cases where its character or
amenity can be shown to have been materially affected. In particular, this should include
cases where the character or amenity of the property has changed to such an extent that
compensation for diminution in value under Part 1 of the Land Compensation Act 197350
is no longer an adequate remedy. However, character and amenity often refer to or
include loss of view, which has never been a right protected under Scottish common law.
3.44
In relation to owner-occupied properties, the RICS recommend the removal of the annual
value limit above which no blight notice may be served.51 If retained, they suggested
that the limit should be raised for investment properties, which should also be brought
within the scope of the blight notice provisions when a certain proportion of the
investment property cannot be let. 52
3.45
In the Aberdeen study53, all of the claimants were concerned about the effects of blight
caused by the acquiring authority's scheme which had a depressing effect on property
values and business profitability. In the event, claimants found it difficult to prove the
blighting effects of the scheme. Several of the businesses wanted to use the blight notice
provisions but could not do so as the annual value exceeded the statutory limit. Although
they had powers to acquire property in advance of requirements, and were given some
encouragement to use them to alleviate hardship, the District Council declined to
exercise this discretion when requested to do so by one of the claimants. The study
49
MHLG, (1969), "Report of the Committee on Public Participation in Planning",(Skeffington Report), HMSO, London
See the equivalent Land Compensation (Scotland) Act 1973
51
£21,500 as at February 1999.
52
RICS, (1995), Compensation for Compulsory Acquisition, RICS, London, p.41-42
53
RICS, Rowan-Robinson, Jeremy, et al, (1995), surpa
50
29
recommends that the annual value threshold for the service of a blight notice should be
revised upwards or abolished.54
3.46
It also seems that where an acquisition programme extends over a large area and/ or an
extended timescale, there can be serious difficulties in identifying comparisons
unaffected by the scheme. As the onus of proof lies with claimants this disadvantages
them rather than acquiring authorities.
3.47
The DETR55 examined blight in 1997 following significant public concerns arising from
the plans for a high speed rail link from London to the Kent Coast. The Working Group
reviewed the operation of the blight and compensation provisions (including 19
suggestions for change) and although they suggested a number of changes they also
recommended that many provisions remain unchanged. At the very least the study
demonstrated the practical difficulties in obtaining a fair balance between acquiring
authorities and claimants.
3.48
Lord Rogers’ Urban Taskforce56 was commissioned to examine the future of England’s
towns and cities and to recommend action to reverse the alleged spiral of decline. Their
Report has the support of the Right Honourable Mr John Prescott, the Deputy Prime
Minister, who has called for "nothing less than an urban renaissance. It is not just a
matter of housing, planning or design. It is about jobs, transport, schools, crime and
health as well – the whole quality of life in our cities and our communities."
Although, perhaps, not central to the main thrust of their Report, it is recognised that
effective compulsory purchase will be required to make the necessary land available if
urban areas are to be successfully redeveloped.
What Can We Learn From Abroad?
3.49
A comparative study57 (published in 1998) which examined Eire, France, Germany,
Malaysia, the Netherlands and the USA found two advantages of the UK system:
• the recognition of business compensation, and
• equity of disturbance payments.
3.50
In relation to the other countries, the study reports:
"anecdotal evidence from practitioners in every country studied except the
UK indicates that a standard premium is added to the valuation achieved
via the statutory basis of compensation in instances where the owner is
prepared to allow the state to purchase their property by negotiation indeed, the Dutch municipalities are required to prove that negotiations
have failed before leave to proceed through the courts will be granted. The
levels of premium have been quoted at 10 - 25% contrasting strongly with
54
RICS, Rowan-Robinson, Jeremy, et al, (1995), surpa
DETR. Inter Departmental Working Group on Blight. Final Report. December 1997.
56
Towards an Urban Renaissance, Final Report of the Urban Task Force chaired by Lord Rogers of Riverside. 2000
57
Dowdy, H et al (1998) Suitable Recompense? The operation of the compensation and compulsory purchase system in the
United Kingdom – a comparative study London: RICS
55
30
the UK where it is perceived that valuations undertaken by reference to
compulsory purchase legislation produce lower than 'open market value'"
and, in relation to blight:
"The incidence of blight in the other countries studied tends to be reduced
because of the greater certainty in their land-use development plans."
and, in respect of re-expropriation:
"Germany has recourse to the mechanism of re-expropriation if public
development is not carried out within statutory timescales on land which
has been expropriated. This appears to be a fair procedure and one which
perhaps could be imported."58
3.51
Amongst other recommendations, the study concluded that public infrastructure
provision needs to be considered at the plan making stage. It has to be capable of
implementation during the plan period including committed funds (our italics)59, thus
creating a framework of certainty.
3.52
The key points to emerge from Literature Review include:
• The doctrine of equivalence is supported.
• The timetable for processing an order is extensive causing uncertainty and stress.
• The general level of compensation is too low.
58
See also CLA, (1995), "Compulsory Acquisition and Payment: A New Approach", A Draft CLA Policy Paper, Country
Landowners Association, London, Executive Summary, item 9
59
Further action on a number of major road schemes being managed by Road Network Management and Maintenance Division
of the Scottish Executive Development Department has stalled at various stages following a change of government and
withdrawal of funding. This has created enormous uncertainty amongst affected proprietors, although others may regard it as a
bonus to occupy what is mainly agricultural land acquired for the road, for a further indeterminate period.
31
CHAPTER FOUR REVIEW OF CURRENT SCOTTISH PRACTICE
Who has compulsory purchase powers?
4.0
There is no central list of organisations in Scotland with compulsory purchase powers.
The same is true in England and Wales. The bodies with compulsory purchase powers
are those within the following categories:
• Government departments and most government agencies.
• Local authorities
• Bodies with statutory obligations
• Bodies subject to a regulator
• Other miscellaneous bodies who have obtained compulsory purchase powers by way
of a Provisional Order.
4.1
Appendix 3 contains an illustrative, but not exhaustive list of bodies with compulsory
purchase powers. There is no evidence of bodies who do not have, but require
compulsory purchase powers. Nor is there evidence of bodies who should have their
compulsory purchase powers removed.
4.2
It should be noted that anybody, including companies and individuals, could promote a
compulsory purchase order by way of a Provisional Order.
Available information on the number, type and use of compulsory purchase orders
4.3
There is no central register providing information on the number, type and use of
compulsory purchase orders. Although some departments of the Scottish Executive
maintain their own departmental working lists, there is no standard approach to the
collation or analysis of this information. The only source of substantial data is the
Keeper of the Registers of Scotland.
4.4
The Keeper provided extracts of the actual sasine minute contained within the Register
and a database of information from the Land Register. The extracts confirmed the date
of registration, the title of the order, the acquiring authority and a summary of
information on the properties and the affected interests. Information has been provided
for orders registered from 1994 to 1998 but the last year is incomplete because of delay
in registration.
4.5
For the purposes of analysis and to allow for local government reorganisation, the
acquiring authorities have been categorised under Scottish Executive, Unitary Authority,
Regional Council, District Council, Islands Council and Scottish Power, the only nongovernment body to have used compulsory purchase powers.
4.6
Table 4.1 shows that a total of 134 orders have been registered since 1994 with the
majority being promoted by either the Scottish Executive or the former District Councils.
32
The figures for Unitary Authorities and Public Utilities demonstrate that those bodies
have made very limited use of compulsory purchase powers.
Table 4.1
Breakdown of Number of CPOs Between Acquiring Authorities
1994 – 1998
Acquiring Authority
Total No of
%
CPOs
Scottish Executive
42
31.3%
Unitary Authority
6
4.5%
Regional Council
22
16.4%
District Council
57
42.5%
Islands Council
6
4.5%
Scottish Power
1
0.7%
134
99.9%
4.7
Table 4.2 shows that orders promoted by the Scottish Executive included the greatest
number of properties per scheme. This is not unexpected because the majority of orders
promoted by the Scottish Executive involved acquisitions for major trunk road projects,
which will normally involve a large number of interests. Excluding the Scottish
Executive, there were 92 orders involving the acquisition of 602 properties, an average of
seven properties per order.
