Portland Stone Firms Ltd & Anor v Dorset County Council [2014] UKUT 0527 (LC)

IN THE MATTER OF A NOTICE OF REFERENCE

UT Neutral citation number: [2014] UKUT 0527 (LC)

Venue BETWEEN (1) PORTLAND STONE FIRMS LIMITED Claimants, (2) STONE FIRMS LIMITED, and, DORSET COUNTY COUNCIL Compensating Authority, Re: Quarries known as the Coastal Strip,, Portland,, Dorset., Before: His Honour Judge Huskinson and A. J. Trott FRICS, Sitting at: Royal Courts of Justice, Strand, London WC2A 2LL, David Holgate QC and Robert Walton, instructed by Stephens Scown LLP, for the Claimants, Robin Purchas QC and Alexander Booth , instructed by Public Law Resource Ltd for the Compensating Authority, The following cases are referred to in this decision:, Health and Safety Executive v Wolverhampton City Council [2012] 1WLR 2264, Trocette Property Co Ltd v GLC [1972] 28 P&CR 408, Transport for London v Spirerose Limited [2009] UKHL 44, MWH Associates Limited v Wrexham Borough Council [2011] UKUT 269 and [2012] EWCA Civ 1884, East End Dwellings Co Ltd v Finsbury Borough Council [1952] AC 109, Horn v Sunderland Corporation [1941] 2KB 26, Director of Buildings and Land v Shun Fung Iron Works Limited [1995] AC 111, Land and Property Ltd v Restormel Borough C ouncil [2004] RVR 303, The following further cases were referred to in argument:, Bernard Wheatcroft v Secretary of State (1982) 43 P&CR 233, Bond v Dorset County Council [2010] UKUT 364, Bwllfa and Merthyr Dare Steam Collieries 1891 Ltd v Pontypridd Waterworks Co [1903] AC 426, Hoare v National Trust (1999) 77 P&CR 366, R v Caradon District Council (2000) 80 P&CR 154, Ryde International Plc v London Regional Transport [2004] EWCA Civ 232, Secretary of State v Ioannou [2014] EWCA Civ 1432, Waters v Welsh Development Agency [2004] UKHL 19, DECISION ON PRELIMINARY ISSUES, Introduction

Between

Portland Stone Firms Ltd & Anor

Dorset County Council

Date 14 November 2014

[1]This decision is concerned with certain preliminary issues which have been raised in a reference in which the claimants claim compensation from the compensating authority under section 107 of the Town and Country Planning Act 1990 (“the 1990 Act”) for loss or damage which is directly attributable to a modification made by an order under section 97 of a planning permission relating to land in which the claimants are interested. The land in question comprises quarries known as the Coastal Strip, Portland, Dorset. These are quarries from which Portland stone can be obtained.

[2]The way in which the claimants present their cases involves the first claimant claiming a total of £14,450,000 in respect of loss of profits etc and the second claimant claiming £2,715,100 based on the loss of royalty income. For the purposes of the decision of the preliminary issues it is not necessary to distinguish between the position of the two claimants and we hereafter refer to them together as the claimants.

[3]The relevant planning permission, which was the subject of the modification order, is a permission dated 14 August 1951 granted over 323 hectares on Portland including the Coastal Strip. The planning permission was subject only to two conditions and in consequence had the effect of permitting the claimants (or their predecessors) to work and win stone from the quarries with little restriction.

[4]On 14 June 2005 the Isle of Portland Studland Cliffs Special Area of Conservation was designated in accordance with Regulation 11 of the Conservation (Natural Habitats etc) Regulations 1994 (“the Habitats Regulations”). As a result Dorset County Council (“DCC”) became obliged pursuant to regulation 50(1) of the Habitats Regulations to review the 1951 permission. DCC did so and ultimately, in consequence of this review, made the modification order. Regulation 51(5) required any modification effected pursuant to regulation 51 to be carried out under existing statutory procedures – hence the modification order was made under section 97 of the 1990 Act.

[5]It is the making of this modification order which has given rise to the present claim for compensation. The parties have helpfully prepared a detailed and lengthy Statement of Facts extending to 11 pages and also a detailed Position Statement extending to seven pages. It is not necessary for the purposes of the preliminary issues to rehearse the facts in any great detail. In summary the matters in this paragraph and the following paragraph should be noted:(1) 14 August 1951: grant of the planning permission.

(2) 5 November 1987: land at Portland including the Coastal Strip was notified as a Site of Special Scientific Interest (“SSSI”) pursuant to the Wildlife and Countryside Act 1981.

(3) 20 June 1998: English Nature designated land at Portland as a candidate Special Area of Conservation.

(4) 19 October 1998: the claimants’ predecessors in title applied to DCC pursuant to section 96 and paragraph 9 of Schedule 13 of the Environment Act 1995 (“the 1995 Act”) to determine the conditions to which the 1951 permission should be subject in respect of the Coastal Strip. Schedule 13 made provision for the review of old mineral planning permissions (hence the acronym ROMP). It was necessary for the claimants’ predecessors to make such an application because otherwise, pursuant to paragraph 12 of Schedule 13, if no such application had been made by the relevant date then the permission relating to the quarries would cease to have effect (apart from restoration or aftercare conditions).

