Nofax Station Road Limited v The London Brough of Barnet

Compensation for compulsory acquisition must reflect the owner’s actual loss, applying the statutory no-scheme principle and the principle of equivalence. Appropriate alternative development is assessed on a broad-brush basis, using the circumstances known to the market at the valuation date. The assumed development need not be shown with the detail required for a full planning application, but it must contain sufficient detail to demonstrate compliance with the development plan and to permit valuation. Fundamental planning deficiencies cannot be left to later adjustment. Where the scheme has reduced the value of a retained part of the owner’s wider site, compensation may reflect the resulting loss in the value of the whole site. A before-and-after valuation is permissible where it properly compares like with like.

The claimant owned a 0.33-acre site at Station Road, Hendon. The acquiring authority compulsorily acquired a 0.12-acre frontage strip under a compulsory purchase order for highway works connected with the redevelopment of the West Hendon estate. The valuation date was 1 November 2019.

The parties disputed the extent of appropriate alternative development in the cancelled-scheme world, the resulting land value, and whether compensation should be assessed by a before-and-after valuation of the whole site. The reference also included severance and injurious affection, professional fees and a basic loss payment.

1. Appropriate alternative development. The Tribunal applied the broad-brush approach described by the Supreme Court in Secretary of State for Transport v Curzon Park Ltd and others [2023] UKSC 30. The planning authority or Tribunal must assess what permission could reasonably have been expected on the relevant assumptions, using the circumstances known to the market at the valuation date. The exercise resembles an ordinary planning assessment, but proceeds on more limited information.
2. The assumed scheme need not be detailed to full-application standard. It must nevertheless contain enough detail to demonstrate compliance with the development plan and to enable a reasonable valuer to value it. Some matters, such as finishes and landscaping, may be left for later agreement. Fundamental departures from planning standards cannot be postponed as mere “tweaks”. The claimant’s proposed 53-unit scheme was therefore rejected.
3. The authority’s concept scheme, revised to comprise 37 residential units with no affordable housing or commercial space, had a reasonable prospect of permission and constituted appropriate alternative development. The value of the whole site on that basis was assessed at approximately £2.1 million.
4. Valuation principle. The principle of equivalence required compensation fully and fairly to reflect the loss actually suffered. The statutory open-market valuation rule did not require the acquired strip to be valued in isolation where that would fail to reflect the loss caused by the scheme to the owner’s retained land. The before-and-after approach was appropriate on the evidence.
5. The no-scheme principle required the decrease in value caused by the prospect of the scheme to be disregarded, including a reduction crystallised by the construction of a smaller building on the retained land before the valuation date. The appropriate comparison was between the value of the whole site in the no-scheme world and the value of the retained land in the scheme world. The resulting loss was £1,510,000.
6. The Tribunal awarded £1,510,000 compensation, professional fees of £62,845.20, and the maximum basic loss payment of £75,000. The decision was final except as to costs.