Castlefield Property Limited v National Highways Ltd

Compensation for injurious affection is assessed by comparing the value of retained land immediately before and after severance, at the valuation date. The valuation must take account of matters known or reasonably anticipated at that date, but not later events which could not then have been known.

The governing principle is equivalence: compensation should fairly reflect the claimant’s actual loss, no more and no less. Separate heads of compensation may overlap conceptually, but the overall award must avoid both under-compensation and double recovery. Where replacement access is longer, less convenient and subject to uncertainty over legal rights, both physical disadvantage and access uncertainty may reduce the retained land’s value.

The claimant acquired a public house and development site after the acquiring authority had compulsorily acquired land providing its sole access. The access was replaced by a longer route over adjoining land, but the acquiring authority left the claimant to negotiate easement and service rights with the adjoining owner.

The negotiations remained unresolved when the reference was heard. The claimant sought compensation for the diminution in value of the retained land, together with disturbance and other losses, including holding costs and works to the replacement access. The central issues were the valuation date, the relevance of later events, the effect of the replacement access and the appropriate compensation for delayed certainty over access rights.

1. Valuation date and hindsight. Compensation for injurious affection under Compulsory Purchase Act 1965, section 7, required a comparison between the value before and after severance as at 10 November 2014. The hypothetical purchaser could be assumed to know or anticipate matters that a reasonably prudent and properly advised purchaser would have known or anticipated at that date. Later events could not be imported retrospectively where they were neither known nor knowable then. The approach suggested in Waterworth v Bolton MBC (1979) 37 P&CR 104 was wrong in principle and was not followed.
2. Equivalence and access. The assessment had to place the claimant, so far as money could do so, in the position it would have occupied had the reference land not been acquired. The longer and less prominent replacement access reduced the site’s value by 10%. The uncertainty over obtaining enforceable easement and service rights caused a further 20% reduction. Injurious affection was therefore assessed at £360,000.
3. Other compensation. The Tribunal allowed £42,000 for carriageway repairs, £5,500 for speed bumps, £7,500 for additional signage and £415,626 for the cost of money between 2 June 2017 and 16 May 2023. The claimant failed to establish that access uncertainty prevented demolition or justified recovery of business rates.
4. The total compensation was £947,501, comprising injurious affection, the agreed value of land taken, statutory loss payment and rule 6 compensation. The parties were directed to agree the calculation of statutory interest, the advance payment and a draft order incorporating National Highways’ undertakings.