(5) 16 November 1998: DCC served a notice under paragraph 9(10) of Schedule 13 on the claimants’ predecessors requiring further details in respect of the ROMP application including an environmental statement. This notice had the effect that the three month period for determination of the ROMP application under paragraph 9 would not start to run until DCC had received all of the further details specified in the notice.

(6) May 2002: the claimants' predecessors submitted a draft environmental statement. This led to detailed comments from DCC and a request for extensive further information. On 5 May 2006 the claimants submitted an environmental statement. DCC notified the second claimant on 1 August 2007 that the environmental statement was incomplete and further information was required. On 12 August 2008 DCC issued a screening opinion requiring provision of an environmental statement once DCC had adopted a scoping opinion. However DCC has not to date adopted a scoping opinion. As a result the ROMP application remains undetermined.

[6]As far as concerns the Special Area of Conservation (“SAC”), the Isle of Portland to Studland Cliffs Special Area of Conservation was designated on 14 June 2005. In consequence:(1) This gave rise to an obligation upon DCC under regulation 50 of the Habitats Regulations as soon as practicable to review the 1951 planning permission and to affirm, modify or revoke it. For that purpose DCC was required to make an appropriate assessment of the implications for the SAC in view of the SAC’s conservation objectives. The provisions of regulation 48(2) to (4) were made applicable with the appropriate modifications. Under regulation 48(5) DCC could only agree to the 1951 permission remaining unmodified if it had ascertained it would not adversely affect the integrity of the SAC.

(2) Regulation 56(1) required DCC to consider if any adverse effects on the SAC could be overcome by means of a section 106 obligation and, if they could not, then to make such order under (so far as presently relevant) section 97 of the 1990 Act as was required (power to revoke or modify planning permission), unless DCC considered there was no likelihood of the development being carried out or continued (see regulation 56(3)).

(3) DCC did consider the matter in accordance with the Habitats Regulations; it concluded that working the land pursuant to the 1951 permission would have an adverse effect on the integrity of the SAC; it considered whether matters could be satisfactorily dealt with by a section 106 obligation (and decided this was not an appropriate way forward); it considered whether it could be said there was no likelihood of the development being carried out or continued (and it decided that this could not properly be said).

(4) 5 January 2009: the second claimant served on DCC notice of intention to extract stone in the Coastal Strip from the end of January 2009 in accordance with their submitted plans.

(5) 6 February 2009: the modification order was made. This modification order became effective on 18 February 2009. Its effect was to impose six conditions on the 1951 permission. The details of these conditions are not relevant for the purposes of this present decision upon preliminary issues.

(6) 23 September 2009: the modification order was confirmed by the Secretary of State for Communities and Local Government. In the letter confirming the modification order it was acknowledged (in paragraph 4) that there was an immediate threat posed to the SAC by the claimants’ proposed development.

[7]It is agreed that the valuation date is 18 February 2009. Compensation is claimed under section 107 of the 1990 Act which provides as follows:

“(1) … where planning permission is revoked or modified by an order under section 97, then if, on a claim made to the local planning authority within the prescribed time and in the prescribed manner, it is shown that a person interested in the land or in minerals in, on or under it – (a) …..; or (b) has otherwise sustained loss or damage which is directly attributable to the revocation or modification, the local planning authority shall pay that person compensation in respect of that ……. loss or damage.”

[8]The modification order imposed six conditions upon the 1951 planning permission. The extent to which these conditions restrict or prevent quarrying in the coastal strip or any part thereof is not a matter before the Tribunal upon this hearing of the preliminary issues. We understand that a dispute exists between the parties as to the extent to which these conditions restrict the working of the quarries and also as to the financial consequences of such restriction.

[9]The difference between the parties for the purpose of the preliminary issues arises in this way. As at the valuation date of 18 February 2009 the 1951 planning permission was already subject to the ROMP application which DCC was obliged in due course to determine. In the circumstances which have in fact arisen, with the making of the modification order, it is common ground that DCC remains obliged in due course to determine the ROMP application and that in doing so it can and will properly include as conditions upon the 1951 planning permission the six conditions which are already applied to the 1951 planning permission by the modification order. It is further agreed that in those circumstances no right to compensation from the subsequent determination of the ROMP application could arise under Schedule 13 because, immediately prior to DCC making the determination under the ROMP application, the relevant land will already be subject to these conditions by virtue of the modification order made in 2009, such that the subsequent determination of the ROMP application will not restrict working rights in respect of the site within paragraph 10(1)(c) of Schedule 13. Accordingly, the modification order having come first, there is no future scope for a separate compensation claim under the compensation provisions in Schedule 13 of the 1995 Act as the consequence of the eventual determination of the ROMP application.

[10]However the crucial question which arises for determination is whether and to what extent the claimants have “sustained loss or damage which is directly attributable to the … modification.” In paragraph 2(v) of their skeleton argument the claimants contend that:

“Without the modification order, the Claimants would have been able to work the Coastal Strip profitably …”

DCC does not accept that this is so. It is therefore necessary to make a comparison between the position the claimants find themselves in as a consequence of the modification order and the position they would have been in without the modification order. On behalf of the claimants it is in summary contended that the relevant comparison is between the position the claimants find themselves in as a consequence of the modification order (Position B) and the position they would have been in if they had been able to work the site in accordance with the terms of the 1951 planning permission unmodified (Position A). In summary DCC argues that it is relevant to compare Position B not with Position A but instead with the position the claimants were in fact in immediately prior to the making of the modification order taking into account the fact that the 1951 planning permission was already the subject of the ROMP application (Position C).