Table 4.2
Number of Properties Acquired by Acquiring Authorities
1994 – 1998
Average No of
Acquiring
No of
No of Properties
Properties in Each
Authority
CPOs
Acquired
CPO
Scottish Executive
42
1586
38
Unitary Authority
6
25
4
Regional Council
22
152
7
District Council
57
402
7
Islands Council
6
22
4
Scottish Power
1
1
1
Total
134
2188
16
4.8
A comprehensive analysis of the use of compulsory purchase powers is not possible
because there is insufficient data contained within the extract of the sasine minutes.
However, there is no evidence from Table 4.3 of orders being used in Scotland to
promote significant urban regeneration projects. There is a wide variety of schemes with
particular emphasis on roads. The large proportion (53%) of Miscellaneous means it is
impossible to assess accurately the main purposes for the exercise of compulsory
purchase powers. It would be helpful for future monitoring if additional categories could
be defined.
33
Table 4.3
Breakdown of Use of CPOs
No of
CPOs
Purpose of CPO
Roads
Housing
42
41
6
1
22
10
1
57
1
8
6
1
1
134
54
9
(40%)
(7%)
Acquiring
Authority
Scottish Executive
Unitary Authority
Regional Council
District Council
Islands Council
Scottish Power
4.9
Misc
1
5
11
48
5
1
71
(53%)
Although it has to be considered in the context of relatively low numbers, there does
appear to be a decline in the use of compulsory purchase powers, as demonstrated by
Table 4.4 (Year of Registration) and Table 4.5 (Year of CPO).
Table 4.4
Year of Registration
1994
1995
1996
No. of CPO's
Acquiring
Authority
Scottish Executive
Unitary Authority
Regional Council
District Council
Islands Council
Scottish Power
Notes: 1.
2.
41
1990
1991
1
4
3
8
3
2
5
31
31
Table 4.5
Year of CPO
1992 1993 1994
4
7
1
12
5
3
15
1
24
6
7
10
1
1
25
1997
1998
19
12
1995
1996
1997
8
3
16
27
16
2
18
5
1
6
1998
2
1
3
Excludes 4 CPO's with year dates prior to 1990
Excludes 2 CPO's with no year date.
4.10
Further details on the information provided by the Keeper of the Registers of Scotland is
contained in Appendix 4.
4.11
This analysis demonstrates that there has been relatively little use made of compulsory
purchase orders and the numbers appear to be declining. If acquisitions by the Scottish
Executive (all for roads purposes) are excluded, the limited use of compulsory purchase
powers is even more striking. Since 1994, the average annual number is 18 affecting 120
properties.
34
Scottish factors
14.12 As our study does not include a detailed comparative assessment of the position in
England and Wales, our consideration of Scottish Factors must include an element of
judgement and anecdotal comment.
• There has been no recent consolidation of the law in Scotland. The Land Clauses
(Consolidation) (Scotland) Act of 1845 remains the foundation of the law relating to
compulsory purchase of land in Scotland. In England and Wales, the law is
consolidated in the Compulsory Purchase Order Act 1965.
• Although the Scottish legal system and basis of land tenure is fundamentally different
to the system in England and Wales, the operation of compulsory purchase is
essentially the same in both jurisdictions. Further, decisions of the Lands Tribunal in
England and Wales, which are far more numerous, are generally accepted as
persuasive in Scotland. Current proposals for land reform in Scotland include
measures to secure the public interest and increase community involvement.
However, those proposals should not fundamentally affect the law of compulsory
purchase in Scotland.
4.13
The differences identified between the jurisdictions are essentially non-legal differences
in custom and administrative practice.
• Our survey results indicate that Scottish acquiring authorities currently make little
use of compulsory purchase powers. This is partly due to limited need/opportunity to
acquire land and a lack of finance and partly due to a perception that the compulsory
purchase process is slow and uncertain. This evidence of limited use of compulsory
purchase powers contrasts with the findings of the English study undertaken by
Adams60 that the use of compulsory purchase powers under planning legislation was
highest in Scotland. This may be due to the fact that Adams' survey was undertaken
pre 1996 while this survey is post 1996. Also, Adams' findings relate to only
planning legislation and not to compulsory purchase for all purposes.
• The limited use of compulsory purchase powers in Scotland contrasts with England
and Wales where there have been a number of major infrastructure projects requiring
large scale acquisition by compulsory purchase, for instance, the Channel Link. This
position may change in Scotland if new major infrastructure projects, such as the
central Edinburgh guided busways, are brought forward under private finance
initiatives or other initiatives.
• Scottish surveying practices do not have specialist compulsory purchase departments
because of the limited volume of compulsory purchases in Scotland. This contrasts
with the position in London where a number of the major practices have such
departments.
• Chief officials in the Scottish Executive are more accessible than their counterparts in
England and Wales. This is a direct result of the comparatively smaller size of the
Scottish Executive and the Scottish community.
60
Adams, David (1996) surpa.
35
• The suggestion in the land reform proposals in Scotland that the Government should
give explicit support to the use of compulsory purchase powers as a last resort where
this will assist implementation of local plan or other strategies is not mirrored in
England and Wales.
• There is particular legislation in Scotland on crofting. Different bodies assess
compensation claims in relation to crofts. If the acquisition is by agreement,
adjudication is by the Scottish Land Court whereas claims arising from a compulsory
purchase order fall within the jurisdiction of the Lands Tribunal for Scotland.
4.14
Notwithstanding some detailed differences in the respective legislative provisions, we
identified no substantial differences in the main thrust of the respective compulsory
purchase processes. This is probably a result of the relatively limited use of compulsory
purchase orders in Scotland. However, more significant differences may emerge if
Scottish acquiring authorities increasingly resort to the exercise of compulsory purchase
powers in the future. It would be prudent, therefore, to review and consider the findings
of the DETR study to identify any matters which may become more relevant in Scotland
in the future.
36
CHAPTER FIVE RESEARCH ANALYSIS
Survey results: Acquiring authorities and the Scottish Executive
5.0
A survey was undertaken of acquiring authorities to establish an understanding of their
approach to and their experience of the use/non-use of compulsory purchase powers and
of compensation. The survey was structured to identify the views of acquiring
authorities on the key issues identified in the Literature Review, with particular emphasis
on the Scottish dimension.
5.1
A questionnaire, which was prepared in consultation with the Scottish Executive
Development Department, (Appendix 5) was sent to a representative sample of acquiring
authorities. Circulation of the questionnaire was followed up by interviews. The
complexity of the subject and the personal experience and views of those interviewed
meant that the questionnaire could only provide a framework for discussion. It was not a
vehicle for a detailed structural response. The limited numbers of orders also meant that
not all of those interviewed had experience of all of the issues raised in the questionnaire.
The interviewers therefore included their own assessment of the Key Comments, which
were set out at the front of each questionnaire.
5.2
Of the 10 bodies approached, a response was received from nine. Two of the respondents
were from within the Scottish Executive.
5.3
The major issues to emerge from the survey interviews are described below.
Procedures
• With the exception of acquisitions for road purposes, compulsory purchase powers
are comparatively little used. This is partly because acquiring authorities do not
presently acquire large amounts of property, due to lack of need and to lack of
finance. When they do acquire property, they prefer to try to purchase by agreement
because confirmation of an order is perceived to be slow and uncertain.
• In cases where the owners cannot be identified, often because they cannot be traced
and/or the interest in the land is of a nominal value, an order is required to obtain a
clear title.
In such cases, the procedure is perceived to be slow, cumbersome and expensive
compared with the value of the land.
• Historically, local authorities were able to commit to major redevelopment projects,
for example, a comprehensive development area, finance the land acquisitions, and
thereafter, implement the development either in partnership with the private sector or
on the basis of a subsequent disposal to the private sector. The new unitary
authorities are less likely to be able to underwrite such projects without the support of
the private sector. If compulsory purchase is necessary, the uncertainty and delay
inherent in the system could deter private sector commitment to a project.
• In addition to professional/staff expenses, the local authority may also have spent
considerable sums purchasing property in advance by agreement. If the scheme does
37
proceed, the local authority may suffer a loss or make a profit dependent on market
conditions. Although development always involves some risk, the uncertain
timescales and levels of compensation make it particularly difficult to plan with any
certainty. Local authorities may not always be in a position to accept these risks.
