PURFLEET FARMS LIMITED v SECRETARY OF STATE FOR THE ENVIRONMENT, TRANSPORT AND THE REGIONS ACQ/108/2000

UPPER TRIBUNAL

LANDS CHAMBER

ACQ/108/2000

Case No ACQ/108/2000

Between

PURFLEET FARMS LIMITEDApplicant

SECRETARY OF STATE FOR THE ENVIRONMENT, TRANSPORT AND THE REGIONSRespondent

Before

The President

P H Clarke FRICS

Venue 48/49 Chancery Lane, London WC2

Date 10 April 2001

Hearing 8, 10-12, 15-19 January 2001

Property: Land at London Road Purfleet and, London Road West Thurrock, Purfleet, Essex

Catchwords: COMPENSATION – acquisition following blight notice – development land – planning assumptions – provision of open space – access – cost of necessary highway works – contribution towards general highway improvements – date of grant of assumed planning permission – deferment – net developable area – value per acre – comparables – deduction for poor ground conditions – addition for size – compensation £6,660,000 – Land Compensation Act 1961, ss 9, 14-16.

[1]This is a reference to determine the compensation payable for the acquisition following a blight notice of land near Purfleet, in Essex, close to the Dartford River Crossing. The land is affected by proposals for the proposed Channel Tunnel Rail Link.

[2]Mr Michael Barnes QC and Mr Eian Caws appeared for the claimants and called:-(i) Mr Hugh Jonathan Watson Bullock BSc FRICS MRTPI, a partner of Gerald Eve of London W1 and elsewhere, who gave evidence on town planning.

(ii) Mr William Neville Mayer BSc MSc MICE, a director of Mayer Brown Limited of Woking, who gave evidence on traffic, highways and access.

(iii) Mr Stephen Wilson BSc CEng MICE, a director of Glanville Consultants of Abingdon, who gave evidence on engineering and ground conditions.

(iv) Mr Richard Fabian Cheshire FRICS, a director in the valuation department of Walker Packman of London W1, who gave evidence on values.

[3]Mr Guy Roots QC and Mr Robert Walton appeared for the Secretary of State for the Environment, Transport and the Regions and called:-(i) Mr James Douglas Williams MA FRICS FRTPI Dip TP, a partner of Drivers Jonas of London W1 and elsewhere, who gave evidence on town planning.

(ii) Mr Richard Parker BSc Dip TE CEng MICE MCIT, senior partner of The Richard Parker Consultancy of Winchester, who gave evidence on traffic, highways and access.

(iii) Mr Clive Onions BSc CEng MICE MIStructE MIWEM MIHT MPWI, an associate director of Ove Arup and Partners International Limited of Bristol and elsewhere, who gave evidence on engineering and ground conditions.

(iv) Mr Richard Alexander Owen BA MRICS IRRV, a partner in the valuation department of Drivers Jonas of London W1 and elsewhere, who gave evidence on values.

[4]We made an accompanied inspection of the reference land, the comparables and the surrounding area. 2 FACTS

[5]The parties have prepared a statement of agreed facts and from this statement and the evidence we find the following facts. Channel Tunnel Rail Link

[6]The Channel Tunnel Rail Link Act 1996 provides for the construction, maintenance and operation of a high speed rail link between London (St Pancras) and the Channel Tunnel at Folkestone in Kent. Section 4 of the Act authorises the Secretary of State to acquire land compulsorily for these purposes, including land required for the works set out in Schedule 1 to the Act. These include part of the railway between Purfleet and West Thurrock (Work no.9) which crosses the reference land. This land is shown on the Thurrock Borough Local Plan Proposals Map as within the Channel Tunnel Rail Link Safeguarding Zone (Policy T17(b)) where safeguarding directions restricting development have been issued by the Department of Transport. Blight notice and reference

[7]On 1 October 1999 the claimants served on the Secretary of State a blight notice under section 150(1) of the Town and Country Planning Act 1990 (“the 1990 Act”) requiring him to purchase their interest in the reference land. This land was stated to be within paragraph 21 of Schedule 13 to the Act (land authorised by a special enactment to be compulsorily acquired). The notice was accepted by the Secretary of State. He was deemed to have served notice to treat on 1 December 1999. On 21 December 1999 the claimants lodged a claim and on 3 February 2000 referred the determination of compensation to this Tribunal. The Secretary of State took possession of the reference land on 30 May 2000. This is the agreed date of valuation. Reference land

[8]The reference land is situated between Purfleet and Grays in Essex, a short distance west of the Dartford River Crossing. It is bounded on the north by London Road Purfleet (A1090) and London Road West Thurrock. These roads meet at a roundabout on the northern boundary, Stonehouse Corner, which is also the junction of the Purfleet Bypass, running north-west to join Arterial Road Purfleet (formerly the A13) at the Circus Tavern junction, and Stonehouse Lane, which runs north to join the M25 at Junction 30. The southern boundary of the reference land is the London, Tilbury and Southend railway line (Tilbury Branch) and the eastern and western boundaries are private roads, Jurgens Road to the east and La Farge Road to the west. The surrounding area is predominantly commercial and industrial in character with some housing.

[9]The reference land is an irregular rectangle in shape with the exclusion of a plot in the south-western corner used for open car storage. The site area is 21.6 acres (8.74 hectares). 3 The reference land comprises vacant, rough grassland, with hedges, trees and shrubs along the boundaries. Access is from Jurgens Road. The general fall of the land is from north-west to south-east, towards the river, from 7.2 metres AOD in the north-western corner to 0 metres AOD over large areas of the southern part of the land. Approximately 70% of the site is below the 1 metre AOD contour which is the 1 in 100 year flood level advised by the Environment Agency. Site drainage consists of open ditches or drains which fall to a culvert which runs under the railway off the southern boundary. From the bank of the Thames to the railway a drainage channel (the Stonehouse Sewer) operates under gravity and is restricted by tides. The reference land has a gas main along the western and southern boundaries, a foul water sewer and electricity along the southern boundary and water mains running north to south across the land. The geology is alluvium and river terrace deposits overlying chalk, which varies in depth from between 1.65 to 3.3 metres below ground level in the northern part of the site dropping away in a south-easterly direction where the depth of chalk is between 2.2. meters and 9 metres below ground level. Title

[10]By a transfer dated 25 February 1999 Van Den Bergh Foods Limited transferred to the claimants for £1 the freehold interest in the reference land. Both companies are subsidiary companies of Unilever plc. The transfer included the right, subject to regulations and requirements and in common with others, “at all times and for all purposes” to pass and repass over and along “the part of Jurgens Road” which forms the western boundary of the reference land.

[11]On 22 December 2000 the Board of Van Den Bergh Foods Limited passed the following resolution regarding the possible improvement of Jurgens Road:- “THAT if in or about May 2000 Purfleet Farms Limited had requested the permission of the Company to carry out improvements to Jurgens Road at their own cost in order to make the road more suitable for use to serve a warehouse development on the adjoining land of Purfleet Farms Limited (including the installation of traffic lights at the junction of Jurgens Road and London Road, Purfleet and the dedication as public highway of a small length of Jurgens Road leading south from the Junction if needed to facilitate the installation of those lights) the Company would have granted its permission for no consideration save an undertaking by Purfleet Farms Limited to bear the whole of the costs associated with the improvement works.” Development plan

[12]The statutory development plan for the purposes of this reference comprises the Essex Structure Plan Approved First Alteration (1991) and Adopted Second Alteration (1995) and the Thurrock Borough Local Plan, adopted September 1997. We deal with its provisions below. 4 Planning history of reference land

[13]On 2 January 1990 Van Dan Bergh and Jurgens Limited applied for outline planning permission in respect of the reference land and the contiguous plot in the south-western corner for commercial development, uses within classes B1, B2 and B8.

[14]On 7 June 1990 the Town Planning Committee of Thurrock Borough Council resolved to grant conditional planning permission on this application (including a condition limiting development to uses within classes B1(b) and (c), B2 and B8), subject to the applicants entering into an agreement under section 52 of the Town and Country Planning Act 1971 and section 33 of the Local Government (Miscellaneous Provisions) Act 1982 concerning the proposed West Thurrock Marshes Western Access Road, improvements to the Stonehouse Corner junction and provision of landscaped open space.

[15]On 2 December 1993 the Town Planning Committee agreed to vary draft condition 2, to provide for application for approval of reserved matters to be made not later than 31 March 1999 and the commencement of development not later than 31 March 2001, and to vary draft condition 11 to limit development to uses for purposes falling within classes B1(a), (b) and (c), B2 and B8.

[16]In December 1993 Thurrock Borough Council issued a draft outline planning permission containing 16 conditions.