[11]The reason why there may be a significant difference between Position A and Position C is as follows. Under Position A the claimants would be able to enjoy all the potential profits and royalties from working the Coastal Strip in accordance with the 1951 planning permission as unmodified. Under Position C the claimants would be able to enjoy all the potential profits (if any) and royalties (if any) of working the Coastal Strip in accordance with the 1951 permission as prospectively modified pursuant to the ROMP application together with such compensation as might be available to them under Schedule 13 of the 1995 Act to compensate them for the relevant restrictions on working rights imposed in consequence of the ROMP application. It might at first sight be thought that the addition of these two separate limbs for the purpose of assessing how happily placed the claimants would be in Position C should result in the claimants being in as good a position under Position C as they were in under Position A – i.e. on the basis that the second limb (compensation under Schedule 13) should make up for the extent to which restrictions upon working rights which became imposed pursuant to the ROMP application placed the claimants in a less happy position than they would have been in under the unmodified 1951 permission. However this is not necessarily so having regard to the modified compensation rights under Schedule 13 paragraph 10 which is in the following terms:

“10. (1) This paragraph applies in a case where – (a) on an application made to the mineral planning authority under paragraph 9 above in respect of an active Phase I or II site the authority determine under that paragraph the conditions to which the relevant planning permissions relating to the site are to be subject; (b) those conditions differ in any respect from the proposed conditions set out in the application; and (c) the effect of the conditions, other than any restoration or aftercare conditions, so determined by the authority, as compared with the effect of the conditions, other than any restoration or aftercare conditions, to which the relevant planning permissions in question were subject immediately prior to the authority making the determination, is to restrict working rights in respect of the site. (2) In a case where this paragraph applies, the mineral planning authority shall, upon giving to the applicant notice of the conditions determined by the authority under paragraph 9 above, also give to the applicant notice – (a) stating that the conditions determined by the authority differ in some respect from the proposed conditions set out in the application; (b) stating that the effect of the conditions, other than any restoration or aftercare conditions, determined by the authority, as compared with the effect of the conditions, other than any restoration or aftercare conditions, to which the relevant planning permissions relating to the site in question were subject immediately prior to the making of the authority’s determination, is to restrict working rights in respect of the site; (c) identifying the working rights so restricted; and (d) stating whether, in the opinion of the authority, the effect of that restriction of working rights would be such as to prejudice adversely to an unreasonable degree – (i) the economic viability of operating the site; or (ii) the asset value of the site. (3) In determining whether, in their opinion, the effect of that restriction of working rights would be such as is mentioned in sub-paragraph (2)(d) above, a mineral planning authority shall have regard to any guidance issued for the purpose by the Secretary of State. (4) In this paragraph, “the applicant” means the person who made the application in question under paragraph 9 above.”

An expression of opinion adverse to an applicant under paragraph 10(2)(d) can be appealed to the Secretary of State. Thus under Schedule 13 paragraph 10 of the 1995 Act, in contrast to section 107 of the 1990 Act, there is an economic viability test. Schedule 13 contemplates that a claimant will get no compensation and will in consequence have merely to accept the worsening of its position unless the restriction of working rights would be such as to prejudice adversely to an unreasonable degree either the economic viability of operating the site or the asset value of the site.

[12]DCC argues that prior to the making of the modification order the claimants were already facing the likely (if not inevitable) prospect that, through the eventual determination of the ROMP application, they would find that(i) the 1951 planning permission was made subject to the same conditions as were in fact imposed by the modification order and

(ii) the circumstances were such that the claimants would have obtained no compensation for the imposition of these conditions unless the economic viability test in paragraph 10(2)(d) was satisfied (and DCC argues that this economic viability test would not have been satisfied). The preliminary issues

[13]At a case management hearing on 19 May 2014 it was ordered that the following matters should be determined as preliminary issues:

“(i) would it be lawful for the determination of the ROMP application to impose the same conditions as were imposed by the modification order? (ii) in assessing the loss or damage directly attributable to the modification order, is it relevant in law to consider the effect of the ROMP application and the compensation provisions under the Environment Act 1995 on the basis that the modification order had not been made and/or on the basis that at the date of the ROMP determination the modification order had been made? (iii) if under issue (ii) above it is to be assumed that the modification order had not been made, what is the scope and effect of that assumption? (iv) whether as a matter of law the ROMP application and/or plan submitted as part of the application or in support thereof can be amended and, if so, on what basis.”

[14]At the hearing before us it was common ground that the answer to preliminary issue (i) was yes. We therefore say no more upon that issue.

[15]Also at the hearing we raised the question of whether (and if so how) the answer to preliminary issue (iv) could be of any relevance in this case. Neither party sought to argue that the point would be of relevance, although the parties wished to reserve their position just in case facts should so emerge that it became relevant in due course. Accordingly it was agreed that we should not decide preliminary issue (iv), but with the position of each party being reserved just in case it ever became relevant.