• There are recent examples of local authorities initiating compulsory purchase
procedures on the basis of an indemnity agreement with a developer. The City of
Glasgow's attempt to facilitate a redevelopment in Buchanan Street in the context of
an indemnity agreement was challenged as ultra vires on the basis of a local
authority's duty on disposal of land to tender the site to the highest bidder. However,
the Outer House of the Court of Session decided that Sections 189 and 191 of the
Town and Country Planning (Scotland) Act 1997 provide a statutory framework
within which a local authority may decide to acquire land compulsorily and to sell it
to a developer under a back to back agreement provided that proper account is taken
of all material considerations.61
• Planning legislation makes it increasingly likely that the development plan will be the
vehicle for promoting major town centre regeneration projects and infrastructure
projects. Compulsory purchase may be necessary to deliver such projects. This may
result in widespread blight, particularly in situations involving alternative routes for
transport projects.
• These issues, which have recently arisen in practice, have not been previously
exposed because of the comparatively limited number of projects and orders in
Scotland. However, they are likely to become increasingly significant if the use of
compulsory purchase increases as expected. Although these issues are beyond the
scope of this study, they should be given consideration by the Scottish Executive.
• Acquiring authorities do not share in the procedures for managing orders within the
Scottish Executive. This is a perception that there can be unnecessary delay in the
confirmation of orders . This is often caused by the Scottish Executive asking for
further justification of the order and/or trying to mediate when it is considered that
their role should be restricted to processing the order. In the authorities' view, it is
"their" order and their responsibility to justify it, if necessary, at a public inquiry.
• As local authorities rarely have the necessary finance or expertise to implement major
redevelopment projects, consideration should be given to establishing a centrally
funded agency to support authorities in the exercise of compulsory purchase powers.
• Acquiring authorities consider it to be unreasonable to allow a single objector, who
may only have an interest of nominal value, to be able to force a public inquiry. It is
suspected that that the real reason for the objection is often to try to increase the
compensation. Obviously, the claimant could not explicitly state such a reason
because it would be irrelevant in legal terms.
61
Standard Commercial Property Securities Limited –v- Glasgow City Council (22/08/00)
38
Compensation
• Acquiring authorities consider the basis of compensation to be generally fair with no
need for any significant alterations. The point is made that increased compensation
may reduce the likelihood of schemes proceeding.
Blight
• As there is very little experience of blight notices, those interviewed made no
substantive comments. For similar reasons, no substantive comments were made
regarding purchase notices and certificates of appropriate alternative development.
5.4
In addition to the survey of acquiring authorities, interviews were conducted within the
Scottish Executive with the administrative departments responsible for compulsory
purchase case handling, members of the Solicitors Office responsible for advising on
compulsory purchase orders and the Inquiry Reporters Unit.
5.5
Although the questionnaire was issued to provide a framework for a subsequent
interview, discussion concentrated on the operation of the system within the Scottish
Executive. The major issues that emerged were:
• Acquiring authorities are not using their compulsory purchase powers as a method of
last resort. This is a source of conflict with some authorities. They believe that it is
for them to justify the need for the order, if necessary at a public inquiry, and that the
role of the Scottish Executive should be restricted to processing the order and not
attempting to mediate.
• There is support for the idea of the publication of a Manual of Best Practice for issue
to all acquiring authorities with compulsory purchase powers.
Survey results: Organisations and professional bodies
5.6
Comments were invited from a number of other participants, including acquiring
authorities who are not local authorities and a sample of organisations and professional
bodies. To widen awareness of the review, a press release was issued inviting comment
from any interested party. However, no response was received from this suggesting that
either there is little interest in the subject and/or that all those with an interest had been
contacted.
5.7
As the numbers involved precluded interviews, comment was invited in writing or by
telephone. The questionnaire originally sent to the acquiring authorities was forwarded
to each organisation inviting a response in the manner which best expressed their views.
Of the 23 organisations approached, a response was received from 14. A number
emphasised that their response contained their personal views and not the views of their
organisation.
39
5.8
The following major issues emerged:
Procedures
• An awareness of the need to achieve a balance between protecting the interests of
affected owners/occupiers and the requirements of acquiring authorities.
• An acknowledgement that, with the exception of roads, the majority of negotiations
are done in the shadow of the threat of compulsory purchase.
• A general concern about the extended timescales of orders causing uncertainty and
stress to claimants.
• Some respondents suggested the creation of a "local informal forum" in place of the
Lands Tribunal for Scotland.
Compensation
• There are varying views on the basis of property compensation. Whilst a few
consider the existing basis to be fair, the majority advocate payment of a premium to
take account of the compulsory nature of the acquisition.
• In effect the onus of proof for disturbance on the claimant means that claimants suffer
financial loss for which there is no provision in the rules and so are not fully
compensated.
• As claimants are only entitled to reimbursement of their professional fees as part of
their disturbance claim, abandonment of the acquisition by the authority means that
the claimant can be substantially out-of-pocket. In addition, Ryde's Scale for
surveyors' fees is often insufficient and, as a result, claimants' professional costs are
not fully recovered.
• If claimants are unsuccessful at the Lands Tribunal for Scotland, they will be
responsible for all of the costs, which is a material disincentive to make an
application to the Tribunal. It is suggested that the maximum liability for claimants
should be restricted to their own costs.
Blight
• There is no substantial experience of blight procedures being initiated and thus no
material comments were made.
5.9
In addition to the survey of organisations who are involved in the compulsory purchase
process, further research was undertaken inviting comment specifically from professional
advisors to claimants. Four of the eight firms identified by the Scottish Executive as
most frequently representing claimants, commented as follows:
40
Procedures
• There is limited experience within the private sector of compulsory purchase orders.
Most experience involved cases in which rural interests were being acquired for a
road scheme.
• As a matter of policy, firms normally initially oppose an order either because of a
lack of information from the acquiring authority or because the client had no prior
knowledge of the proposal.
Compensation
• To reflect the additional time and stress of compulsory acquisition, a premium should
be paid above open market value.
• Ryde's Scale is inadequate and professional advisors usually require clients to "topup" their fees.
Blight
• There is no substantial experience of clients consulting on blight and thus no material
comments were made.
Symposium
5.10
A symposium was held at the Scottish Executive, Victoria Quay, Edinburgh on 2 July
1999 when the consultants' provisional findings were presented to an audience of 40. 88
invitations had been issued to all parties who participated in the survey and to others who
may have had an interest in the subject. Following the presentation, (Appendix 6), the
participants were divided into four focus groups and the summarised views of the groups
are as follows:
• Procedures
5.11
-
The procedures should be streamlined with a defined timetable consistent with
retaining claimants' rights to object and, in the case of blight notices, the acquiring
authority's right to pursue a counter-notice.
- A standard "easy read guide for claimants" should be sent to all claimants.
-
There is support for "Manual of Best Practice".
• Compensation
5.12
-
The private sector supports an additional payment to compensate for the compulsory
nature of the acquisition. Although acquiring authorities do not strongly resist this
suggestion, some are concerned that the additional costs will inhibit the
promotion/implementation of schemes. All agree that this is an issue that requires
further study.
41
-
There should be a study on liability for costs at the Lands Tribunal for Scotland and
on professional fees.
-
The private sector would like a review of Ryde's Scale; the acquiring authorities do
not see this as a live issue but have no objection to a review.
-
There is general support for the principle of a review of Rule 3.
• Blight
Blight is not presently a major issue, but it is recognised that shortcomings in the system
may emerge if the use of compulsory purchase increases in the future. It is agreed that
the position in England and Wales should be monitored.
Questionnaire responses
5.13
The wide ranging nature of the questions and responses means that a simple analysis is
not possible. Nevertheless, we have reviewed the common themes under the same key
headings, as follows:
Procedures
5.14
Generally acquisitions are pursued by agreement, albeit often in the shadow of
compulsory purchase, with the exception of Scottish Executive, Transport and Planning
Group where all schemes valued above £3m proceed with compulsory purchase powers.
A preference for voluntary acquisition was supported by the majority of respondents,
who tended to view compulsory purchase as a method of last resort.
5.15
The most common use of compulsory purchase orders is in support of road schemes.
Acquiring authorities have limited recent experience of using powers for other purposes,
but, in discussion, referred to housing proposals, land assembly for transportation
schemes and to enforce a repairs notice served on a listed building. The use of
compulsory purchase is normally related to the role of the authority, for example,
planning authorities in support of development plan proposals. None of the respondents
has any experience of compulsory purchase provisions contained within Scottish private
legislation.
