Secretary of State for Transport v Curzon Park Ltd & Ors

The Court of Appeal considered whether, when deciding a certificate of appropriate alternative development (a CAAD) under section 17 of the Land Compensation Act 1961, the decision-maker may take into account CAAD applications or decisions on other land acquired for the same underlying compulsory acquisition scheme. The court held that the statutory "cancellation" assumption in section 14(5)(a) requires the decision-maker to assume the scheme had been cancelled at the launch date and, consequently, that CAAD applications arising only because of that scheme could not have been made and must be disregarded.

The court emphasised application of the reality principle and the statutory valuation date (section 5A): events or applications occurring after the relevant valuation date cannot be treated as known to the market at that date and so cannot be used to alter the hypothetical grant of planning permission. The court also confirmed that a CAAD is not equivalent to a grant of planning permission and is not a material planning consideration when determining what planning permission could reasonably have been expected.

The appeal was dismissed. The court also dismissed the challenge to the Upper Tribunal's costs direction under section 17(10), upholding the UT's approach that expenses reasonably incurred in connection with the CAAD proceedings may be made payable as part of compensation (subject to reasonableness).

Background and parties: The Secretary of State for Transport compulsorily acquired four contiguous development sites in Birmingham for the HS2 terminus. Each of the four landowners applied to Birmingham City Council for certificates of appropriate alternative development (CAADs) under section 17 of the Land Compensation Act 1961. The Council issued some certificates and other applications were appealed or undetermined. The Secretary of State challenged the approach to assessing appropriate alternative development in the Upper Tribunal and appealed to the Court of Appeal.

Nature of the application: This was an appeal from a preliminary issue decided by the Upper Tribunal. The preliminary issue was whether, for the purposes of section 14(4)(b) of the Land Compensation Act 1961, a decision-maker determining the development for which planning permission could reasonably have been expected may take into account CAAD applications or decisions relating to other land acquired for the same underlying scheme.

Procedural posture: Appeal from the Upper Tribunal (Lands Chamber) decision [2020] UKUT 0037 (LC). The Court of Appeal heard argument on the preliminary issue and on costs.

Issues before the court:

• Whether the cancellation assumption in section 14(5) required the decision-maker to assume no CAAD applications on other sites could have been made.
• Whether an application for, or grant of, a CAAD on another site should be treated as a notional planning application or planning permission and therefore be a material consideration when determining appropriate alternative development.
• Whether the Upper Tribunal erred in its costs order under section 17(10) of the 1961 Act.

Court’s reasoning: The court analysed the statutory code (notably section 14 and section 5A) and general valuation principles: the reality principle and the principle of equivalence. It held that the cancellation assumption requires the hypothetical "no-scheme" world to exclude consequences that could not have occurred in that world. Because a CAAD can only be applied for where an interest is proposed to be acquired by an authority with compulsory powers, in the assumed no-scheme world such applications could not have been made and therefore must be disregarded when determining what planning permission could reasonably have been expected at the valuation date. The court also observed that CAADs are valuation devices only; they do not alter land use in the real world and are not equivalent to planning permissions or material planning considerations. The court stressed that events after the relevant valuation date cannot be treated as known to the market (section 5A(2)) and that the statute’s assumptions should not be supplemented by judge-made assumptions in the name of fairness. On costs, the court upheld the UT's order that reasonable expenses in connection with CAAD proceedings may be made payable as part of compensation, subject to usual limitations about reasonableness.

Result: The appeal was dismissed. The Court of Appeal answered the preliminary issue by holding that CAAD applications or decisions concerning other land arising from the same compulsory acquisition scheme are not to be treated as notional planning applications or grants of planning permission and are not material planning considerations.

Appeal dismissed. The court concluded that the cancellation assumption in section 14(5) requires the decision-maker, when assessing appropriate alternative development for a particular parcel of land, to disregard CAAD applications or certificates relating to other land that arise solely because of the same compulsory acquisition scheme; such CAADs are not equivalent to planning permissions nor are they material planning considerations. The court also upheld the Upper Tribunal's approach to costs under section 17(10), leaving open issues of reasonableness of amount and necessity.

Appeal from the Upper Tribunal (Lands Chamber) decision [2020] UKUT 0037 (LC). The UT had addressed a preliminary issue about the treatment of CAAD applications across sites; the Court of Appeal heard the appeal and dismissed it on 6 May 2021.