[16]Also at the hearing it was agreed between the parties that preliminary issue (iii) could usefully be re-worded as following: “(iii) if under issue (ii) above it is to be assumed that the modification order had not been made and it is relevant in law to consider the effect of the ROMP application and the compensation provisions under the Environment Act 1995 on the basis that the modification order had not been made, what is the scope and effect of that assumption?” (The added text is in italics.)

[17]The central question before the Tribunal arises under the first limb of issue (ii). The parties’ submissions

[18]It is a notable feature of the present case that each of the advocates submits that the case is a simple one and that the answer is clear, but the answers each contend for are very different. Looking solely at the essence of each of the arguments, and ignoring for the moment the more detailed justifications and elaborations thereof, the parties' arguments can be summarised as follows.

[19]On behalf of the claimants David Holgate QC argues:(1) a modification order under section 97 of the 1990 Act was made and it did have the effect of imposing the six conditions upon the 1951 planning permission;

(2) in consequence compensation can be claimed under section 107 for loss or damage which is directly attributable to the modification;

(3) this claim for compensation under section 107 is not subject to any economic viability test such as applies in Schedule 13 paragraph 10 of the 1995 Act;

(4) it is not relevant in calculating this compensation to consider what might have happened at some undetermined date in the future when the ROMP procedures were eventually concluded, because that moves away from what in fact happened here namely the introduction of conditions by a modification order under the 1990 Act;

(5) accordingly compensation can be claimed under section 107 without such compensation being constrained by having to pass the economic viability test;

(6) any other conclusion would involve in effect rewriting the provisions for compensation in the 1990 Act by introducing an economic viability test which is not part of the compensation provisions in that Act;

(7) in consequence the proper measure of compensation is based upon the difference between (i) the profits and royalties available to the claimants if they had been able to work the Coastal Strip pursuant to the 1951 planning permission unmodified and (ii) the profits and royalties (if any) available to the claimants in the position they found themselves in as a consequence of the modification order, namely enjoying the 1951 planning permission modified by the addition of the six conditions.

[20]On behalf of DCC Robin Purchas QC argues:(1) in order to assess under section 107 the loss of profits and royalties directly attributable to the imposition of the conditions by the modification order it is necessary to consider what profits and royalties the claimants would have made in the absence of the modification order;

(2) it is fundamental to this calculation of compensation to recognise that as at the valuation date the 1951 planning permission, although as yet unmodified, was in the ROMP process which had to be completed in due course in any event;

(3) it would offend the principle of equivalence, which applies to claims for compensation, to ignore a circumstance which in fact existed (namely that the planning permission was in the ROMP process) and to proceed instead upon the basis of a fact which did not exist (namely that the claimants could look forward to implementing the 1951 planning permission until its expiry in accordance with its terms without any further restriction);

(4) it was therefore relevant to consider what would have been the consequences for the claimants if there had been no modification order in place on the valuation date and if instead the matter had proceeded (as it would have done) through the ROMP procedures;

(5) it should be open to DCC to establish if it can that, in the absence of a modification order, the ROMP procedures would have resulted in the imposition of the same conditions (i.e. as were contained in the modification order), that the economic viability test in paragraph 10 of Schedule 13 to the 1995 Act would not have been satisfied, and that therefore the claimants would soon have been in the same position as was reached under the modification order but without any right to compensation;

(6) if DCC were able to establish these facts upon the evidence, then it would put the claimants into a far better position than they could ever have hoped to be in (and would therefore overcompensate them) if compensation were calculated based upon the difference between (i) the profits and royalties available to the claimants if they had been able to work the Coastal Strip pursuant to the 1951 planning permission unmodified and (ii) the profits and royalties (if any) available to the claimants in the position they found themselves in as a consequence of the modification order, namely enjoying the 1951 planning permission modified by the addition of the six conditions. The claimants’ submissions

[21]On behalf of the claimants Mr Holgate advanced arguments to the following effect.

[22]Preliminary issue (ii) concerned the relationship between the modification order and the ROMP code. The correct approach was given by the statutory framework itself. The proper order in which to approach matters was by first having regard to the Habitats Regulations (under which the planning permission was modified); then having regard to the 1990 Act (under which compensation is payable); and finally having regard to the 1995 Act.

[23]It was essential to DCC’s case that an assessment of the ROMP process must be made as if the 2009 modification order had not been made. However DCC advanced no legal basis for asserting that the Tribunal should assess in the present reference the likely outcome of the ROMP process as if the modification order had not been made.

[24]Mr Holgate pointed out that no assistance was sought by either side from the Pointe Gourde principle.