5.16
There is no central source of information on how many orders have been submitted to the
Scottish Ministers but acquiring authorities' responses ranged from nil to a maximum of
seven. There is no information available regarding the classification of the purpose for
acquisition.
5.17
Acquiring authorities stated that, due to the varying size and complexity of schemes, it is
not possible to generalise on a typical time period involved in compulsory acquisition.
Individual examples ranged from six months to 27 years. Professional advisors consider
that the average minimum time between vesting and final settlement of compensation is
42
rarely less than five years and from making the order to settlement, rarely less than
seven/eight years.
5.18
There is a perception that the confirmation process with the Scottish Executive is slow
and uncertain. Acquiring authorities are unaware of the procedures for managing the
process within the Scottish Executive, for example, there are no target timetables.
5.19
Acquiring authorities oppose any procedural change that would impose upon them, at the
resolution stage, the obligations currently imposed on service of a Notice to Treat. Their
opposition is based on the grounds they may be obliged to acquire properties before they
are certain of confirmation of the order. The private sector do not have strong views on
this point.
5.20
The general practice of agents representing claimants is to object to any order to protect
their clients' interest but the objection is normally withdrawn after discussion on the
likely amount of compensation.
5.21
When asked what improvements would assist the process, the following points were
made:
• In general the legislation is considered to require complete revision and consolidation
to bring it up to date.
• The Scottish Executive should set target timetables for managing their part of the
process and the acquiring authority should be kept fully aware of progress.
• All of the respondents suggested that a manual of Best Practice would be very
helpful. The manual should clearly set out each stage in the procedure and identify
the information required from each party. The private sector is very keen that the
manual should be available to them.
Compensation
5.22
The majority of respondents accept the principle that the claimant is required to mitigate
his loss. There is little support for the proposal that the acquiring authority should be
obliged to mitigate hardship.
5.23
Advance payments are based on 90% of the acquiring authorities' estimate of
compensation. There is no support for the advance payment to be based on the average
of the estimate. Although it is accepted that authorities' estimates tend to be cautious,
interest is paid on the amount finally agreed. There is little support for fast track
arbitration.
5.24
Claimants, who have not moved in anticipation of dispossession, may be given only 28
days notice to move by the acquiring authority. Although there is no experience of any
difficulties in this regard, nevertheless, there is general acceptance that the period should
be increased to 90 days.
43
5.25
There is little knowledge among respondents of the judge made impecuniously rule.
Nevertheless, there is general agreement that the rule is unfair and should be changed by
statute.
5.26
The private sector view is virtually unanimous that there should be an additional payment
over and above open market value for all claims in respect of non-residential land to
reflect the fact that the acquisition is compulsory. However, there are varying views
about the amount. For example, it might be a fixed percentage of the property value or a
varying scale. Many authorities accept that there is a case for an additional payment but
their main reservation is that, if this is excessive, it may prevent some schemes from
proceeding.
5.27
The respondents were asked if the method of calculating market value should be
amended so that account may be taken of demand from both the private sector, including
the needs of a particular non-statutory purchaser, and the public sector. As they have no
practical experience of this matter, acquiring authorities have no particular view. The
private sector does, however, consider that, if land is particularly valuable to a privatised
utility, that value should be taken into account.
5.28
The majority of the respondents believe that the existing compensation code is
satisfactory. Although no specific examples were identified, some response from the
private sector suggests that the possibility of the payment of a supplementary allowance
to the occupier of agricultural, industrial and commercial property, when part of his land
is taken and there is damage by way of severance or injurious affection, should be a
matter for further investigation. The supplementary allowance would be paid in addition
to compensation otherwise payable.
5.29
In situations in which no land is acquired, but, there is entitlement to compensation
following the physical interference with a legal right, the majority are in favour of the
claimant receiving compensation for all losses, including loss of profits, rather than the
compensation being limited to depreciation in the value of the land. However, it is
acknowledged that there may be practical difficulties in quantifying the loss.
5.30
The majority of respondents are in favour of the proposition that, in situations where part
only of the claimants land is taken, compensation for injurious affection to the retained
land should include any loss of profit and costs caused as a direct result of the execution
of the works in connection with the scheme for which the land was acquired. Some
respondents commented upon the fact that the McCarthy rules already allow for loss of
profits, if related to the value of the land, but not temporary loss of profits.
5.31
There is general acceptance of the proposition that interest on a compound basis or
accrued interest, whether or not it exceeds the current limit of £1,000, should be paid
annually to the claimant if he so requests. However, some acquiring authorities are
concerned that the administrative costs could outweigh the benefit.
5.32
The majority agree that interest on surveyors' fees should only be payable from the date
of instruction. Some respondents commented that, as the date of entry is historic, the
interest payable helps to offset the fact that fees are based on the historic values.
44
5.33
There is general acceptance that advance payments should be payable to all interests
being compensated; in particular to interests no greater than yearly tenancies.
5.34
Acquiring authorities are divided almost equally between support and opposition to the
suggestion that advance payments should be payable as a right to all claimants when
compensation is payable and not just in cases where land is actually taken. The private
sector support the proposal.
5.35
The respondents were asked if the owner of a property should be entitled to
compensation for any cost directly and reasonably incurred as a result of an indication
that the relevant land is to be compulsorily acquired. Acquiring authorities support the
status quo but the private sector strongly support the proposal on the grounds that, as
orders are initiated by the acquiring authorities, they should pay all of the reasonable
costs arising from their actions.
5.36
In relation to Rule 5, the proposition was put that the Lands Tribunal for Scotland should
have the power to direct that the whole or part of the compensation awarded should be
retained and paid only when reinstatement takes place. All respondents point out that,
under the existing Rules, the Lands Tribunal for Scotland has to be satisfied that
reinstatement is bona fide intended. The thrust of the difference which is between the
Land Tribunal for Scotland being satisfied that reinstatement is intended and it actually
having been carried out is only a fairly small move, but might in practice be more
material as the proposal would require the claimants to fund the cost of reinstatement.
Moreover, claims under Rule 5 are very rare.
5.37
The private sector consider the existing Ryde's scale is almost always inadequate and
suggest a comprehensive review.
5.38
The effect of capital gains tax, which may be incurred because the acquisition is at a time
not of the landowners' choosing is not seen as a material issue because claimants are able
to recover the effect of capital gains tax.
5.39
The following changes to the compensation code were suggested:
• Subject to some possible minor adjustments, acquiring authorities consider the
existing system to be fair and they would be concerned that any material increase in
compensation might be a disincentive to schemes.
• The private sector support a fundamental change to increase the compensation
(probably as a percentage of the property value) to reflect the compulsion in the
acquisition. Other relatively minor adjustments would be of assistance.
• In the case of accommodation works, the acquiring authority should accept
responsibility for the actions of their contractors. A claimant's loss, arising from the
contractors' actions, is not necessarily always accepted by the acquiring authority,
leaving the claimant to sue the contractor with whom he has no direct contractual
relationship.
5.40
All acquiring authorities say they advise claimants of their compensation rights and this
is generally confirmed by the private sector. It is, however, also suggested that the
45
Scottish Executive should publish an "easy read guide for claimants" which would be
attached to all order notices.
5.41
With regard to the possible referral of disputes to a more local informal forum, acquiring
authorities wish to maintain the status quo because they believe the Lands Tribunal is
consistent and independent and seen to be so. They are concerned that a local forum
would contain local "experts" who might have conflicts of interest and, in addition,
decisions might be inconsistent. While acknowledging these points, the private sector
consider the Lands Tribunal to be remote and forbidding to many claimants. A possible
compromise may be to make the Lands Tribunal more informal and ready to travel to the
locality of the dispute. The use of written submissions could also be encouraged.
Blight
5.42
The majority support the proposition that investors, as well as owners/occupiers, should
be able to serve a blight notice on the basis of incurring a loss. However, there is a
significant minority view that blight is simply another investment risk and there should
be no such entitlement to serve a blight notice.
5.43
There is strong support from professional advisors for the removal of the rateable value
limit. The views of acquiring authorities tended towards keeping some limit to protect
small, more vulnerable businesses balanced against the potential cost to the authorities.
5.44
The majority of acquiring authorities support the retention of current requirements for
owner/occupier claimants affected by blight to make reasonable efforts to dispose of their
property on the open market before payment of compensation. The private sector
consider that blight is normally self evident and this requirement delays the matter
unnecessarily often causing hardship.