[17]On 1 December 1994 the Town Planning Committee resolved that officers be authorised to seek a satisfactory conclusion of the planning agreement in respect of the above planning application without the inclusion of provisions relating to the Purfleet Relief Road. Proposals for this road to be referred to the Engineering Services Committee to seek further inclusion in the transport policies and programmes.

[18]A draft agreement under section 106 of the 1990 Act dated 12 May 1995 was prepared in connection to the above planning application but was never completed and planning permission has not been granted.

[19]On 14 December 1995 the Town Planning Committee resolved to impose a condition recommended by Union Railways Limited restricting development within the safeguarded area under the safeguarding direction issued by the Department of Transport. Access and highway matters

[20]The parties have agreed that:- 5(i) Access to the reference land from London Road Thurrock east of Stonehouse Corner would not have been acceptable to Thurrock Borough Council.

(ii) Access to the reference land from La Farge Road (on the eastern boundary) would not have been practicable because it was in the private ownership of a third party.

(iii) The likelihood of a five-arm roundabout being provided at Stonehouse Corner would have been remote due to the proposal to construct the West Thurrock Marshes Relief Road to the east of the Dartford River Crossing (Queen Elizabeth II Bridge). Scheme

[21]The scheme underlying the acquisition is the construction of the Channel Tunnel Rail Link under the Channel Tunnel Rail Link Act 1996. ISSUES

[22]The fundamental issue between the parties is the amount of compensation payable for the acquisition of the reference land, that is to say the amount which the land if sold in the open market on 30 May 2000 by a willing seller might have been expected to realise (section 5(2) of the Land Compensation Act 1961). The claimants seek a figure of £12,260,000, the Secretary of State offers £3,750,000.

[23]Both Mr Cheshire and Mr Owen value the reference land on the basis of an assumption of planning permission for B8 development (warehousing and distribution). However, there is disagreement on:-(1) The effect of such assumptions as to planning permission for the development of the reference land as fall to be made under sections 14-16 of the 1961 Act.

(2) The amount and configuration of such open space as the local planning authority would have required to be provided.

(3) The means of access to the reference land that would have been permitted, and the design and cost of the necessary highways works.

(4) Whether a developer of the reference land would have been required to pay to Thurrock Borough Council a contribution of £40,000 per acre towards the costs of general highway improvements under a planning agreement under section 106 of the 1990 Act. 6

(5) Whether it should be assumed that planning permission would only have been granted after the valuation date, and if so when, and the amount of any adjustment for deferment that might fall to be made as a consequence.

(6) The net developable area of the reference land for valuation purposes.

(7) The gross value per acre before deductions.

(8) The adjustments to be made in the valuation for:- (i) ground conditions, (ii) off-site highway works, (iii) any contribution payable to Thurrock Borough Council for general highway improvements, (iv) other costs (if any), (v) the larger size of the reference land, (vi) deferment (if any) for the grant of the assumed planning permission. DEVELOPMENT PLAN

[24]The statutory development plan as we have said, consists of the Essex Structure Plan Approved First Alteration (1991) and Adopted Second Alteration (1995), and the Thurrock Borough Local Plan, adopted in September 1997. No policies in the structure plan require to be considered for the purposes of this case. In the local plan the subject land is covered by four notations. The greater part of it is shown as land within a primary industrial and commercial area for new industrial and commercial development and the expansion of existing firms, under Policy E2. Together with other land owned by Van Den Bergh to the south of the railway it constitutes area E2(i). Under Policy E1, within such an area “new industrial and commercial development will be permitted, provided the development meets Policy BE9 and policies protecting the environment.” Policy BE9 relates to buffer zones between industrial and residential areas. The reference land is not itself affected by a buffer zone notation, although there is one very close to it.

[25]The second notation relates to sections of two proposed roads. They are shown running from a junction improvement at Stonehouse Corner (Policy T3(k)). One road runs due south across the reference land, dividing it into two unequal halves. It then crosses the railway and continues to the river before turning eastwards under the Dartford Crossing bridge. That road (Policy T2(l)) is referred to as the “West Thurrock Marshes: Western Link Road”. The second road, going south-westwards from the improved junction is referred to (Policy T2(q)) as the “Purfleet Relief Road”. Paragraph 11.4.13 says that the West Thurrock Marshes Western Link Road is required in connection with the development or redevelopment of adjoining land for industrial and commercial purposes and as a secondary access to West 7 Thurrock Marshes. Paragraph 11.4.25 says that the Stonehouse Corner improvement is required in connection with the new access to the employment site to the south and to serve the West Thurrock Marshes Western Link Road. Paragraph 11.4.17 says that funding for some of the road improvement schemes will “need to be sought from Essex County Council …. Others, required in order that land may be developed, will have to be provided by developers.”

[26]At the valuation date both the West Thurrock Marshes: Western Link Road and the Purfleet Relief Road had effectively been abandoned. On 8 June 1999 the Environmental Services Committee of Thurrock Borough Council considered a proposed alternative alignment for the West Thurrock Marshes: Western Link Road (the West Thurrock Marshes Relief Road) and recommended the abandonment of the Western Link Road (development plan route). On 18 January 2000 the Committee considered a programme of implementation for the new West Thurrock Marshes Relief Road and recommended the submission of a planning application. There is no reference to the Purfleet Relief Road in the Thurrock Unitary Development Plan Review (May 1999) Issue Report (Pre-deposit Consultation). It is not included as a proposal in the Local Transport Plan (July 1999). The Council have confirmed that they are no longer pursuing the Purfleet Relief Road scheme. It is agreed that the value of the reference land should be assessed on the basis that none of the land is now required for either of these road proposals.

[27]The third notation is an area of open space separating the industrial notation from London Road Thurrock to the north. A small detached piece of this open space is shown to the west of the West Thurrock Marshes: Western Link Road. It is shown as area (t) “Stonehouse Farm, West Thurrock” in Policy LR4 “Provision of additional open space.” Its area is given as 1.3 hectares. It appears that of this area 0.95 hectare is within the reference land, and the rest, immediately alongside the carriageway of London Road Thurrock, is in Council ownership. The policy says that the Council “will seek to ensure that provision of outdoor playing space and/or amenity open space is made” in the locations identified. The text refers to the provision of outdoor playing space, which, it says, includes facilities provided by both the private and the public sectors. At paragraphs 10.4.17 and 10.4.18 it says that the policy includes small areas of amenity open space which, where appropriate, the Council will seek to have laid out/landscaped by developers in association with new development.

[28]The fourth notation, which gives rise to the present proceedings but has no bearing on the question of compensation, is the safeguarding area for the route of the Channel Tunnel Rail Link. Two further provisions in the local plan are to be noted. Policy BE10 provides:

“Development of land will only be permitted where there is adequate infrastructure, either in existence or programmed, to serve the development or when planning permission is to be subject to a planning agreement securing advance or suitably phased infrastructure provision, or appropriate contributions thereto, by the developer.”

The other provision is the notation on the open land to the south of Purfleet Bypass of a “Green Chain”. Policy LN11 says that Green Chains are designated as a recreational and nature conservation resource and as links to the countryside. 8 PLANNING ASSUMPTIONS

[29]Section 14(1) of the Land Compensation Act 1961 provides for the application in the assessment of compensation of the relevant planning assumptions in sections 15 and 16. It is section 16, which provides for assumptions derived from the statutory development plan, that falls to be considered in the present case. Subsection (3) of section 14 is also to be noted. It provides that nothing in sections 15 and 16 is to be construed as requiring it to be assumed that planning permission would necessarily be refused for any development that is not the subject of any assumption under those sections. Thus it is a question of fact what, if any, planning permissions, apart from those to be assumed under sections 15 and 16, would have been granted in the no-scheme world. Any permission that would have been so granted is to be taken into account.

[30]The relevant assumptions in section 16 are contained in subsections (1), (2) and (3). Subsection (1) applies to land which:- “consists or forms part of a site defined in the current development plan as the site of proposed development of a description specified in relation thereto in the plan.” In respect of such land it is to be assumed that planning permission would be granted for such development. Subsection (2) applies to land which:- “consists or forms part of an area shown in the current development plan as an area allocated primarily for a use specified in the plan in relation to that area.” Subsection (3) applies to land which:- “consists or forms part of an area shown in the current development plan as an area allocated primarily for a range of two or more uses specified in the plan in relation to the whole of that area.”

[31]Where subsection (2) or (3) applies the assumption is that planning permission would be granted for development for the purposes of the specified use (or, as the case may be, of a use in the range of uses specified) if it is development for which planning permission might reasonably have been expected to be granted.

[32]The distinction between subsection (1) and subsections (2) and (3) is thus that where the development plan defines the land as the site of proposed development, planning permission for development of that description is to be assumed; but where the land forms part of an area allocated primarily for a particular use or particular uses, planning permission for development for such a use is only to be assumed if it is development for which planning permission might reasonably have been expected to be granted. 9

[33]Under subsection (6) of section 16, where it is to be assumed that planning permission would be granted, the assumption is that it would be granted subject to such conditions as might reasonably be expected to be imposed.