[25]He submitted that the stance taken by DCC was deeply unattractive in paragraph 10 of his skeleton argument:

“The stance taken by DCC is deeply unattractive. In effect the Tribunal is being asked to accept that in this case Parliament intended that:- (i) Although in reality the ROMP procedure will be applied on the basis that the 1951 permission had already been altered by the 2009 Order ……. here the ROMP procedure and compensation should be assessed as if the 2009 Order had not been made; (ii) The Tribunal should assess ROMP compensation payable in the future and that can only be dealt with in terms of likelihood ( Transport for London v Spirerose Ltd [2009] 1 WLR 1797 ); (iii) Expert evidence would need to be called as to the likely outcome of the ROMP procedure; (iv) Even if the conditions imposed by the 2009 Order had the effect of sterilising minerals so that the Claimants have sustained the losses claimed, no compensation should be paid either under section 107 or under the 1995 Act. There is no reason to think that Parliament intended the legislation to be interpreted as DCC submits, having regard also to Article 1 of the First Protocol of the ECHR and the ‘equivalence’ principle. ”

[26]The Habitats Regulations made detailed provisions including an obligation upon the relevant local authority (here DCC) to review planning permissions. Regulation 55 excluded certain permissions from the scope of the duty to review under regulations 50 and 51, but regulation 55 did not exclude from that duty a planning permission (such as the present 1951 planning permission) which was liable to be reviewed under the ROMP procedures in Schedule 13 of the 1995 Act. There was in regulation 55 an opportunity for Parliament to exclude such a permission (i.e. one which was subject to ROMP procedures) from the obligation to review, but that opportunity was not taken. In other words the Habitats Regulations required a review under regulations 50 and 51 to be carried out regardless of the ROMP procedure. In this connection it might further be noted that the general principle was that compensation payable in respect of a modification made pursuant to an obligation arising under the Habitats Regulations was compensation which could be recovered by the relevant local authority from Central Government, whereas compensation payable under Schedule 13 by reason of the ROMP procedures was compensation payable by the relevant local authority itself. There was therefore a direct interest for the Government to make clear (if this was the intention) that, where a planning permission was subject to both ROMP procedures and the Habitats Regulations, the compensation should be assessed by reference to what would have been payable under the ROMP procedures.

[27]Mr Holgate stressed that DCC had an obligation to consider the 1951 planning permission under the Habitats Regulations; that DCC concluded that the implementation of that permission would affect the integrity of the SAC; that it decided the matter could not be dealt with by agreement (under section 106); that it decided that it did not consider that there was no likelihood of the development being carried out or continued; and that therefore DCC was under an obligation to make a modification order (or a revocation order) and thereby to trigger section 107 of the 1990 Act.

[28]Mr Holgate referred to Health and Safety Executive v Wolverhampton City Council

[2012] 1WLR 2264

per Lord Carnwath SCJ at paragraph 51 where he referred to section 97 creating a specific statutory power to buy back a permission previously granted. He submitted that what was being done in this case was to buy back part of the permission previously granted.

[29]He argued that compensation should be assessed applying the “reality principle”. In other words the valuation should be kept as near as possible to the real world. No assumptions should be made departing from reality except in so far as is required by a statutory provision, see Trocette Property Co Ltd v GLC

[1972] 28 P&CR 408

especially at p.420 per Lawton LJ.

[30]Mr Holgate pointed out that there existed no relevant conditions upon the 1951 planning permission until the modification order operated in February 2009 to impose all six conditions. The imposition of these six conditions by the modification order removed any possibility of any claim for compensation under Schedule 13 in respect of any subsequent decision upon the ROMP application, because the ROMP decision would impose the same conditions and would not therefore bring about any restriction on working rights beyond those already existing, pursuant to the modification order, before the ROMP application was determined.

[31]If the ROMP application had been finally decided prior to the making of any modification order then, consistently with the proposition of looking at the matter in the real world, compensation would have fallen to be assessed in accordance with Schedule 13 with the result that the economic viability test in paragraph 10(2) would have been relevant. However as a matter of fact this did not happen. What in fact happened is that DCC proceeded to bring about the modification of the planning permission pursuant to a modification order under section 97 of the 1990 Act (and not through the ROMP procedures). If no modification order had been in place at the valuation date, then the claimants could have continued to work the site in accordance with the 1951 planning permission.

[32]There was no justification for imagining how prospectively (viewed at the valuation date) the ROMP application might be eventually decided at some indeterminate date in the future, as that did not reflect what actually transpired.

[33]Section 107 of the 1990 Act did not contain any economic viability test. By assessing compensation under section 107 by reference to how the ROMP application might have been decided in the future if no modification order had been made and by reference to how a claim for compensation might have progressed in consequence under Schedule 13, DCC in effect was incorporating into section 107 an economic viability test (lifted from the 1995 Act, Schedule 13 paragraph 10). Section 107 made no provision for any such test. Also the examination of what prospectively would have happened under the ROMP application if no modification order had been made gave rise to attendant uncertainties in assessing this future undetermined ROMP application. Such uncertainties bring with them the problems recognised in Transport for London v Spirerose Limited

[2009] UKHL 44

[34]Mr Holgate referred to the decision of the Upper Tribunal and the Court of Appeal in MWH Associates Limited v Wrexham Borough Council

[2011] UKUT 269

and

[2012] EWCA Civ 1884

. In that case a claimant failed to establish any claim for compensation as a result of a deemed modification order arising from the imposition of ROMP conditions, because the claimant would have failed to obtain the grant of a derogation licence at the valuation date to translocate great crested newts from the site. In other words there was a wholly separate reason (i.e. separate from any deemed modification order) as to why the site was of no value to the claimant, namely the inability to translocate great crested newts. Mr Holgate accepted that when considering causation it was necessary to compare (as in the MWH case) the position with the modification order in place and the position without the modification order in place, but he stressed that this was only correct provided you stayed in the real world. In the MWH case, in the real world, the presence of newts meant that the claimant could not quarry in any event whether or not a modification order had been made, so the modification order caused no loss. In the present case the modification order did prevent the quarry being worked. The fact that, if no modification order had been made, the claimants might have been prevented under a separate code (namely the ROMP procedures) from working the site was very different from the MWH case where the actual presence of newts as at the valuation date actually prevented the site being worked.