5.45
The respondents were asked if adjoining property owners should be given the right to
serve a purchase notice in cases where the character and amenity of their property can be
shown to have been materially affected to such a degree that compensation in value is not
an adequate or appropriate remedy. Acquiring authorities consider the status quo should
be retained. In contrast, the private sector support this proposition. It is, however,
acknowledged by all parties that there are likely to be difficulties of definition and
implementation.
5.46
Consideration was given to the possible imposition of a duty on local authorities to
advise owners of notifications of schemes received from the Scottish Executive as well
as adopted road schemes initiated by roads authorities. Acquiring authorities believe that
responsibility for notification lies with the promoter of the scheme. Some of the private
sector believe it is the duty of local authorities to advise all parties regarding potential
schemes, at the earliest possible date.
5.47
Although some respondents, particularly the acquiring authorities, saw no need to speed
up the blight notice procedure, there is broad consensus that the matter should be subject
to further consideration.
5.48
There is no direct experience of purchase notices.
46
5.49
There is no direct experience of certificates of appropriate alternative development
General conclusions drawn from the survey results:
5.50
The results of the survey lead to the following general conclusions:
• The legislation is historic and complex and requires consolidation and updating.
• To assist with the development of consistency and understanding, the Scottish
Ministers should make some clear policy statements of general application on the use
of compulsory purchase powers. It should be noted that the Scottish Ministers did
write to acquiring authorities in September 1999 to remind them of their compulsory
purchase powers and of the potential value of those powers.
• Although both parties may use the procedural difficulties as negotiating ploys, there
is general acceptance that the procedure is uncertain and unsatisfactory. Acquiring
authorities consider themselves to be responsible for their own orders, which they
may have to justify at a public inquiry. The role of the Scottish Executive should be
to manage the process and not to attempt to mediate/negotiate with the parties.
• While acquiring authorities are concerned about the costs of increasing
compensation, there is general support for an additional payment to reflect the
compulsory nature of the purchase.
• The liability for professional fees, their amount and costs at the Lands Tribunal for
Scotland should all be reviewed.
• Although blight is not presently a serious issue, if the use of compulsory acquisition
increases, it is probable that a number of difficulties will become apparent.
47
CHAPTER SIX CONCLUSIONS
6.0
How Does the System Operate Currently?
• The number of compulsory purchase orders is relatively limited. This is partly due to
the limited number of projects, which, in turn, is directly linked to the lack of funding
particularly for local and central government. There also appears to be a belief that
there is a reluctance within the Scottish Executive to confirm orders.
• Notwithstanding the relatively limited use of compulsory purchase, acquiring
authorities are in no doubt that having powers in reserve enables them to negotiate by
agreement. Although no statistics are available it is apparent that the majority of
purchases are by agreement in the shadow of compulsory purchase powers.
• It seems probable that the use of compulsory purchase will increase in the future.
This is partly due to current planning policies, which support the redevelopment of
brownfield sites preferably in town centre locations. Such sites are often in multiple
ownership. There is also an increase in infrastructure projects. If these projects are
to be delivered, compulsory purchase procedures will have to operate efficiently,
effectively and fairly.
• There is a general lack of expertise in most acquiring authorities, and in the private
sector, in the use of compulsory purchase powers. This is due to the low numbers of
compulsory purchase orders in recent times. The main exception is the Scottish
Executive Transport and Planning Group who use compulsory powers as a matter of
practice and operate the system efficiently and effectively.
• There are concerns about the delay and uncertainty in the timetable for confirmation
of orders, which can adversely affect both claimants and acquiring authorities.
• There is a broad acceptance that open market value is the appropriate basis for
compensation for land taken. Although it is by no means universal, nevertheless,
there is also a general feeling that a premium (10% is the most often suggested)
should be paid to compensate the claimant for the compulsory nature of the
acquisition. The costs and benefits of any alteration should be the subject of a
separate study.
• There is a general belief amongst claimants and their advisors that acquiring
authorities tend to take a "difficult approach" to claims for disturbance payments.
The onus of proof for each item of claim is usually insisted upon, but this may not
always be possible. A fair approach to disturbance payments should be balanced
against the need to ensure that public funds are properly spent.
• There is a concern, mainly from the private sector, that the limitations on professional
fees can adversely affect claimants. It is suggested that the acquiring authorities
should pay reasonable fees, whether or not the acquisition proceeds and irrespective
of the outcome of any compensation dispute. There is also concern that the potential
costs arising if the claimant is unsuccessful, deters applications to the Lands Tribunal
for Scotland (David against Goliath!)
48
• Rule 3 should not apply to acquisitions by privatised utilities unless they have
obtained a "Public Interest Certificate" confirming that the proposed use is for the
public interest and not for commercial purposes.
• The present position of "no blight" in Scotland may change if more major
redevelopment/infrastructure schemes are brought forward.
The Findings
6.1
In relation to the criteria of finance, time and certainty in the context of fairness between
parties, the findings on the key issues of the Study are as follows:
• Procedures
6.2
There is a consensus view that the procedures are complex, time-consuming and
uncertain. Although these defects can adversely affect both parties, each may exploit the
complexities/delays to their advantage.
6.3
In terms of the stated criteria:
6.4
-
Finance. The procedures can be expensive in terms of costs and delay.
-
Time. The extended timescales create uncertainty and can cause stress to those
affected. Such difficulties also affect acquiring authorities in planning and
delivering projects.
-
Certainty. The lack of certainty creates serious difficulties for both groups. Those
affected have to live (often in their home/business) with the threat of compulsory
purchase. On the other hand, acquiring authorities face uncertainty about whether or
not they will be able to proceed with the scheme.
We therefore recommend the following action:
-
That the current procedures should be reviewed with a view to reducing timescales
and increasing certainty, where possible.
• Compensation
6.5
The key issue is whether there should be provision for an additional payment over
and above open market value, as a result of the compulsory nature of the acquisition.
If so, what would be an appropriate amount and which categories should receive this
payment? The views vary from apprehension by acquiring authorities on the grounds
that increased costs will reduce the viability of projects to general support on the part
of the private sector, who advocate a premium of up to 30%.
The private sector, in particular, are concerned that:
• As the cost of professional fees are usually only recoverable as part of the
disturbance claim, if the acquisition does not proceed, usually through no fault of
49
the claimant, these costs are not recoverable. It is suggested that the acquiring
authority should bear any reasonable costs arising from their actions.
• Ryde's Scale rarely cover the full cost of surveyors fees and should be reviewed.
• Claimants are deterred from making applications to the Lands Tribunal for
Scotland because they will have to pay all of the costs, if unsuccessful It is
suggested that their liability should be limited to their own costs.
6.6
6.7
In terms of the stated criteria:
-
Finance. Acquiring authorities are not totally opposed to an additional premium
payment but their main concern is the potentially adverse effect that may have on the
prospects of schemes proceeding.
-
Time. Nowithtanding the procedural complexities, the time taken to settle claims for
compensation, typically six years, is unacceptable.
-
Certainty. The wide range between claims and offers and the uncertainty about the
amount of compensation, coupled with delays in receipt/payment, creates serious
difficulties for both parties.
We therefore recommend the following action:
-
A study to assess the costs/benefits of provision for a premium in addition to the
open market value. This should consider the appropriate amount and the categories
who should be entitled to receive the premium.
-
The regulations should be amended to make the acquiring authority liable for
reasonable fees incurred by claimants. Consideration will have to be given to an
appropriate trigger date for such liability.
-
Ryde's Scale should be reviewed.
-
Consideration should be given to limiting the claimants' maximum liability for costs
on application to the Lands Tribunal for Scotland, subject to provisions to deal with
unreasonable behaviour on the part of the claimant.
Blight
6.8
As there is little evidence of blight in Scotland, no firm conclusions can be drawn. There
is, however, clear evidence in England (for instance, the Channel Rail Link) that blight
can be a major issue with large-scale infrastructure projects. It would be wrong to
assume that similar difficulties could not arise in Scotland; they have not so far occurred
simply because there have been no large scale Scottish projects.
6.9
We therefore recommend the following action:
-
The conclusion of the DETR Study on this subject should be carefully considered to
assess whether or not any proposed changes would be appropriate in Scotland.