[34]There is disagreement between the parties as to which of the subsections, (1), (2) and (3), apply to which of the areas of notation in the local plan – E2(i) (industry and commerce), T2(l) and (q) (the proposed roads), and LR4(t) (the open space). Mr Barnes says that it is either subsection (1) or subsection (2) that applies to the land shown for industry and commerce, and it does not matter which of these it is. He says that in each case the assumption is that planning permission “would be granted” subject to such conditions as might reasonably have been expected to be imposed. The effect of this assumption, he submits, is that no question can arise of a section 106 agreement as a pre-requisite of the grant of the assumed planning permission. Planning permission is to be assumed, and conditions that would have been imposed are to be assumed, but that is all. He says further that the assumption that planning permission “would be granted”, containing as it does no statement as to when such planning permission would be granted, must mean that a present and not a future grant of planning permission is to be assumed. He points out that section 16(6)(b) covers the case of an indication in the development plan that permission would be granted only at a future time. In the absence of such an indication in the plan, a present grant of planning permission is to be assumed and no question of any deferment, to reflect the time for the processing of an application, can arise.

[35]Mr Barnes also advances a particular argument in relation to the open space land. He says that its notation constitutes an indication, within the meaning of section 9, that the land is likely to be acquired by an authority possessing compulsory purchase powers, so that, under that provision, any depreciation in its value by reason of the indication is to be left out of account.

[36]Mr Roots submits that the parts of the reference land shown on the plan for proposed roads (Policy T2) fall under subsection (1); the open space land (Policy LR4) falls under (2); and the industrial and commercial land (Policy E2) falls under (3). But he says that the section 16 assumptions are of academic interest only because they relate to development embracing the West Thurrock Marshes Western Link Road, with two areas of commercial or industrial development divided by the road. What gives the reference land its value at the valuation date is not the statutory assumptions but section 54A of the Town and Country Planning Act 1990. A prospective purchaser at the valuation date, basing himself on the local plan in the knowledge that the two road schemes had been abandoned, would be confident of achieving planning permission for B8 development across the whole of the reference land with the exception of that shown for open space. But he would know that the local planning authority would require him to enter into a section 106 agreement and he would allow for the length of time that it would in fact take to achieve a planning permission.

[37]The reason for the different provisions in subsection (1) of section 16 (a site of proposed development defined in the development plan) and subsections (2) and (3) (areas allocated primarily for particular uses) is to be found in the provisions relating to development plans in the Town and Country Planning Act 1947, which was in force at the time the 1961 Act was passed. Section 39(1) of the 1961 Act provides that “development 10 plan” has the meaning assigned to it by section 5 of the 1947 Act. Section 5(2) of the 1947 Act provided that a development plan might in particular:– “(a) define the sites of proposed roads, public and other buildings and works, airfields, parks, pleasure grounds, nature reserves and other open spaces, or allocate areas of land for use for agricultural, residential, industrial or other purposes of any class specified in the plan.”

[38]There was thus a clear distinction in the old-style development plans between sites defined for specified developments and areas allocated for specified uses. Now, however, under section 54(1) of the Town and Country Planning Act 1990, the development plan for the purposes of the 1961 Act is to be taken as consisting of the operative structure plan and local plan for the district; and local plans do not define sites and allocate areas in the way that old-style plans did. A local plan contains a written statement of detailed policies (see section 36(2) of the 1990 Act) together with a map illustrating those policies and other descriptive and explanatory matter (section 36(6)).

[39]Neither Mr Barnes nor Mr Roots suggest that section 16 has no application where the development plan comprises a structure plan and a local plan (or a unitary development plan) rather than an old-style plan. We think that they are right not to make such a suggestion. Had it been intended that section 16 should not apply to new-style development plans, the Town and Country Planning Act 1968 (which instituted the new-style plans) or a successor statute would have made this clear. In our judgment the section applies as much to new-style as to old-style development plans. Its language is outmoded, and, as in the present case, its application can be a matter of difficulty. It is an element of the compensation legislation that, like a number of other provisions, cries out for revision. What has to be done in order to apply the section, it seems to us, is to look at the relevant provisions of the local plan and to categorise them according to the dichotomy which was set out in section 5(2)(a) of the 1947 Act and is reflected in section 16. On this basis Policies T2 and LR4, together with the proposals map, can be seen to define the sites of the roads and the open space. Both of these are categories of development referred to in the first part of section 5(2)(a) and section 16(1) therefore applies to them. Policy E2, together with the proposals map, on the other hand, allocates land for industrial and commercial development, as in the second part of section 5(2)(a), and thus either subsection (2) or subsection (3) of section 16 applies. Nothing however turns on which of these two subsections is the apposite one since in either case planning permission is to be assumed for such industrial or commercial development as might reasonably have been expected. OPEN SPACE

[40]We cannot accept Mr Barnes’s contention that section 9 of the 1961 Act applies to the open space land. Section 9 applies only where an indication has been given that the relevant land is, or is likely, to be acquired by an authority possessing compulsory purchase powers. Policy LR4 and the identification of the land in the proposals map do not amount to such an indication in our view. The policy itself does not imply that all the areas of land proposed as outdoor playing space and amenity open space are to be acquired by the local authority, and 11 the paragraphs that follow it, which we have referred to above, make clear that the provision of open space may be either through public or through private agencies.

[41]The assumption that a purchaser of the reference land in the no-scheme world would make, in our view, is that he would need to set aside and lay out as open space an area that would be accepted as satisfying Policy LR4. The planning authority would in practice have been able to insist on the provision of 0.95 ha for this purpose (the amount of the 1.3 ha specified in the policy that is on the reference land). Mr Williams suggested that the 0.95 hectare would be increased by 0.12 hectare, the area of the West Thurrock Marshes: Western Link Road allocation, but in our view the precise size and configuration of the area would be a matter of detail and would be determined in the light of the purpose underlying the notation.

[42]From our site inspection it appears clear to us what the purpose of the policy provision is. The area of open space would be a band on the higher ground alongside London Road Thurrock up to the Stonehouse Corner junction. It would provide a visual break between the road and the development, which would be at a lower level, and it would continue the green chain that the plan identifies along Purfleet Bypass. Its precise size and configuration would depend, we think, on the design of the Stonehouse Corner junction and the regrading of the site that would be needed for the development. In the no-scheme world planning permission would in our view have been granted either on the basis of a section 106 agreement providing for the laying out of a defined area or, if there was no such agreement, on condition that the area of open space should be laid out.

[43]We think that in practice a vendor and purchaser would have negotiated on the basis of the area actually shown in the local plan as open space, i.e. 0.95 hectare, 2.3 acres. We do not think that they would have assumed that an addition to this area would have to be made as Mr William suggested. ACCESS

[44]Mr Cheshire values the reference land on the assumption that access to it would be gained from Jurgens Road. The claimant’s interest includes a right of way for all purposes along this private road, and Mr Mayer says that such access, with minor improvements at the junction with London Road Purfleet, would be acceptable in highway terms. There is no dispute that the claimants’ easement would enable it to improve the private road to make it suitable for their purpose. Mr Barnes refers, for this proposition, to Mills v Silver

[1991] Ch 271

(per Dillon LJ at 286-287). Mr Roots does not seek to argue against this proposition. He says, however, that if the improvement required land outside the easement, the need to deal with Van den Bergh to achieve consent for this would be a matter going to valuation; and Mr Owen says that a developer would be reluctant to take access from a private road such as this and would reduce his offer accordingly.

[45]On the evidence, access from Jurgens Road would be acceptable in highways terms. Mr Mayer had tested the capacity of the junction with London Road Purfleet using LINSIG and found it adequate. Mr Parker did not dissent from Mr Mayer’s conclusion on this. He said, however, on the basis of his own inspection, that delays occur to vehicles leaving 12 Jurgens Road and that the level crossing causes queuing. There is, however, nothing to suggest to us that these constitute problems that would make access via Jurgens Road unacceptable. Traffic lights could if necessary be installed, and this could be done without the need for the highway authority to acquire any land, but since the junction, improved as proposed by Mr Mayer, would be operating within capacity, there would in our judgment be no need for these.