[35]Mr Holgate also referred to Circular 06/2005 (DEFRA Circular 01/2005) at paragraphs 38-40. This recorded that Central Government would reimburse compensation payable in respect of a modification order made under the Habitats Regulations provided certain steps were gone through. He argued that if Government had thought that compensation could be avoided (or greatly lessened) by the application of an economic viability test made applicable (as argued for by DCC) in circumstances where there had been a modification order rather than the working through of the ROMP procedures, then surely the circular would have pointed that out.

[36]Mr Holgate drew attention to an additional argument which DCC appeared to wish to take in due course, through amendment of its statement of case, being a point arising under the Environmental Damage Regulations 2009 – the point apparently being that DCC may seek to rely upon the effect of these Regulations which would have made working of the site so as to damage the integrity of the SSSI unlawful irrespective of the determination of the ROMP. Mr Holgate said that this point (and the application for permission to amend) might be relevant in the future, but was a point which would turn upon the evidence and was not a point which the Tribunal was asked to consider while dealing with these preliminary issues.

[37]Mr Holgate drew attention to circumstances which would arise under the ROMP procedure if compensation was claimed and if the economic viability test was passed, such that compensation became payable in accordance with paragraph 15 of Schedule 13. In these circumstances a modification order was deemed to have been made. Mr Holgate argued that DCC’s approach in the present case would, if consistently applied, give rise to a circularity in circumstances where a deemed modification order arose in this manner. The circularity would arise in the following way. To determine the losses directly attributable to the deemed modification order it would be necessary, according to DCC’s argument, to consider the position in the absence of that order. In the absence of the deemed modification order there would still be a requirement under the Habitats Regulations for DCC to review the 1951 planning permission. That review would lead to an actual modification order which in turn would mean that the losses directly attributable to it would have to be considered in the absence of that order and so on in an infinite regression. Mr Holgate summarised this circularity argument in paragraphs 14-20 of the note he handed to the Tribunal as part of his submissions in reply:

“ The circularity in DCC’s argument 14. The Tribunal has to assess loss caused by the MO. 15. DCC say that to do that [the] Tribunal has (as a matter of law) to assess the loss that would have been caused by the ROMP, assuming the MO had not been made. 16. But any compensation due under the ROMP could only be pursuant to a deemed MO (schedule 13 para 15(4)). 17. There can be no difference of approach to the assessment of compensation under a deemed ROMP MO as opposed to a MO made pursuant to the 1994 regs – both are made under s.97 of the 1990 Act. 18. So, on DCC’s argument, to assess the loss under the deemed ROMP MO it would be necessary to assess what losses would have been caused assuming that the ROMP MO had not been made. 19. If the ROMP MO had not been made then there would be an outstanding appropriate assessment under the 1994 regs, leading to a MO under the 1994 regs, i.e. what happened in the real world …. 20. And so on and so on ad infinitum…”

[38]The foregoing summarises Mr Holgate’s opening arguments upon preliminary issue (ii). As regards preliminary issue (iii) Mr Holgate pointed out that this issue did not arise at all if the Tribunal accepted the claimants’ arguments upon issue (ii) and concluded that it was not relevant to consider how the ROMP application would have been determined in the absence of the modification order.

[39]He argued that if the claimants were unsuccessful upon their argument upon issue (ii) then the situation was as follows (see paragraph 49 of his skeleton argument):

“(i) The valuation in this reference will be proceeding on the basis of a disregard, which is not contained in the 1995 Act or in any other legislation and does not accord with the reality principle; (ii) That disregard would have to extend to include all the corollaries which would have accompanied it (see eg. Lord Asquith in East End Dwellings Co Ltd v Finsbury Borough Council [1952] A.C. 109, 132-3) not least for reasons of consistency; (iii) If the inability to work the reserves in the Coastal Strip is assumed to be caused by the imposition of conditions on the ROMP determination the same or similar to those imposed by the 2009 Order, on the assumption that the 2009 Order had not been made, then not only the statutory review process under the 1994 regulations but also the SAC designation which give rise to the identical need to impose those conditions must also be disregarded in order to satisfy the equivalence principle.”

DCC’s submissions

[40]On behalf of DCC Mr Purchas advanced the following arguments.

[41]The issue in the present case was about the assessment of loss or damage directly attributable to the making of the modification order. As at the date of the modification order the 1951 planning permission was actually subject to an ongoing ROMP application which had to be determined in due course. The situation was not that at the date of the modification order the 1951 planning permission existed free of prospective restrictions upon its continued implementation.

[42]DCC’s position could be crystallised in the following manner:(1) In order to assess the loss of profits directly attributable to the modification order it was necessary to consider what profits would have been made without the modification order and then to compare that situation with the profits that could be made with the modification order.

(2) This assessment should be made as far as possible in the light of circumstances which actually existed.