50
Identify Ways of Improving the Operation of Compulsory Purchase
6.10
We recommend the following:
Short term changes within the existing legislative framework.
6.11
6.12
Procedures
(i)
The Scottish Ministers should provide a clear policy statement on the use of
compulsory purchase powers. If orders are to be used to support planning policy
objectives, it may no longer be appropriate to restrict their use to cases of "last
resort". Acquiring authorities should understand the scope of their powers to
exercise compulsory purchase powers in a commercial context to allow them to
assist with site assembly for town centre development.
(ii)
Scottish Development Department Circular 42/76 should be revised and updated.
As well as providing a policy statement on the use of compulsory purchase
powers, the new circular should include guidance on:
-
The desirability of pursuing a compulsory purchase order in advance of either
development plan approval or a grant of planning permission for the project.
-
Matters to be covered by the acquiring authority in their Statement of
Reasons for making an order.
-
An "Easy Read" guide to compulsory purchase and compensation
procedures. The acquiring authority should be instructed to serve this guide
with the formal notification of the order on affected landowners.
-
Clarification of the supporting documentation to be submitted by the
acquiring authority to the Scottish Ministers on notification of the order.
-
Target timescales for Ministerial decisions on confirmation of orders
(iii)
The Scottish Executive should consider the production of a Best Practice manual.
(iv)
The Scottish Executive should progress towards confirmation of an order as soon
as reasonably practicable. In particular, they should not delay the procedure with
attempts to reconcile disputes between the parties. The proper forum for
consideration of such disputes is a public inquiry. Promotion of the order is the
responsibility of the acquiring authority. It is their responsibility to provide
evidence to the public inquiry to support confirmation of the order.
(v)
The Lands Tribunal for Scotland should be invited to review their procedures to
identify possible improvements to make the Tribunal more accessible.
Compensation
• A review of Ryde's Scale of professional fees should be undertaken as soon as
possible.
51
6.13
Blight
• No short-term measures are considered necessary in relation to current provisions of
blight.
Areas for further investigation by the Scottish Ministers (probably requiring
legislation)
6.14
Procedures
• Consideration should be given to updating and consolidating the legislative
framework governing compulsory purchase procedures.
• A future review of compulsory purchase procedures should identify opportunities to
increase speed. This is of particular importance if local authorities are to respond to
commercial pressures when facilitating town centre improvements.
• Consideration should be given to assess the significant issues currently arising in
practice regarding the scope for local authorities to enter into indemnity agreements
with private companies. For example, whether a local authority is entitled to enter
into an agreement to acquire land compulsorily and then transfer title onto a
particular developer, who has agreed to indemnify the authority for the acquisition
costs.
• As local authorities rarely have the necessary finance or expertise to implement major
redevelopment projects, consideration should be given to establishing a centrally
funded agency to support authorities in the exercise of compulsory purchase powers.
6.15
Compensation
• The costs and benefits of paying a premium should be assessed and, if payment of a
premium is considered to be appropriate, there should be guidance on how this
should be calculated for all or certain categories of claims.
• The rules of disturbance should be reviewed to ensure that claimants have a fair code
consistent with the requirements of public accountability.
• Consideration should be given to the possibility of claimants being entitled to recover
reasonable professional fees in the event of an acquiring authority withdrawing an
order.
• The system of awards of expenses by Lands Tribunal for Scotland should be
reconsidered to assess the benefits of restricting a claimants' maximum liability to his
own costs, if unsuccessful. However, the risk of encouraging frivolous claims should
be part of such an assessment .
• Consideration should be given to whether there is a need for privatised utilities to be
required to obtain a "Public Interest Certificate" if they wish to continue to benefit
from the application of Rule 3.
52
6.16
Blight
• The Scottish Executive should monitor the operation of any amendments to the blight
provisions in England and Wales and, if appropriate, incorporate such amendments
into Scottish legislation.
53
APPENDIX 1
TERMS OF REFERENCE
54
REVIEW OF COMPULSORY PURCHASE AND LAND COMPENSATION:
RESEARCH INTO THE OPERATION OF THE SYSTEM WITH A PARTICULAR
EMPAHASIS ON THE SCOTTISH DIMENSION
Background
1.
In July 1998 Scottish Office Ministers announced that there was to be Scottish
participation in a wide ranging review of the law and practice of compulsory purchase,
land compensation and related matters being led by DETR. They also confirmed that
there was to be separate work to ensure that the distinctive Scottish context was taken
fully into account in drawing up proposals for change, which would be for the Scottish
Parliament to consider. Professor Jeremy Rowan-Robinson of the University of
Aberdeen has been appointed as an external advisor to the Department for the review of
compulsory purchase, land compensation and related matters.
2.
The initial phase of the GB review is designed to identify interim measures to improve
the effective, efficient and fair operation of the system within the existing legislative
framework along with the areas for further investigation as part of a programme of work
for the second phase, which could involve more fundamental change.
Research Aims and Scope
3.
As part of the separate Scottish work programme, the Scottish Office Development
Department wishes to commission research aimed at establishing how the system
operates in Scotland currently and identifying ways of improving its operation. Any
proposals for change should encompass short-term changes within the existing legislative
framework and areas for further investigation with a view to the Scottish Parliament
considering a more fundamental scheme of reform. The overall objective of the research
is to provide an informed basis for a Scottish Office working group to draw up proposals
for consideration by Ministers. The research should be wide ranging in its scope from
the possibility of the use of compulsory purchase powers through to the settlement of
compensation including negotiations on the amount of compensation; any public local
inquiry into the compulsory purchase order; proceedings before the Lands Tribunal for
Scotland; the confirmation of the order and subsequent vesting process. The research
should encompass the full range of public and private sector bodies with compulsory
purchase powers including privatised utilities and other "commercial" organisations such
as the BAA plc.
Research Programme
4.
It is envisaged that there would be 3 distinct phases to the research. These can be
summarised as follows:
-
Firstly an analysis of previous research and literature to include those listed at Annex
A. The analysis to include a summary of the key issues, benefits and problems in the
operation of the compulsory purchase and land compensation system together with
an assessment of the extent of knowledge of the distinctive Scottish context from the
existing literature and research.
55
-
Secondly the researchers should seek to establish how far the issues, benefits and
problems identified in the first phase literature review are experienced in Scotland
and the extent of other distinctively Scottish issues/problems; to identify any patterns
of use/non-use of compulsory purchase powers which are distinctively Scottish
along with information on what other approaches are used and when; the role of the
development plan including issues associated with speed of preparation and review
of plans; the relationship between the operation of the system and the wider
Government policy framework e.g. on regeneration and provision of social needs
housing; and
-
Thirdly to identify current best practice along with possible solutions in changes in
approach together with an assessment of their respective contributions individually
and collectively to resolving the key issues/problems overall and in particular in the
Scottish context.
Research Design and Methods
5.
While it is for the researchers to prepare a detailed proposal setting out their
recommended design and methods, it is suggested that the following be included:
1.
The desk based literature review mentioned above.
2.
A listing of Scottish bodies with CP powers including the privatised utilities, the
powers themselves and any published guidance on policy on the use of such
powers.
3.
A survey of key non-local authority acquiring authorities such as NRD, Scottish
Enterprise, Highlands and Islands Enterprise, Scottish Power, Scottish Hydroelectric and SNH together with a representative sample of Scottish local
authorities to establish an understanding of their approach to and experience of
the use/non-use of their compulsory purchase powers and associated issues of
compensation. Such a survey should encompass interviews with a representative
sample of acquiring authorities including Scottish local authorities.
4.
A survey of other key participants in the system to include the Chief Valuer
Scotland at the Office of the District Valuer, the Lands Tribunal of Scotland and a
representative sample of relevant representative organisations of professional
advisers involved in advising "both sides" on the compulsory purchase order and
the associated compensation provisions. The following list of such organisations
is intended to be advisory and it would be for the researchers to determine the
composition of a representative sample. The initial list includes the RTPI, the
RICS, the Law Society of Scotland, the Chartered Institute of Housing, Scottish
Federation of Housing Associations, Association of Chief Estates Surveyors,
Central Association for Agricultural Valuers (CAAV) and Incorporated Society
of Valuers and Auctioneers.
56
5.