[46]Mr Parker’s proposal was for an access from London Road Purfleet, about 50 metres from the realigned junction with London Road Thurrock. Such an access would be more costly, in view of the earthmoving requirements, and we see no justification for it. It may be, as Mr Owen suggests, that a developer would find such an access more attractive, but the evidence does not suggest to us that the extra costs of it would be outweighed by an increase in value. STONEHOUSE CORNER

[47]Both highways witnesses said that the existing junction at Stonehouse Corner was inadequate and caused significant operational problems. The London Road Purfleet arm is not wide enough to allow two articulated vehicles to pass each other, and the radius of the uphill bend from London Road Purfleet to Purfleet Bypass is very tight. Both witnesses recognised that improvement would be required. Mr Mayer produced and costed a layout which he considered adequate for this purpose. Mr Parker’s layout provided a substantially larger radius on the London Road Purfleet/Purfleet Bypass bend, but in addition it was designed to provide for the closure of Stonehouse Lane and, 50 metres or so to the south, for access to the reference land. We have said already that we consider that Jurgens Road would have provided an acceptable means of access, and any improvement of the Stonehouse Corner junction would not have had to include provision for access to the reference land.

[48]Mr Mayer said that a LINSIG analysis, carried out on the basis of Mr Parker’s base traffic flows and growth assumptions, showed that, with or without widening, the junction would operate within capacity at the morning peak hour and would be oversaturated in the evening peak hour. The position would be the same with or without the development, but the effect of the development would be to make the junction performance only marginally worse. We accept this, and, in the absence of any proposal to close Stonehouse Lane and with the improvement proposed by Mr Mayer for the junction, we do not think that planning permission would have been refused on highways grounds.

[49]However, Stonehouse Lane is shown for closure in the June 2000 Local Transport Plan, which was published in draft form in July 1999. Although no date for the closure has yet been determined, the LTP covers a 5-year period and its proposals may be taken to relate to that period. Mr Parker said he understood that the principal reason for the proposal to close the road was that two-thirds of the road required rebuilding, and this was not considered viable. There was also a concern about safety, the road being perched above two worked-out quarries with a steep fall on both sides. We are satisfied that the closure of Stonehouse Lane would make necessary a more substantial improvement to Stonehouse Corner, both to provide an extra lane in both London Road Thurrock and Purfleet Bypass and also to increase 13 the radius and reduce the gradient on the London Road Purfleet/Purfleet Bypass corner. A significantly greater amount of traffic from the development would turn this corner than with Stonehouse Lane open, and in the absence of the assured provision of such an improved junction we consider that planning permission would have been refused.

[50]The components of the highway scheme for development of the reference land would thus in our judgment have consisted of an improved junction at Jurgens Road and a junction improvement at Stonehouse Corner, designed to function well with Stonehouse Lane closed. At our suggestion Mr Mayer and Mr Parker produced layouts showing a Stonehouse Corner junction and costings of both elements of the scheme. The costings were not in all respects comparable, but the principal difference between them arose from a disagreement about the costs of diverting or protecting the pipes and cables of public utilities.

[51]Mr Mayer’s assessment was £1,044,000; Mr Parker’s was £1,390,000. Mr Mayer’s estimate of the civil engineering costs was slightly higher than Mr Parker’s (£660,000 as against £640,000) even though Mr Parker’s scheme, incorporating a 25m radius for the London Road Purfleet/Purfleet Bypass corner, rather than Mr Mayer’s 15m radius, would appear to involve greater works. The cost of diverting and protecting services was estimated by Mr Mayer to be £364,000 and by Mr Parker to be £750,000. The differences in the service costs were somewhat less than fully explored, even after the supplementary written reports that we allowed to be produced. The principal difference appears to arise from the extent to which gas pipes would have to be diverted rather than protected. Mr Mayer allowed £100,000 and Mr Parker £500,000 for dealing with gas services. Mr Mayer said, and Mr Parker did not deny, that Mr Parker based himself on a figure that assumed the diversion of all five of the gas mains in or near the highway. For apparatus beneath existing carriageways, however, Mr Mayer said, what matters principally is the maintenance of adequate cover, and since the roadworks would increase rather than reduce the cover, it was extremely unlikely that mains beneath existing carriageways would need to be diverted. He did not allow, therefore, for the diversion of such mains. We find his approach on this preferable to that of Mr Parker, who does not answer the point that Mr Mayer makes.

[52]Mr Parker said that he had allowed £125,000 for the diversion of a gas main in the verge on the north side of Purfleet Bypass. Mr Mayer had allowed nothing for this, as his layout was designed to avoid this main. Mr Parker allowed £120,000 for diverting or protecting water mains, including the re-laying of 200m of the 400m of pipe affected by the proposed realignment of London Road Purfleet. Mr Mayer says that the need for protection or diversion is unknown and Mr Parker’s figure is much higher than he would expect.

[53]Doing the best we can on evidence of costs that lacks detailed justification, we think it right to take a figure of £1,100,000 for the highways works. This, in our judgment, is the amount the purchaser of the land would allow for. Planning permission would be granted either on the basis of a section 106 agreement providing for the construction and financing of these works or on the basis of a Grampian condition. On either basis the purchaser would know that he would have to finance the works to realise the development value of the land. 14 THE £40,000 PER ACRE

[54]It appears that it was the practice of Thurrock Borough Council to request the payment of £40,000 per acre whenever planning permission was sought for major commercial development. Such payments were expressed to be contributions towards the cost of highway improvements in the area. The authority say that such a contribution would have been sought in the no-scheme world when application for development of the reference land was made. Mr Owen’s valuation includes a reduction of £760,000, calculated on the net developable area of the site, to reflect this. Mr Roots submits that payments on the basis requested by the Council were in a accordance with Circular 1/97 and the decision in R v South Northamptonshire District Council, ex parte Crest Homes plc

[1994] 3 PLR 47

[55]Mr Barnes argues that it would have been unlawful for the Council to have demanded £40,000 per acre. He refers to Tesco Stores Ltd v Secretary of State for the Environment

[1995] 1 WLR 759

, and relies on the passage in Henry LJ’s judgment in Crest Homes (

[1994] 3 PLR 47

at 58 E-G) in which he suggested that the imposition of an arbitrary standard contribution from all developers, in the absence of an examination or costing of future infrastructure needs, might be vulnerable to attack. The contribution, says Mr Barnes, would amount to a levy of the nature of local taxation and would be unlawful having regard to ordinary constitutional principles. He refers to McCarthy and Stone (Developments) Ltd v Richmond upon Thames London Borough Council

[1992] 2 AC 48

[56]Mr Parker said that an officer of the Council, Mr Cunningham, had told him that he would require a contribution of £40,000 per acre to help improve non-car accessibility to the reference land and to implement some of the improvement measures set out in the Local Transport Plan. Mr Parker identified a selection of schemes from the plan which he thought might be of relevance, in addition to the major scheme proposed, the construction of the West Thurrock Regeneration Ring Road. The schemes included a bus telematics system for the whole of the bus fleet in the area, cycle ways and other measures to encourage the use of sustainable transport, and works to M25 junction 31.

[57]We do not think that any further allowance for contributions in respect of such transportation schemes beyond what a developer would pay for the Stonehouse Corner and Jurgens Road improvements requires to be made. We reject the authority’s contention that £40,000 per acre should be deducted so as to reflect the contribution that the Council was in the practice of demanding in respect of every major commercial development. We think that, on the evidence, the Council would have been satisfied with the provision of works totalling £1.1m. The new junction at Stonehouse Corner and the improvement of the Jurgens Road junction would have produced substantial benefits to the highway system and, in relation to Stonehouse Corner, the highway authority would have been relieved of paying for an improvement that it would have to provided before Stonehouse Lane was closed. The contribution, related to the area of the subject land, represents about £60,000 per acre. We also note the terms of the section 106 agreement that the Council had negotiated in 1995 in anticipation of the grant of planning permission for development of the reference land. The agreement provided for the payment of £40,000 per acre to the council, but this was to be reduced by any costs incurred by the applicant in constructing, firstly, the roundabout that was proposed at Stonehouse Corner and, secondly, what was termed the “applicant’s access 15 road”. The agreement required that this road should be constructed in such a way that it could form part of the West Thurrock Marshes Western Link Road. While it is right to bear in mind that the Council were, as it appears, effectively getting free the land required for the construction of the link road, on the other side, the benefits to Van Den Bergh, the applicant, went beyond enabling the application site to be developed. The link road, with its bridge across the railway, would have opened up for development the undeveloped land to the south of the railway and would have provided a better access for the developed land than that provided by Jurgens Road and the level crossing.

[58]The draft section 106 agreement was never executed, but as the product of negotiations it provides, we believe, evidence of what the Council would have been prepared to settle for in terms of a contribution to transport schemes in respect of the reference land. The Council would, moreover, have been conscious, we believe, that any refusal of permission based on the unsatisfied demand of a flat-rate payment would not have been upheld on appeal. The appeal decision of 21 April 1999 on land at Fiddlers Reach shows the approach which, in our view, any inspector, basing himself on circular 1/97, would have taken. The inspector in that case described the requirement of a flat-rate contribution as “fundamentally flawed”. Under Circular 1/97, he said, planning obligations should be sought only where they met a number of tests, one of which was that they should be fairly and reasonably related in scale and kind to the proposed development. There was no justification for the refusal of planning permission because of the absence of an obligation made on a flat-rate scale. These conclusion are ones which are plainly of general application and are not confined to the facts of that particular case.

