MWH Associates Ltd v Wrexham County Borough Council (Rev 1)

Compensation under section 107 of the Town and Country Planning Act 1990 requires loss or damage to be directly attributable to the revocation or modification. Where environmental protection law already made the proposed use unlawful without a derogation licence, a modification order may merely recognise that restriction. Depreciation caused by protected-site designation, species protection and the absence of a licence is not attributable to the order. Under regulation 44(3)(b) of the Conservation (Natural Habitats) Regulations 1994, comparison of donor and receptor habitats may be necessary to assess detriment to the species population and its favourable conservation status. Lack of a present intention to work is not independently fatal to every claim, though it is material to lost-profit claims. Appeal dismissed.

MWH Associates Ltd claimed compensation from Wrexham County Borough Council under section 107 of the Town and Country Planning Act 1990 after planning modifications restricted mineral extraction and landfill at Hafod Quarry, which contained protected great crested newts and had been designated an SSSI and SAC. The Upper Tribunal, Lands Tribunal, rejected the claim, finding that MWH had not genuinely intended to work the area, that a derogation licence would not have been granted, and that the depreciation was not directly attributable to the deemed modification order: [2011] UKUT 269 LC. MWH appealed, challenging the statutory test for a derogation licence and the causation analysis.

Appeal dismissed unanimously. The Court of Appeal upheld the Upper Tribunal’s essential findings.

1. Derogation licence. Regulation 44(3) of the Conservation (Natural Habitats) Regulations 1994 required the authority to be satisfied that there was no satisfactory alternative and that the proposed action would not be detrimental to maintenance of the species population and a favourable conservation status in its natural range. The detriment limb could be assessed by comparing donor site R2 with receptor site R1. Although paragraph 149 of the Tribunal’s decision, read alone, appeared to formulate a best-site test, paragraph 150 showed that the Tribunal had applied the correct statutory inquiry. Its detailed findings concerning carrying capacity, habitat quality, management, predation, invasive species and geographical range justified the conclusion that translocation would be detrimental. No error of law was established.
2. Direct attribution. Section 107 of the Town and Country Planning Act 1990 required the loss to be directly attributable to the modification. The fact that the council lawfully made, or may have been obliged to make, modification orders under section 97 did not prevent the Tribunal from finding that the real cause of the inability to work was the protected status of the land, the presence of the newts and the resulting environmental restrictions. The orders recognised in planning terms what environmental legislation already prohibited. The law did not provide compensation for loss of value caused by the designation of the SAC.
3. Intention and valuation. The claim should not fail solely because the appellants had realistically not formed a current intention to work the site. Intention remained an essential consideration in a claim for loss of profit. The agreed valuation used notional lost profit as representing diminution in value, but the claim was defeated by the absence of a licence and the lack of direct attribution. The long duration of the planning permission did not assist because any future relaxation of protected status and resulting value was speculative and unsupported by evidence. Arden LJ left open whether section 107 dealt with contingent future loss.

The Tribunal’s decision was affirmed and the appeal was dismissed.

• Court of Appeal (Civil Division): Dismissed MWH’s appeal and upheld the decision below.
• Upper Tribunal (Lands Tribunal): On 19 July 2011, rejected the compensation claim after finding that no derogation licence would have been issued and that the loss was not directly attributable to the modification order: [2011] UKUT 269 LC.