A survey of Scottish Office staff by an agreed semi-structured interview, to
include administrative divisions responsible for compulsory purchase case
handling (e.g. Planning and Historic Scotland), members of Solicitor’s Office
responsible for advising on both CPOs on an all client basis and National Roads
Directorate as the acquiring authority; and SOIRU – Reporters and administrative
staff in relation to CPO PLIs.
6.
Tenders should outline in detail; their proposed methodology including, where
appropriate the number of interviews to be undertaken. Tenderers are also invited to
specify other approaches to be adopted in support of achieving the aims and objectives of
the study. Tenders should provide a detailed breakdown of tasks per member of the
study team and how this corresponds to the various stages of the research.
7.
While the composition of the research team is primarily for the contractor to determine it
is envisaged that the team will have or have access to planning, surveying, property
advice and legal expertise on the operation of the compulsory purchase and land
compensation system including sufficient knowledge of the distinctive Scottish context.
Timetable
8.
It is intended that this project should last for approximately 7 months with a start date on
award of the contract in December 1998.
Outputs
9.
The following outputs are required:
•
•
•
•
An inception report to be produced by 15 January 1999.
An interim report to be produced by 26 February 1999.
A draft final report to be submitted by 9 April 1999.
To convene and contribute to a research symposium in May 1999 (date to be
finalised).
• A final report by 4 June 1999.
• A summary of research findings for the CRU Research Findings Series.
10.
The inception report will enable the contractor to develop themes as set out in their
proposal and to agree the overall scope of the research with the advisory committee.
Included in the inception report will be a review of the literature from which the
contractor should draw out important differences between the CPO process in Scotland
compared to the rest of the UK. The inception report should also include a complete
listing of all bodies or organisations in Scotland identified by the contractors with CPO
and related powers. The contractors will be expected to demonstrate how the net phases
of the research would be undertaken.
11.
The interim report will be based on the preliminary findings of the survey work with
non-local authority acquiring authorities, a representative sample of local authorities and
interviews with other key participants. These findings will help the researchers identify
the relevant context in which to complete the survey analysis with an agreed formal of
semi structured interviews with Scottish Office staff.
57
12.
The draft report draws on the research outputs together with examples and an assessment
of current best practice. It should identify obstacles to effective use of compulsory
purchase powers, provisional recommendations on ways of improving the operation of
the compulsory purchase and compensation system within the existing legislative
framework in Scotland. The draft final report should include the researchers’ views on
possible solutions to improving the operation of the system in Scotland and advice on the
minimum necessary information to provide in the future an ongoing monitoring
framework on the operation of the system together with an estimate of the cost and the
sources of information. The monitoring framework should seek to minimise the burden
on acquiring authorities and any requirement to collect information not already routinely
available would need to be justified.
13.
The final report is likely to be in the region of 60-80 pages and should be of publishable
standard. The contractor should provide the Department with 5 camera ready copies of
the final report and a disk containing the text (compatible with MS DOS).
The
contractor will also be required to provide a short four-page summary of the research
finding from the final report in the style of the CRU Research Findings Series.
14.
It is expected that the contractors will contribute to and convene a research symposium.
Precise formal of the event will be agreed in advance with the advisory group. The
purpose of the research symposium is to provide the contractors with the opportunity to
disseminate the research findings to a selected audience of practitioners and to allow for
discussion, feedback and comments on the conclusions and recommendations. It is
anticipated that the symposium will aid the contractors in drafting the final report.
15.
The contractors have the responsibility to submit 8 unbound copies of relevant papers to
the Scottish Office one wee before the date of the meeting of the advisory group. This
includes circulation of the inception report in January 1999, the interim report in
February 1999 and the draft final report in April 1999. The final report and research
findings should be submitted within 2 weeks days of receiving the advisory group’s
comments or according to a timetable agreed between the advisory group and the
contractor. Arrangements and timetable for advisory group will be decided upon at its
first meeting soon after the submission of the inception report.
Costs
16.
The tendered sum for this work should include all liability for all costs including staff,
equipment, travel and subsistence and overheads. Payments will be phased and linked to
the successful completion of key stages of the research. Tenderers liable for VAT on
government funded research projects should indicate this in their proposal. Payments
will be phased and linked to the successful completion of the key stages in the research.
Ownership and Publication of the Report
17.
Ownership of all research data and reports lies with the Secretary of State for Scotland.
Decisions on all aspects of publication of the report rests with The Scottish Office
Development Department.
58
Responsibilities of the Contractor
18.
The contractor will be responsible for ensuring compliance with the Data Protection Act
(1984) and must agree to abide by any guidelines issued by their profession.
Management of Research
19.
The project supervisor and chair of the advisory group will be Mrs Louise Donnelly of
Planning Division, the project manager for this research will be Mrs Janice Crerar,
Planning Division, and the CRU contact for research will be Mr Mike Chapman. The
advisory group will consist of the project management team together with representatives
from Planning Services, Land and Property Division, National Roads Directorate,
SOIRU and Housing Division together with Professor Jeremy Rowan-Robinson. The
contractor will be expected to attend a minimum of three meetings of the advisory group
during the course of the research project.
Submitting a Tender
20.
Responses should be based upon the information given in the specification and on the
knowledge and professional expertise of the tenderer. Clarification of particular points
can, however, be sought from Mrs Louise Donnelly of Planning Division, telephone
0131 –244 7059 or Mike Chapman, Central Research Unit, telephone 0131 224 0376.
21.
Contractors should, in no more than 2,000 words detail their proposed approach to the
study and their planning staging of the various elements of work. They should also
provide the following information:
• Name of applicant and/or organisation with which the contract would be placed.
• Relevance of applicant’s previous research or survey experience to current
application.
• Number, role, inputs and expertise of all staff to be involved in the project.
• Costings for the project, set out both by the main components of the work and by fee
and expense rates. Where appropriate tenders should include VAT and/or overheads
– costed as a separate item.
Tenders should be submitted by 11:00 am on 10 December 1998 to:
Linda Nicholson
Head of Planning Research Branch
The Scottish Office
Central Research Unit
CRU-2J
Victorian Quay
Edinburgh
EH6 6QQ
The Scottish Office Development Department
November 1998
59
APPENDIX 2
KEY PROCEDURAL STEPS
STAGE
DESCRIPTION
TIMETABLE/COMMENTS
Resolution
Acquiring authority resolves to make an order to In the hands of the acquiring
acquire land compulsorily under relevant statutory authority.
power.
Public Notice
Newspaper advertisement for 2 successive weeks.
Notices
Notice served on owners, lessees and occupiers Objections to be submitted within
advising of date by which objections have to be lodged period not less than 21 days from
with the Scottish Ministers. Statement of Reasons the date of notice.
should be served with the statutory notice.
Objection
(Public Local
Inquiry)
If objections submitted and not subsequently In the hands of the Minister and the
withdrawn, public inquiry must be held by Reporter Reporters Unit. Typical period is
appointed by the Scottish Ministers.
6/12 months to arrange the inquiry
and 6/12 months for a decision on
confirmation.
Confirmation
Following consideration of outstanding objections and In the hands
Reporters' report on the public inquiry, the Scottish Ministers.
MinisterS may confirm the order with or without
modification, or decline to confirm the order.
Legal
Challenge
If order is confirmed, right to challenge the validity of Depends on nature of statutory
the order in the Court of Session within 6 weeks.
appeal and court time-scales.
Entry
Entry to land by the acquiring authority may be taken Minimum period to take entry and
under general vesting declaration.
title is 28 days with occupiers'
consent.
Otherwise, minimum
period is 3 months.
of
the
Scottish
Or
Notice to Treat followed by/with a Notice of Entry.
60
Minimum period to take entry is 14
days after serving notice. The date
of entry fixes the date for assessing
compensation but it does not have to
be paid on the date (interest will
however run from the date of entry).
The acquiring authority do not
however acquire title which can
only be transferred once the
compensation is determined.