[59]The conclusion that we have reached, that the Council would not in fact have held out for a contribution going beyond the £1.1m, makes it unnecessary for us to consider Mr Barnes’s contention that the demand for £40,000 per acre would have been unlawful and should for that reason be left out of account in assessing compensation. DEFERMENT

[60]Mr Owen in his valuation made a reduction to reflect the time that it would take after the valuation date to achieve planning permission for development of the reference land. We agree with Mr Barnes that such a reduction is incompatible with an assumption of the grant of planning permission that requires to be made under section 16. The purpose of section 16, in our view, was to establish assumptions about planning permissions on the basis of the provisions of the development plan in a way that produced certainty. The assumption is that planning permission “would be granted”, and we cannot accept that this wording was intended to leave open for argument on the basis of evidence the question of when planning permission would be granted. Indeed evidence might, for instance, show that from the valuation date onwards planning permission would never have been granted for, say, the airfield for which the development plan defined the reference land before the Council resolved to purchase it for public open space. The assumption, nevertheless, would have to be made that planning permission would be granted for the defined development, and no question of deferment, including therefore perpetual deferment, could arise. Similarly, in subsections (2) and (3) “would be granted” imports a certainty that excludes questions of deferment except to the extent that this is expressly provided for by subsection (6). 16

[61]Having said this, however, the planning permission derived from the development plan assumptions of section 16 would not in the present case be sufficient to achieve the development that Mr Cheshire values – a B8 development of a single area including the site of the abandoned proposal for the West Thurrock Marshes: Western Link Road. For this development some further (or different) planning permission would be required, and the question then arises: in the no-scheme world, would such planning permission have been granted? The parties are agreed that it would have been granted, but they differ about when. Mr Owen approaches this issue of timing on the assumption that there would have been no application for permission until the valuation date. We can see no justification as a matter of law for such an assumption. The question is, what would have happened in the no-scheme world? In the absence of the Channel Tunnel Rail Link proposal, when would permission have been granted? This is a matter for evidence, and there is no evidence that suggests that application would not have been made, or indeed that planning permission would not have been obtained, before the date of valuation. Indeed the evidence seems to us to be to the contrary. A planning application had in fact been made in 1990. Of course, for planning permission to be granted in the form in which both parties now assume it, a decision would have to have been made as to whether the West Thurrock Marshes: Western Link Road was to proceed, but we can see nothing to suggest that this would not have been done in time to enable a permission to be in place by the valuation date. The reduction that Mr Owen makes for deferment is, therefore, not justified. VALUATION

[62]Mr Cheshire, for the claimants, valued the reference land at £12,260,000 calculated as follows:- Value of land with normal ground conditions 21.6 ac @ £638,015.8 per acre £13,781,141 Less Cost of road access £ 652,123 Fees 10% 65,212 Excess foundation costs (inc pumping station £425,000) 1,300,000 Fees 43,000 Pumping station site 45,050 £ 2,105,385 £11,675,756 Add 5% for site size £ 583,788 £12,259,544 say £12,260,000 Mr Cheshire prepared a second valuation in the sum of £10,773,646 using the value of the land with poor ground conditions (£530,000 per acre) as his starting point with deductions for road access, fees and pumping station (and site), but not for excess foundation costs, with a similar addition of 5% for site size. He adopted his higher value on the grounds that the market at the valuation date was extremely good and the price would be the optimum of his two valuations. All types of purchasers would be present in numbers sufficient to produce competitive bidding. 17

[63]Mr Owen, for the Secretary of State, valued the reference land at £3,750,000, calculated as follows:- Potential value of land 18.95 ac @ £460,000 per ac £8,717,000 Deduct for Ground conditions £1,750,000 Associated costs 400,000 Highway costs 1,795,000 Planning costs 760,000 Other costs 80,000 £4,785,000 £3,932,000 Defer 6 months @ 10% 0.9535 £3,749,162 say £3,750,000

[64]Both valuers used comparable transactions to support their value per acre. Before summarising their evidence it will be convenient to set out the facts regarding these comparables. Most are agreed. Tesco

[65]This site comprises 36.94 acres (14.95 hectares) of net developable land in a former quarry on the west side of Stonehouse Lane a short distance to the north of the reference land. On 15 April 1998 Tesco contracted to purchase this land for £14,221,900 with completion on 15 February 1999. In addition Tesco agreed to pay half the cost of building a tunnel under Stonehouse Lane to provide access from land to the east retained by the vendors. This half share is agreed at £405,256. The site was sold with outline planning permission for the construction of a warehouse/distribution building of 631,840 sq ft (58,700 sq m). Costs under a section 106 agreement were met by the vendors.

[66]The parties disagree on the floor loading of the Tesco building. Mr Wilson, for the claimants, said that he had been told by Tesco’s engineers that the quarry had been filled in a random manner and they advised that piled foundations should be used. They further advised that the provision of a suspended floor to support 55kN per sq m would be expensive and the loading specification could be reduced to 35kN per sq m. This would be adequate for the intended use. This advice was accepted by Tesco and the floor slab was designed to support 35kN per sq m superimposed loading. Mr Owen put in evidence a letter dated 22 December 2000 from Tesco stating that the floor loading is 55kN per sq m. Mr Onions confirmed Mr Wilson’s evidence regarding the uncontrolled filling of the Tesco land. He also confirmed that piled foundations were used due to the fill. 18 Prologis site (Dolphin Park)

[67]This land is to the east of Stonehouse Lane opposite Tesco. The agreed total net developable site area is 22.34 acres (9.04 hectares), comprising 8.4 acres (3.399 hectares) to the west of a spine road and 13.94 acres (5.637 hectares) to the east of this road. In March 1999 Prologis Kingspark contracted to purchase this land paying £3,360,000 for the land to the west and £5,576,000 for the land to the east. These prices were based on £400,000 per acre. There is a clawback provision whereby the vendors are entitled to 35% of any developer’s profit over 20% on the total cost of development, including finance at 7.5%. The planning position on sale is not agreed. Mr Cheshire included in his evidence a statement by the vendors’ agent that the purchasers applied for planning permission for 250,000 sq ft (23,225 sq m) on the eastern site. Mr Owen said that the site was sold with planning permission for B1, B2 and B8 development. Costs under a section 106 agreement were to be met by the vendors. Mr Wilson said that this land was a former chalk quarry which was backfilled with controlled material. Shallow foundations and ground bearing floor slabs have been used in the subsequent development. Grainger site (Dolphin Park)

[68]This land is part of the Prologis site. It is to the west of the spine road (8.4 acres or 3.399 hectares developable area). The land was sold to Grainger Thurrock Limited for £4,200,000 with completion on 21 January 2000. There are no clawback provisions. The letting brochure gives the development as 156,950 sq ft (14,581 sq m) of warehouse and distribution accommodation with 180 car spaces. The floor loading is 50kN per sq m. Edison’s Park, Crossways, Dartford

[69]Edision’s Park is in the northern part of Crossways Business Park immediately adjoining the Dartford River Crossing in Kent. In March 2000 three warehouse units were sold as a completed and let investment for £13,350,000. The total floor area is 133,722 sq ft (12,422 sq m) and the site area is 7.91 acres (3.2 hectares). Mr Wilson said that this land would have cost more to develop from the viewpoint of foundations than the reference land. Mr Onions put the additional cost at £95,000 per acre. Volvo site

[70]This is in Oliver Close, to the east of the reference land, immediately adjoining the Dartford River Crossing. It is a surfaced and fenced site used by Volvo for the storage and sale of lorries. The site area is 2 acres (0.81 hectares). It was let to Volvo from March 2000 at £80,000 per annum and was then sold to them with completion in July 2000 for £1,000,000. There is no planning permission for development. Mr Wilson said that ground conditions are poorer than the reference land. Land adjoining Fyffe’s warehouse, Crossways 19

[71]This is a site of 3.2 acres (1.295 hectares) adjoining Fyffe’s warehouse on Galleons Boulevard in the southern part of Crossways Business Park. It was sold in December 2000 for £2,750,000. There was no specific planning permission for the land. It is included in the outline planning permission for Crossways for B8 development. The purchasers applied for planning permission for the erection of a warehouse of 67,500 sq ft (6,268 sq m). Claimants’ case

[72]Mr Cheshire’s valuation of the reference land is £12,260,000. He supported this figure by reference to all the comparables. The Tesco, Edison’s Park and Volvo properties have poor ground conditions. Mr Cheshire used them in his second valuation. Using these comparables, no deduction for piling was made. The Grainger and Fyffe’s transactions relate to sites with good ground conditions and adjustment needs to be made for the additional cost of piling on the reference land. Deductions for abnormal development costs (access and drainage works) are required in all cases. Mr Cheshire used the comparables to value the reference land as follows.

