Simon Nelson v Southern Electric Power Distribution

Compensation for a necessary electricity wayleave should reflect the owner’s loss over the wayleave period. Where the apparatus both reduces the value of the property as built and prevents implementation of a more valuable permitted development, the proper comparison is between the property’s value, including that development opportunity, without the apparatus and its reduced value with the apparatus. The resulting capital loss may be converted into an annual equivalent and capitalised for the 15-year wayleave period.

A claimed future cost of electricity shutdowns is not compensable where the relevant work can safely be carried out without a shutdown and no loss has been incurred.

The claimant owned Dale House, across which a pole and 11kV electricity line ran. The Secretary of State granted Southern Electric Power Distribution a 15-year necessary wayleave under paragraph 6 of Schedule 4 to the Electricity Act 1989.

On a reference under paragraph 7, the claimant sought compensation for diminution in value, loss of the opportunity to implement a larger planning permission, and the anticipated cost of future shutdowns to allow maintenance. The valuation experts agreed the relevant figures but disagreed on whether diminution and lost development value were alternatives or cumulative.

The central issue was the proper valuation of the loss caused by the grant of the wayleave.

1. Compensation was determined at £47,250. The claim for anticipated shutdown costs was rejected.

2. Paragraph 7 of Schedule 4 to the Electricity Act 1989 required compensation for the loss caused by the 15-year wayleave. The agreed valuation of the property as built, without apparatus, was £1.5 million. The agreed effect of the apparatus on that property was a 2.5% reduction, or £37,500.

3. The claimant had, but for the wayleave, retained the opportunity to implement a larger permitted scheme. The Tribunal accepted that the agreed £53,500 represented additional value above £1.5 million for that development opportunity, after allowing for the cost of carrying it out. It was neither correct simply to treat diminution and development value as alternatives nor simply to add separately annualised awards.

4. The proper counterfactual comparison was £1,553,500 without the apparatus, comprising the built property and the development opportunity, against £1,462,500 with the apparatus, being the built property less the agreed 2.5% reduction. The resulting capital loss was annualised at 5% and capitalised for 15 years, producing £47,250.

5. The claimed costs of two annual shutdowns failed. The Tribunal accepted that gutter clearance could safely be performed outside the danger zone. No further shutdown had been permitted or paid for during the first two years, so the claimant had suffered no loss and should not suffer one in future.

Costs were reserved for later determination.

This was a first-instance reference to the Upper Tribunal. The Secretary of State granted the necessary wayleave on 7 July 2023. The judgment records an unsuccessful judicial review concerning the Planning Inspector’s recommendation and an unsuccessful appeal to the Court of Appeal from a Tribunal directions order, but gives no citations.