(3) The circumstances which actually existed included a 1951 planning permission which was subject to an undetermined ROMP application which DCC had an obligation to determine in due course. It was therefore relevant to consider what if any effect this as yet undetermined ROMP application would have had upon the profits to be made from working the land pursuant to the 1951 planning permission. This was an important consideration.

(4) To exclude that consideration would offend against the principle of equivalence which underlies compensation claims.

(5) This simple analysis was not affected whether the claim was for loss of profits or for depreciation in the value of land – the principles were the same in either case. There was nothing in the Habitats Regulations (under which the modification order was made) or in any other material to require that there be ignored other controls to which the land was subject at the valuation date. One of these controls was the existing but as yet undetermined ROMP application.

(6) It would involve over compensating the claimants if compensation was calculated by a comparison between the position the claimants were in at the valuation date with the modification order having been made and the position the claimants would have been in at the valuation date if they had then enjoyed the 1951 planning permission with no modification and with no prospect of such modification. The principle of equivalence was that a claimant should be compensated for neither more nor less than his loss, see Horn v Sunderland Corporation

[1941] 2KB 26

at 49; Director of Buildings and Land v Shun Fung Iron Works Limited

[1995] AC 111

at 125.

[43]In the situation where no modification order had been made the 1951 permission would have remained subject to the outstanding ROMP application. It was relevant, when considering the extent of any loss to the claimants, to consider how the ROMP would have been determined and the consequence of such determination in terms of the working of the site and any compensation that would become payable to the claimants in accordance with the ROMP procedures and Schedule 13 to the 1995 Act. Mr Purchas submitted that in the absence of the modification order the claimants’ ability to work the mineral on the Coastal Strip would necessarily have been subject to prospective restriction as a result of the determination required under the ROMP application. As a matter of fact the claimants were not, prior to the making of the modification order, in the position of being able to look forward to continuing to work the Coastal Strip in accordance with the 1951 permission unamended until its expiry. Instead the ROMP procedures had already attached to the 1951 permission.

[44]Approaching the matter in this manner and taking into account what was in fact the situation as at the valuation date (namely that the 1951 permission was already subject to a ROMP application) was consistent with the approach in Trocette Property in that it involved keeping as near as possible to reality. It was also consistent with the approach taken by the Lands Tribunal in Land and Property Ltd v Restormel Borough C ouncil [2004] RVR 303 in which the Member, Mr P F Clarke FRICS, concluded in respect of the correct basis of valuation as follows:

“My decision …. is that, as a matter of law and fact, I should not depart from the actual position at the valuation date, save for the need to make the necessary assumption that the 1997 permission had not been modified.”

[45]As regards the MWH case, it was true that the facts were substantially different. However the underlying principle was the same. In the MWH case, without the deemed modification order, the claimant would have owned land which had an impediment to profitable working, namely the presence of great crested newts which could not be translocated. In the present case, without the modification order, the claimants would have owned land which enjoyed the benefit of the 1951 planning permission, but such land was within an SSSI and was part of an SAC and the planning permission was already subject to an ongoing ROMP application. Just as in the MWH case the extent to which the presence of great crested newts fettered the ability profitably to work the site was a point of relevance, so here the extent to which these features (namely SSSI and SAC and ongoing ROMP application) were factors which affect the site must be taken into consideration.

[46]The restrictions imposed by the modification order (namely the imposition of the six conditions) could have been achieved through the ROMP route. Such conditions probably would have been imposed through the ROMP route in the absence of the modification order. The claimants failed to a grapple with a central question, namely what was the loss of profits directly arising from the modification order.

[47]It was likely that, in the absence of the modification order, conditions which were the same as (or similar to) the six conditions imposed in the modification order would have been imposed on the site through the ROMP application. If that had occurred then the question of whether the claimants would have had to accept such conditions without any compensation or would instead have been entitled to compensation would depend upon the economic viability test in paragraph 10(2) of Schedule 13 to the 1995 Act.

[48]Mr Purchas made reference to the history of the legislation which included the Stephens Report and the concern that had been raised there regarding old planning permissions for the working of minerals. He explained that the position which ultimately was reached, which was controversial, was that old permissions became subject to procedures which led to their modification (or lapsing) and that compensation was limited to losses arising by virtue of restrictions upon working rights, but only where such restriction of working rights would be such as to prejudice adversely to an unreasonable degree the economic viability of operating the site or the asset value of the site. In other words in many cases the modifications had to be accepted without compensation.

[49]In summary DCC contended that, absent the modification order in the present case, the claimants faced the likelihood that the working rights under the 1951 planning permission would have become restricted to the same or a similar extent under the ROMP application, that the economic viability test would not have been met and that in consequence the claimants would not have received any compensation for this restriction. The question of whether the conditions imposed through the ROMP procedure would in fact have been the same or effectively the same as those under the modification order and the question of whether, if the ROMP application had been determined in such a manner, the claimants could have satisfied the economic viability test were matters for the future upon evidence. But these were live points which were relevant to the proper consideration of compensation payable in the present case.