[73]He analysed the price paid by Tesco at £395,971 per acre, including the cost of the tunnel. Piling was needed for the development of this land. Having regard to the Edison’s Park (Crossways) comparable (£320,000 per acre land value before development in June 1998), two conclusions can be drawn. First, that land in Purfleet is worth substantially more than land at Crossways. Second, that occupiers are prepared to pay a premium value to obtain land which can accommodate a large distribution warehouse. The nearby Lakeside Shopping Centre would encourage interest in the reference land. The land has a premium value of 5% to reflect its size and suitability for a distribution depot.

[74]The price paid for the Prologis site was based on £400,000 per acre. In addition the purchasers agreed to pay a proportion of developer’s profit. Mr Cheshire has not taken into account these clawback provisions:

[75]The Grainger sub-sale was at £500,000 per acre. The price required notification to the vendors because it was in excess of 20% base profit over the price paid and therefore gave rise to an overage payment. The vendors could have obtained a higher price for the land. This site is a better location than the reference land and is the best evidence of land value without ground problems. It should be used with a growth factor and considered with the Volvo transaction.

[76]The Edison’s Park land (Crossways) was introduced to Mr Cheshire before development early in 1998. In June he reported that the purchase of the land was based on a value of £320,000 per acre. The site was capable of development by the erection of three units totalling 130,000 sq ft on 7.91 acres (3.2 hectares). Mr Cheshire subsequently prepared a retrospective development appraisal of the sale price for the completed development (£13,350,000) to establish the value of the undeveloped site. This indicated a land value in March 2000 of £512,964 per acre. The building costs used in this appraisal included extra foundation costs due to poor ground conditions, poorer than at the reference land. The 20 additional cost of piling at Edison’s Park compared to the reference land was £95,000 per acre. Mr Cheshire relied on this comparable to show the rise in land values and relative levels of values north and south of the Thames. The reference land is directly comparable to the Crossways land.

[77]The Volvo sale was at an agreed price of £500,000 per acre. The current use of the land for the storage, sale and leasing of trucks does not have planning permission. Ground conditions would require piling for development. The location of the land requires a considerable journey to London Road Purfleet and the M25. Until the West Thurrock Marshes: Western Link Road is built this site will be in an inferior location compared to the reference land. The price was depressed by works for the Channel Tunnel Rail link and the lack of planning permission for current use.

[78]The Fyffe’s site at Crossways received 15 bids, five of which were £750,000 per acre or more. The purchaser paid more than £800,000 per acre. There are no abnormal foundation requirements. There is a possibility of ransom value although the ransom strip is mainly of nuisance value and unlikely to have a value higher than £65,000.

[79]Mr Cheshire’s main valuation approach was to time apportion the Grainger and Fyffe’s comparables, which straddled the valuation date, to find the value per acre, and then deduct access costs, extra foundation costs and other necessary works. The Tesco and Prologis comparables show rising values from 1996. The Grainger and Fyffe’s comparables showed a value of £620,953 per acre at the valuation date, later revised to £638,015.80 for land with normal ground conditions and no foundations, access or drainage problems. Mr Cheshire’s second valuation used the Edison’s Park and Volvo comparables to arrive at a value of £530,000 per acre for land with poor ground conditions.

[80]Mr Cheshire’s deduction for access costs is Mr Mayer’s figure of £652,123 plus fees (10%). The resolution by Van Den Bergh Foods regarding the use of Jurgens Road has removed any question of payment to them for the use of this private road. No deduction was made for a levy of £40,000 per acre by Thurrock Borough Council towards general transport costs.

[81]Mr Cheshire adopted the total site area (21.6 acres) as the net developable area for valuation purposes. He applied his value per acre to this figure in both valuations on the grounds that the landscaping strip and the proposed roads shown on the local plan would have required the use of compulsory purchase powers and this should be ignored. In the absence of compulsory purchase these areas would have been available for development. If this is incorrect, Mr Cheshire would have proceeded as follows. He would have assumed a 25 metre wide strip of open space running parallel to London Road (1.35 acres). Planners usually require five per cent of an industrial site to be used for landscaping. This is accepted by the market and included in the value of the land. Five per cent of the reference land is 1.08 acres. This is the extent of the landscaping to be expected on the site. This is less than the 1.435 acres landscaping strip by 0.355 acre. This latter area should be deducted from the total site area to produce a net developable area of 21.245 acres (8.5975 hectares). 21

[82]The likely development of the reference land would be one large warehouse/distribution building of 350,000 square feet. Mr Cheshire did not prepare a site layout. He acknowledged that the only site layout (prepared by Mr Onions) showed two units on the land. At the conclusion of his evidence, in answer to questions from the Tribunal, Mr Cheshire said that he had not based his valuation on any particular size of development but between 350,000 and 400,000 sq ft would be built on the land.

[83]Mr Cheshire included in his valuation an addition of 5% for the larger size of the reference land. This was not unreasonable having regard to Edison’s Park.

[84]A developer of the reference land would expect to provide a significant amount of tailgate loading requiring the construction of a building with a raised floor. Mr Cheshire referred to the tailgate loading provided at Edison’s Park and Dolphin Park (including Tesco). The price to be paid for the reference land would not be affected by the fact that ground conditions might also require the floor slab to be raised.

[85]In his primary valuation Mr Cheshire deducted £1,300,000 for excess foundation costs (including the cost of a pumping station, £425,000). This is the agreed additional cost of the flooded site or pumped site options for dealing with ground conditions over the cost of a conventional building with a floor slab 1.3 metres above ground level. He added fees of £43,000 and the price of a pumping station site (£45,050). This would be 0.1 acre. This price represented 85% of £530,000 per acre or £450,500 per acre for the lower value land to the south of the railway.

[86]Mr Wilson gave evidence regarding ground conditions and foundations. He adopted a common approach with Mr Onions, namely that the reference land would be developed with a B8 distribution warehouse with a total floor area of 30,000 sq m (about 323,000 sq ft). Conventional shallow foundations could not be used: the ground slab and frame would need supporting piles. Mr Wilson assumed a design superimposed load of 30kN per sq m (as inferred in Mr Onions’s report).

[87]Mr Wilson said that the pumping station at the end of Stonehouse Sewer is adequate to provide protection against flooding. Duty and standby pumps and an emergency generator should be sufficient for insurance purposes. The use of a raised slab for the pumped solution is unnecessary.

[88]The provision of a floor slab at ground level or 1.3 metres above that level depends on the use of the building and the nature of the business. Distribution centres frequently require a raised slab to facilitate loading of vehicles (eg. Tesco). Conversely, other users require a slab at ground level, particularly where vehicles need to enter the building or where forklift trucks are used. The method of construction is a commercial choice rather than one made on engineering grounds.

[89]Fees should be added to the agreed costs of dealing with the ground conditions on the reference land. A proper allowance would 5%. Mr Wilson assumed a development of the 22 reference land by the erection of two buildings. Unloading could be by raising the floor slab for tailgate loading or constructing a slab at ground level with ramps down for tailgate loading, but this is subject to a maximum slope and the two options are not the same. Secretary of State’s case

[90]Mr Owen’s valuation of the reference land is £3,750,000. The principal factors determining value are planning permission and demand. In the absence of planning permission the land has hope value, the possibility of permission. A purchaser in May 2000 would have expected to obtain permission for development on a net site area of 18.95 acres (to allow for 2.65 acres of landscaping) for B2 or B8 development with a deduction of £2,635,000 for planning and highway contributions and planning permission fees. Outline planning permission would take six months to obtain. The vendor of the reference land is assumed to be a hypothetical willing vendor not the claimant company. The potential purchaser would have been a developer or speculator.

[91]Mr Owen calculated the maximum development of the reference land to be 330,226 sq ft (30,680 sq m) of gross internal floor area. This is 40% site cover based on the average site cover at Tesco, Dolphin Park and Edison’s Park. He also had regard to the layout prepared by Mr Onions providing for two buildings totalling 322,770 sq ft (30,000 sq m). His valuation reflects this development. The building would have a raised floor slab with ramps down for loading.

[92]Mr Owen used some of the comparables to arrive at a price per net developable acre with outline planning permission and then adjusted that figure to produce the value as a fully serviced site.