APPENDIX 3
AUTHORITIES WITH POWERS OF COMPULSORY PURCHASE
CATEGORY
All Government Departments
All Local Authorities
AUTHORITIES
Agriculture, Environment and Fisheries
Department of Health
Development Department
Education and Industry
Home Department
Social Work Services Group
Most Government Agencies
Eg. Scottish Natural Heritage
Scottish Environmental Protection Agency
Scottish Enterprise (and all LECs)
Aberdeenshire Council
Angus Council
Argyll and Bute Council
Borders Council
City of Aberdeen Council
City of Dundee Council
City of Edinburgh Council
City of Glasgow Council
Clackmannan Council
Dumbarton and Clydebank Council
Dumfries and Galloway Council
East Ayrshire Council
East Dumbartonshire Council
East Lothian Council
East Renfrewshire Council
Falkirk Council
Fife Council
Highland Council
Inverclyde Council
Midlothian Council
Moray Council
North Ayrshire Council
North Lanarkshire Council
Orkney Islands Council
Perth and Kinross Council
Renfrewshire Council
Shetland Islands Council
South Ayrshire Council
South Lanarkshire Council
Stirling Council
West Lothian Council
Western Isles Council
61
APPENDIX 3 Cont.
CATEGORY
AUTHORITIES
Bodies with Statutory Obligations
British Coal
Health Trusts
Scottish Gas
Scottish Power
Scottish Hydro-Electric
Water Authorities
Bodies subject to a Regulator
British Airports Authority
Atomic Energy Authority
British Energy
Scottish Forest Enterprise
Pipelines (Oil Companies)
Telecommunications (eg BT)
Railtrack
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APPENDIX 4
SUMMARY OF INFORMATION PROVIDED BY THE KEEPER –
REGISTERS OF SCOTLAND
Summary of Information on CPO’s Provided by The Keeper – Register of Scotland
Type of CPO’s
Year of
Registration
Acquiring Authority
1994
Secretary of State
Regional Council (5)
District Council (9)
Islands Council (1)
1995
Secretary of State
Regional Council (3)
District Council (7)
Islands Council (1)
1996
Secretary of State
Regional Council (4)
District Council (9)
Islands Council
1997
Secretary of State
Unitary Authority (2)
Regional Council (2)
District Council (5)
1998
Secretary of State
Unitary Authority (3)
Regional Council (1)
District Council (5)
Scottish Power
Total N0. of
CPO’s
Total No of
Properties
Acquired
Roads
Housing
Misc
11
6
23
1
41
6
8
13
4
31
14
4
12
1
31
8
2
3
6
19
3
4
1
3
1
12
362
33
256
651
239
54
50
21
364
696
45
36
1
778
250
17
9
46
322
39
8
11
14
1
73
11
3
14
6
4
1
1
12
13
2
15
8
1
1
10
3
3
2
2
1
2
3
2
2
1
1
3
21
1
25
3
10
3
16
1
2
9
1
13
1
2
6
9
4
1
2
1
8
134
2188
48
5
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Notes: 1. Figures in brackets under Acquiring Authority indicate number of individual Authorities or Councils
2. Figures reflect local government reorganisation at 1 April 1996
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APPENDIX 5
QUESTIONNAIRE
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THE SCOTTISH OFFICE REVIEW OF COMPULSORY PURCHASE
AND LAND COMPENSATION
SURVEY OF ACQUIRING AUTHORITIES
AUTHORITY:
NAME(S):
DATE OF INTERVIEW:
INTERVIEWER:
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The following questions relate to post April 1996 when Local Government was reorganised.
The questions are organised under two main headings i.e. procedural issues and compensation
issues.
PROCEDURAL ISSUES
1.
To what extent have acquisitions been pursued:
(i)
(ii)
(iii)
By agreement?
By agreement under the threat of Compulsory Purchase?
In pursuance of Compulsory Purchase?
2.
For what purposes have Compulsory Purchase powers been used?
3.
What are the sources of Compulsory Purchase action?
e.g.
4.
Development plans, planning permissions, private legislation, deemed
planning permissions, others.
To what extent are CPOs opposed
(i)
(ii)
Initially?
Objections maintained to inquiry?
5.
How many CPOs have been referred to the Secretary of State for Scotland for
confirmation – classified into acquisitions purposes?
6.
To what extent have Compulsory Purchase provisions been contained within
Scottish private legislation?
7.
What are the typical time periods for each stage of the process, between the
following states:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
Identification of possible need for Compulsory Purchase.
Authorisation by acquiring authority.
Service of Compulsory Purchase Notice.
Confirmation of CPO.
(a)
Un-opposed
(b)
Opposed
Service of Notice to Treat.
Entry to Land.
Advance payment.
Agreement on compensation.
8.
Should investors as well as owner/occupiers be able to serve a blight notice?
9.
Should the current restrictions which prevent commercial property owners from
serving a blight notice if their rateable value is over a certain figure [currently
£21,500] be removed in the case of owner/occupied properties?
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10.
Should the current requirements on owner/occupier claimants affected by blight to
make reasonable efforts to dispose of their property on the open market before
compensation is received be removed?
11.
Should adjoining property owners be given the right to serve a notice requiring the
purchase of the property in cases where its character and amenity can be shown to
have been materially affected to such a degree that compensation in value is not an
adequate or appropriate remedy?
12.
Should there be a clear duty on local authorities to inform owners about
notifications of schemes received from the Secretary of State as well as adopted
road schemes initiated by Highway Authorities?
13.
Should the blight notice procedure be speeded up?
14.
To what extent is the purchase notice procedure used and with what consequences?
15.
To what extent is the Certificate of Appropriate Alternative Development
procedure used and to what effect?
16.
Should the CPO process be changed so that the acquiring authorities assume the
obligations which they currently take on when the serve Notice to Treat at the time
that they resolve to make the CPO?
17.
Would a Manual of Best Practice be helpful?
18.
Do Acquiring Authorities explain to claimants their rights to compensation; in
particular that the cost of professional fees is included with the compensation?
Should they be under an obligation to do so?
19.
Should disputes be referred to a more local informal forum (for example an
Independent Expert)?
20.
What procedural difficulties are experienced by Acquiring Authorities?
21.
Are there any improvements which would assist the process?
COMPENSATION ISSUES
1.
At present claimants are treated as willing sellers and obliged to mitigate their loss.
Should this be altered so that acquiring authorities are obliged to mitigate
hardship?
2.
Advance payments are based on 90% of the acquiring authorities estimate of
compensation. Should this be altered to that the advance payment is based on the
average of the estimate and claim subject to a fast track arbitration?
3.
Claimants who have not moved in anticipation of dispossession may be given only
28 days notice to move by the acquiring authority. To find suitable alternative
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premises for a business and to relocate within 28 days is virtually impossible.
Should this period be extended to say 90 days?
4.
The judge-made impecuiniosity rule can cause considerable hardship. Should this
be changed by legislation?
5.
Should an additional allowance over and above open market value be paid for all
claims in respect of non-residential land to reflect the fact that the acquisition is
compulsory (in the case of residential property an additional payment over and
above market value is now paid to reflect the fact that it is a compulsory
acquisition)?
6.
Should the method of calculating market value be amended so account may be
taken of demand from both the private sector, including the needs of a particular
non-statutory purchaser the and the public sector?
7.
Should a supplementary allowance on top of the compensation otherwise payable be
paid to the occupier of agricultural, industrial and commercial property when part
of his land is taken and there is damage by way of severance or injurious affection?
8.
Should the claimant from whom no land is acquired but who is entitled to
compensation following the physical interference with the legal right receive
compensation for all losses, including loss of profits, rather than the compensation
being limited to depreciation in the value of the land?
9.
Where part only of the claimants land is taken should compensation for injurious
affection to the retained land include any loss of profit and costs caused as a direct
result of the execution of the works in connection with the scheme for which the
land was acquired?
10.
Should interest on a compound basis or acrued interest whether or not it exceeds
the current limit of £1,000 be paid annually to the claimant if he so requests?
11.
Should interest on surveyors fees be payable only from the date on which the
surveyor is instructed?
12.
Should advance payments be available to all interests being compensated; in
particular interests no greater than yearly tenancies.
13.
Should advance payments be payable as a right to all claimants when compensation
is payable and not just in cases where land is actually taken?
14.
Should the owner of a property be entitled to compensation for any cost directly
and reasonably incurred as a result of an indication that the relevant land is to be
compulsorily acquired?
15.
Should the Lands Tribunal have the power to direct that the whole or part of the
compensation awarded should be retained and paid only when reinstatement
(compensation under Rule 5) takes place?
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16.
Should Ryde's scale be increased to ensure that claimants have appropriate
professional advice?
17.
Should claimants be able to claim for the effect of capital gains tax which may be
incurred because the acquisition was at a time not of their choosing?
18.
Do you think there should be any changes to the compensation code and if so what
are these?
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