Responding to a Compulsory Purchase Order – an opportunity or existential threat?

Local authorities are being encouraged to use Compulsory Purchase powers more often to unlock land for house building.

Also, the House of Commons’ Housing, Communities and Local Government Committee is currently examining the effectiveness of current land value capture methods and the need for new ways of capturing any uplift in the value of land associated with the granting of planning permission or nearby infrastructure improvements. In this connection the seminar my firm hosted on 23 May is extremely timely.

Having dealt with many businesses up and down the country either threatened with or subjected to a Compulsory Purchase Order (CPO), I could not resist reading Lance Forman’s book Forman’s Games about his own experience on the London Olympic site. Therefore, it was with great interest that I invited him to come and speak at the seminar.

Professionally and personally I have always found it very sad that perfectly viable businesses end up being extinguished only because they cannot relocate within the notice period because planning and other regulations means it would take months or even years to secure approval for a new location.

That is why it was fascinating for the audience to listen to Lance describe some of the tactics used by the authorities to clear the Olympic site, such as saying it was a ‘regeneration project’ and the land was ‘derelict’, which he believes were underhand and designed to depress the value. He told the audience that he was even approached by a shadowy businessman offering to buy his site at critical points during the negotiations! Lance decided to research every aspect of compulsory purchase law in great detail and concluded that even wining a CPO battle in the courts was a bad result for him as the law itself was unfair.

Lance raised many other issues that he regarded as deserving wider debate, including:

  • The time he spent on letters and meetings with the acquiring authority, preparing for the public inquiry, speaking to journalists, was time he was not serving his customers or developing his business and for which he was not compensated.
  • Businesses experienced ruthless competitors taking advantage while they were preoccupied with the disruption of the CPO by approaching their customers and suggesting that their established supplier may not be in business for much longer.
  • Compensation based on the ‘no-scheme world’ is fundamentally flawed for businesses that want to relocate in his opinion. This is because they need to find alternative premises in the ‘scheme world’, at a time when others are also looking to relocate and so there is a much smaller pool of sites.
  • The approach to betterment is also flawed because it is almost always impossible to find a building that is equivalent in size, in which case the tendency is to take slightly larger premises and so the business bears the additional costs.
  • The inequality of resources between the Claimant and the acquiring authority in engaging professional assistance.
  • There is no compensation for employees other than statutory redundancy pay.

Meyric Lewis, a leading CPO barrister from Francis Taylor Building, splendidly dovetailed his talk with Lance’s. He started by reminding us that the foundations for protecting property rights were first mentioned in Magna Carta. He then described the basis and assumption developed by case law used to quantify the compensation before describing the cases that introduced the recognition of hope value, ransom value and disturbance.

Meyric described recent developments in the treatment of business losses (including the approach taken in the “Contraband” case where I gave evidence before the Tribunal), issues surrounding claiming relocation costs, or where owners have negative equity and finally generalised blight (“Ramac”). He then brought us right up to date with the cautionary tales of the Heron Quay and Aylesbury Estates CPO inquiries, the codification of the “no-scheme rule” earlier this year and the proposed protocol for dealing with compensation (where he has played a key part in its drafting). Meyric covered a great deal of ground and demonstrated just how much we rely on a patchwork of case law when quantifying compensation. With many claims due along the HS2 route and at Heathrow, further reform is sorely need. If you would like to know more, please contact me.

Charles Lazarevic
charles.lazarevic@veroconsulting.expert
21 June 2018

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