[93]Mr Owen found the Grainger transaction to be the most helpful (£500,000 per acre). It is the starting point of his valuation. The Tesco and Prologis transactions indicate a rising trend of values but both are complicated by particular factors (the construction of the access tunnel in the case of Tesco and the clawback provisions for Prologis). The Volvo site is not directly comparable to the reference land; Mr Owen attached no weight to it. A purchaser would not consider land values at Crossways to be directly comparable with the reference land or land on the north bank of the Thames. Crossways is an entirely different location compared to the poorer quality location of the reference land. It commands higher values. The Fyffe’s transaction has characteristics which make it dissimilar to the reference land, e.g. it is six months after the valuation date, the site is smaller and has frontage to an existing estate road on an established business park, it is not liable to flooding. The Edison’s Park transaction was the sale of a completed development and is not reliable evidence of land value. Mr Cheshire’s analysis showed that land values are higher at Crossways than for land near the reference land. It is inappropriate to compare the Grainger transaction with the Fyffe’s sale to find a trend of values. The two sites are dissimilar.

[94]Mr Owen built up his valuation as follows. He started with the Grainger transaction as the best evidence of value, £500,000 per acre in January 2000. He considered the reference land to be inferior in terms of location, size, shape and lack of road frontage. Internal 23 distributor roads would be needed. The valuation date is four months after Grainger. To reflect these differences Mr Owen reduced his value to £460,000 per acre, subject to deductions to reflect site specific issues. The reduced value per acre was rounded up to reflect the four months difference between the Grainger transaction and the valuation date. Mr Owen’s adjustment was a deduction of 10% for size and an addition of £10,000 for the time factor.

[95]The first deduction for site specific issues is for ground conditions. Mr Owen referred to Mr Onions’s evidence and said that a purchaser would favour the pumped site option. It is cheaper and would deal with flooding to the areas round the buildings. The additional cost of this option (2A) is £1,750,000. To this figure must be added fees, a contingency sum and the purchase of land for a pumping station. The addition for fees and contingency is 20% (£350,000) and the land purchase is £50,000 (0.1 acre at £500,000). The total deduction for ground conditions is £2,150,000. Mr Owen also deducted £1,795,000 as the likely cost of highway obligations (Mr Parker’s figure) plus £760,000 payable to Thurrock Borough Council to secure planning permission (£40,000 per acre). A purchaser would expect to pay these sums and would reduce his price for the land. Other costs of £70,000 fees to obtain planning permission and £10,000 for work to establish the amenity and open space area would also be deducted. Six months would be required to obtain planning permission; the price should be discounted for this delay and risk.

[96]Mr Onions’s evidence regarding ground conditions was as follows. He said that pad foundations would not be appropriate for the reference land due to the variability and softness of the ground. Piled foundations would be required. These have been assumed with a load capacity of 500kN. Mr Onions assumed a building area of 30,000 sq m (about 323,000 sq ft). Two warehouse buildings have been envisaged. This is perceived to be the best arrangement within the constraints of the site. A single warehouse is possible although the area would be less. A large number of smaller units would result in a reduced building area. A developer would expect conventional buildings to be constructed with pad footings and a ground bearing floor slab. For many distribution buildings the floor slabs would be cast on raised ground 1.3 metres above the service yard for trailer access. Whether the slab should be at ground level or raised would depend on the use of the building. Decision

[97]We have reached the following conclusions:-(i) The area of open space on the reference land to satisfy Policy LR4 is 0.95 hectare (2.3 acres). This is the amount that the negotiating parties would have assumed would be provided.

(ii) Access to the reference land from Jurgens Road would be acceptable in highway terms.

(iii) The components of the highways scheme for development of the reference land are an improved junction at Jurgens Road and London Road Purfleet and a junction improvement at Stonehouse Corner, designed to function 24 well with the closure of Stonehouse Lane. The cost of these works allowed for by a purchaser of the reference land would be £1,100,000.

(iv) Thurrock Borough Council would have been satisfied with a contribution of £1,100,000 for highway works and would not have insisted on payment of a further contribution of £400,000 per acre.

(v) The planning permission that both valuers assume for B8 development (warehousing and distribution) would, in the no-scheme world, have been granted at the valuation date.

[98]The following issues are outstanding:-(i) The net developable area for valuation purposes.

(ii) The gross value per acre before adjustment.

(iii) The adjustments to be made in the valuation for:- (a) ground conditions, (b) other costs (if any), (c) the larger size of the reference land. We now deal with each of these matters.

[99]We look first at the net developable area. Mr Cheshire adopted the total site area of 21.6 acres; Mr Owen used 18.95 acres (the total area less a landscaping strip of 2.65 acres).

[100]We have found that the open space to be provided on the reference land is 2.3 acres. The area of land left for development is 19.3 acres. It is important to determine what can be built on this land. The figures given in evidence vary. Mr Cheshire said that his valuation was not based on any particular size of development but that between 350,000 and 400,000 sq ft would be built on the land. Mr Owen calculated the maximum development at 330,226 sq ft (40% site cover) by reference to the site density of three of the comparables. Later he said that he had regard to the site layout and floor area of Mr Onions, 322,770 sq ft. This figure was used by Mr Onions and Mr Wilson in their agreement regarding foundations and drainage costs.

[101]Mr Onions was the only witness to prepare a development scheme for the reference land and we adopt it, including his floor area of 322,770 sq ft. This is a site cover of 38.4% on the net developable area. This is slightly below the density of the Tesco land (39.2%) and the Grainger land (42.9%) (which are the comparables we have found most helpful) and, in our view, reflects the shape of the reference land, the contours, access and drainage problems, matters not present at the Tesco and Grainger sites. Our valuation will therefore reflect a net developable area of 19.3 acres capable of accommodating a warehouse/distribution development of 322,770 sq ft. 25

[102]We turn now to value per acre. Mr Cheshire used £638,015.80 applied to the total site area of 21.6 acres; Mr Owen adopted £460,000 per acre applied to a smaller net developable area of 18.95 acres. Both valuers relied on comparable transactions. We have found two of these helpful, Tesco and Grainger. The remainder we have found unsatisfactory for the following reasons.

[103]The Prologis land bought in March 1999 for £400,000 per acre is close to the reference land but the price paid was linked to a clawback provision. We were given no evidence as to the operation of this clawback and we cannot determine the true price of the land. It is clearly more than £400,000 per acre. The Tesco purchase was one year earlier at the same price per acre and the Grainger purchase of part of the Prologis land was some time later at £500,000 per acre. These indicate that £400,000 per acre was not the full price. Owing to the uncertainty as to this transaction we give no weight to it.

[104]Mr Cheshire relied on two transactions on Crossways Business Park on the south bank of the river close to the Dartford River Crossing. On the evidence, and particularly the evidence of our inspection, we cannot accept that Crossways is comparable to the reference land. Crossways is a well laid out business park, attractive in appearance with good infrastructure and roads connecting directly to the M25 at Junction 1a at the Dartford River Crossing. It contains two hotels and a pub. By contrast the reference land is in unattractive surroundings with poor access and poor communications leading to the M25 and other routes. The adjoining properties, Tesco, Prologis and Grainger, are former chalk quarries. The attractions of Crossways to occupiers, developers and investors are greater than for the reference land. The adjustments to the analysed values at Crossways, to relate them to the reference land, are so great and so speculative as to make them unreliable evidence of value.

[105]In addition to the general lack of comparability between Crossways and the reference land, the two transactions relied on by Mr Cheshire have other defects, particularly the sale of part of Edison’s Park in March 2000. This was not a sale of development land but of a completed investment. Mr Cheshire used the residual method of valuation to analyse the sale price and arrive at a land value of £512,964 per acre. The unreliability of the residual method in litigation is well-known. It relies for its accuracy on a correct balance between a number of variables, all of which must be accurately estimated. A slight change in the balance or in the amount of a variable can cause a significant change in the final figure. It is possible to prove or disprove almost anything by a residual valuation. Mr Cheshire sought to prove the land value element in the price of the completed investment but we regard this as an unreliable exercise. He also referred to the sale of the Fyffe’s site. This was development land but on a fully serviced and attractive business park. The sale was seven months after the valuation date. Mr Cheshire used this comparable mainly for the purpose of calculating the rise in land values between the Grainger sale in January 2000 (completion) and December 2000 (the Fyffe’s sale). This comparison is however flawed because the two sites are not comparable. The Fyffe’s land is considerably better than Grainger and any comparison between these transactions designed to show a trend in values will be rendered inaccurate by the inherently higher value of the Fyffe’s land. We give no weight to the two Crossways transactions. 26

[106]The sale of the Volvo site in July 2000 was not a sale of development land. It was sold to the tenants who continued to occupy the land for their existing use of the storage, sale and leasing of trucks. The site was not exposed to the market. There was no planning permission for development. This is unreliable evidence for the value of the reference land as a development site. We give it no weight.

[107]We are left with two comparables which are of assistance. Both are to the north of, and close to, the reference land. The Tesco site (36.94 acres) was bought for the erection of a warehouse and distribution depot of 631,840 sq ft (39.2% site cover) for £14,221,900 plus a contribution of £405,256 towards the cost of an access tunnel. The total price represents just under £400,000 per acre. Contracts were exchanged in April 1998 with completion in February 1999. The Grainger sub-sale of part of the Prologis land was completed in January 2000. It is likely that contracts were exchanged between March 1999, when the vendors contracted to buy the larger Prologis site, and completion in January 2000. The site area is 8.4 acres and the land has been developed with 156,950 sq ft of warehouse distribution accommodation (42.9% site cover). The price was £500,000 per acre.

[108]The reference land is generally inferior in location and accessibility to these properties. The site area is smaller than Tesco but larger than Grainger. The site cover is less than either comparable. We have no reliable evidence of the change in land values between April 1998 and May 2000 although we can accept the general proposition that values rose during this period. Taking these factors into account it is a matter of judgment as to the value of the reference land in May 2000. On the limited evidence we put this value at £475,000 per acre.

[109]We look now at the deduction for ground conditions. The parties agree that abnormal development costs will be incurred to deal with surface water drainage. There are two approaches to this problem. Option 1 is the flooded site approach whereby the floor slab of the buildings to be erected on the land is constructed at least one metre AOD with an open area between ground level and the slab to accommodate floodwater. Option 2 is the pumped site approach. The floor slab is built above ground level but on built up soil. A pumping station is provided to deal with accumulated flood water.

[110]The parties have agreed the following costs (exclusive of fees) for a warehouse development of 322,770 sq ft (30,000 sq m) on the reference land:-(1) Conventional building (slab at ground level) £2,200,00 Additional cost for:- Option 1 – flooded site £2,010,000 Option 2A – pumped site £1,750,000 Option 2B – pumped site with 1.3m high floor slab £2,010,000

(2) Conventional building (floor slab 1.3m above ground level) £2,910,000 Additional cost for:- Option 1 – flooded site £1,300,000 27 Option 2B – pumped site £1,300,000 The conventional building includes a ground bearing slab and external pavement. The flooded site option includes raised building slabs on piles and ground bearing external pavement. The pumped site option includes piled ground bearing slab and external pavement and a pumping station adjacent to the Thames. The parties agree that piled foundations will be required for any buildings erected on the reference land.

[111]Mr Cheshire assumed a building with raised floor slab and deducted £1,388,050 for ground conditions, comprising the agreed figure for option 2B (£1,300,000), £43,000 fees (3.3%) and £45,050 for the site of a pumping station. Mr Owen assumed a ground level floor slab and deducted £2,150,000, comprising the agreed figure of £1,750,000 for option 2A, fees and contingencies of £350,000 and £50,000 for the pumping station site.

[112]By the end of the hearing there was a large measure of agreement on this issue. The outstanding question is what form of building would have been in the mind of a purchaser and therefore what deduction would he have made for the poor ground conditions and risk of flooding? We find that the conventional building which would be built on the land would have the floor slab 1.3 metres above ground level for tailgate loading. To combat flooding the developer would have chosen the pumped site option. The agreed additional cost is therefore £1,300,000 (option 2B), Mr Cheshire’s figure. We agree that fees should be added. Mr Cheshire’s figure is £43,000 (3.3%), Mr Owen’s figure is £350,000 including contingencies (20%). We do not include a contingency sum and assess the fees at 5% of cost, £65,000. We adopt Mr Cheshire’s figure for the site of the pumping station, £45,050. The total deduction for ground conditions is £1,410,050.

[113]The next item in dispute is other costs. Mr Cheshire made no deduction in his valuation; Mr Owen deducted £80,000 comprising £70,000 planning permission costs and £10,000 costs relating to the open space. We have found that planning permission would have been granted at the valuation date and therefore we make no deduction for the costs of obtaining that permission. We do not think that a separate deduction for costs relating to the open space is justified. We make no deduction for other costs.

[114]The final item is an addition for size. Mr Cheshire added 5% on the grounds that the larger area of the reference land would be particularly attractive to an occupier or developer for the erection of a warehouse or distribution depot. Mr Owen made no addition for this element in his valuation. We agree with Mr Owen. We received no evidence that the reference land would have been particularly attractive to a purchaser at the valuation date, justifying a premium value. We have taken into account the size of the land, relative to the comparables, in our price per acre.

[115]We have now determined all issues in this reference. Our valuation is as follows:- 19.3 acres at £475,000 per acre £9,167,500 Less Highway costs £1,100,000 28 Excess foundation and drainage costs £1,410,000

£2,510,000

£6,657,500 say £6,660,000

[116]We determine the compensation payable to the claimants for the acquisition by the Secretary of State for the Environment, Transport and the Regions of their freehold interest in the reference land to be the sum of £6,660,000 (six million six hundred and sixty thousand pounds) plus surveyors’ fees under Rydes Scale.

[117]This decision concludes our determination of the substantive issues in this reference. It will take effect as a decision when the question of cost has been decided and at that point, but not before, the provisions relating to the right of appeal in section 3(4) of the Lands Tribunal Act 1949 and order 61 rule 1(1) of the Civil Procedure Rules will come into operation. The parties are invited to made submissions as to the costs of this reference and a letter accompanying this decision setting out the procedure for submissions in writing. Dated: 10 April 2001 (Signed) George Bartlett QC, President (Signed) P H Clarke ADDENDUM

[118]We have received written submissions on costs. The claimants sought compensation of £12,260,000; the Secretary of State’s figure was £3,750,000; our award was £6,660,000. On 1st December 2000 the Secretary of State made a sealed offer in the sum of £5,000,000.

[119]The claimants seek their costs on the grounds that they have been successful and that our award exceeds the Secretary of State’s sealed offer. They refer to para 19.3 of the Tribunal’s Practice Direction of April 2001. They should not be deprived of their costs on the grounds of unreasonable behaviour (including adjournments) nor because they have failed on discrete issues. The Secretary of State contends that the claimants should be ordered to pay the costs arising out of two adjournments during the hearing and that otherwise there should be no order as to costs. Our award was significantly closer to the valuation of the Secretary of State. The general rule that costs follow the event is now only the starting point for an award of costs; a party’s conduct should be taken into account, including whether or not the claim has been exaggerated (see AEI Ltd v Phonographic Performers Limited

[1999] 1 WLR 1507

at pages 1522-3 and the Tribunal’s Practice Direction para 19.2).

[120]Our award exceeds the figure put forward by the Secretary of State at the hearing (£3,750,000) and his sealed offer (£5,000,000). We agree that the starting point for our determination of costs is that the claimants have been successful and should receive their costs. We agree, however, with the Secretary of State that this is only a starting point; all the 29 circumstances should be taken into account, including whether the claim has been exaggerated and the relationship between the award and the contentions of the parties.

[121]Although the Civil Procedure Rules do not apply to proceedings in this Tribunal, we should have regard to them, where applicable, in particular with regard to the award of costs. Rule 44.3(2) provides:- “If the court decides to make an order about costs –(a) the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party; but

(b) the court may make a different order.” Rule 44.3(4) requires regard to be had to all the circumstances including “the conduct of all the parties”. “Conduct” includes “whether a claimant who had succeeded in his claim, in whole or in part, exaggerated his claim” (rule 44.3(5)(d)). In the AEI decision, referred to above, Lord Woolf MR said (page 1522H):- “I draw attention to the new Rules because, while they make clear that the general rule remains, that the successful party will normally be entitled to costs, they at the same time indicate the wide range of considerations which will result in the court making different orders as to costs. From 26 April 1999 the ‘follow the event principle’ will still play a significant role, but it will be a starting point from which a court can readily depart.”

[122]Our determination of compensation at £6,660,000 is well below the claimants’ figure of £12,260,000. It is £2,910,000 above the Secretary of State’s figure but £5,600,000 below the claimants’ figure. In our judgment the latter was significantly higher than could be supported by reliable evidence, particularly with regard to the price per acre (£638,015 based on comparables south of the Thames, which we found to be wholly dissimilar to the reference land and unreliable in other respects, compared to our determination of £475,000 and the Secretary of State’s figure of £460,000 per acre). Overall, we find that the claimants’ value was assessed at a particularly high figure and this should result in a reduction in costs. The claimants’ entitlement to the recovery of their costs should be reduced to three-quarters. We do not think that the adjournments of the hearing merit a separate order for costs.

[123]We order the Secretary of State to pay three-quarters of the claimants’ costs, such costs, if not agreed, to be the subject of a detailed assessment by the Registrar of the Lands Tribunal on the standard basis. DATED: 10 April 2001 (Signed) George Bartlett QC, President 30 (Signed) P H Clarke 31