[50]Mr Purchas suggested it might be helpful to examine what actually happened here in case it might illuminate the interplay between the ROMP procedures and the review under the Habitats Regulations. He drew attention to paragraphs 7.46 - 7.49 of the report dated 5 September 2008 to DCC’s Planning Committee which was in the following terms:

“7.46 Within most areas of planning permission 200411 (including Tout, Inmosthay, Withies Croft, Waycroft and Admiralty Quarries) it is now clear that there is no immediate or short term threat of quarry development occurring in breach of the restrictions identified as necessary to protect the integrity of the SAC. The indications are that the relevant owners and operators will agree to the necessary restrictions to safeguard the SAC, and an oral update will be given to the Committee on this. Accordingly, it is suggested that the necessary restrictions can be secured through the future determination of the current ROMP applications. 7.47 However it has become fairly clear that there are two areas where there remains real potential for development to occur that would be likely to unacceptably affect the SAC, Broadcroft and the Coastal Strip. 7.48 At Broadcroft, SFL has stated that it is not willing to voluntarily accept the restrictions required to safeguard the SAC, and there would appear to be no alternative but to make orders to modify planning permission 200411 and 26548 to secure the necessary restrictions before any further loss of habitat occurs. However, your officers are continuing to negotiate with SFL on this and will report orally to the Committee. 7.49 Similarly, in relation to the Coastal Strip SFL has stated that ‘whilst in most cases there are no current proposals to work these areas we cannot be fettered or restricted as issues may arise whereby we will need to use these areas or parts of them for future quarrying operations. We therefore would not be willing to voluntarily accept the restrictions required to safeguard the SAC or associated land.”

This showed how the modification order was not an alternative to the ROMP procedures. Instead the ROMP procedures were continuing anyway (and in relation to the whole of the Coastal Strip) whereas the modification order was considered necessary as a more urgent measure to protect the integrity of the SAC as regards the northern part of the Coastal Strip.

[51]As regards Mr Holgate’s circularity argument, Mr Purchas pointed out that, in order for paragraph 15 of Schedule 13 to the 1995 Act to become engaged and for a deemed modification order under section 97 of the 1990 Act to arise, the economic viability test under paragraph 10(2)(d) must have already been satisfied. Thus under such a deemed modification order there could be no question of going back and seeing whether, in the absence of the deemed modification order, the economic viability test under paragraph 10 would have been passed – it was a given fact that it had been passed because otherwise paragraph 15 would not have been engaged at all. There was no circularity.

[52]In summary upon preliminary issue (ii) Mr Purchas submitted that the Tribunal would fall into serious error if it concluded that part of the real world, namely the fact that the 1951 planning permission was already in the process of review under the ROMP application, was to be ignored for the purpose of assessing compensation payable in respect of the modification order. To do so would result in the claimants potentially being in a substantially better position as a result of the modification order than they could ever have hoped to have been in in the absence of the modification order.

[53]As regards preliminary issue (ii) the answer to both limbs of the question was: yes.

[54]As regards preliminary issue (iii) Mr Purchas submitted that a proper assessment must be made of the difference between Position B and Position C, using those expressions as explained in paragraph 10 above. There would be an issue between the parties as to what if any profits and royalties were available to the claimants in the position they in fact found themselves as a result of the modification order (Position C). It would then be necessary for the Tribunal to assess what profits and royalties the claimants would have made pursuant to the 1951 planning permission if no modification order had been made but taking into account the fact that the permission was subject to the existing ROMP application and to the prospective determination of that application (as well as being subject to any other regulatory control). This reference to any other regulatory control was intended to include an argument raised in footnote 7 on page 22 of DCC’s skeleton argument to the effect that the Environmental Damage Regulations 2009 would have made working of the site so as to damage the integrity of the SSSI unlawful, irrespective of the determination of the ROMP. The latter point is the subject of an application to amend DCC’s statement of case, which has been submitted to the Tribunal. We were not asked at this hearing of the preliminary issues to decide upon this application to amend. It is common ground between the parties that the application to amend and (if such amendment is granted) the relevance of these 2009 Regulations are matters for the future.

[55]In deciding upon how happily placed the claimants would have been in Position C it would be necessary for the Tribunal to assess what would have happened under the ROMP application in the absence of the modification order. Such an assessment regarding what would have happened in the absence of some relevant event was just the sort of assessment which a Tribunal was well used to considering. There could be no dispute that DCC remained under an obligation to determine the ROMP application. It would be a matter for evidence as to how soon that would ultimately have been determined in the absence of the modification order; whether the result of that determination would have been to impose upon the 1951 planning permission the same or similar conditions as were in fact imposed by the modification order; and, if so, whether the economic viability test would have been passed in respect of any relevant restrictions of working rights so as to entitle the claimants to compensation in respect of such restrictions as opposed to the claimants merely having to accept such restrictions without compensation. Claimants’ submissions in reply

[56]Mr Holgate pointed out that it was not accepted by the claimants that the area comprising the south of the Coastal Strip (which is not included in the modification order) would in due course be dealt with through the ROMP procedures.

[57]It was noted that, pursuant to the thinking behind the Stephens Report and the legislative history referred to by Mr Purchas, it seemed to be argued by DCC that this showed that compensation should not be obtained in any event for loss or damage arising from restrictions on working rights which did not meet the economic viability test in paragraph 10 of Schedule 13 to the 1995 Act. However in the present case it was clear, even on DCC’s arguments, that for at least a limited period compensation assessed on a different basis would be available to the claimants. Thus the modification order prevented the working of the site from the valuation date namely 18 February 2009. If the approach contended for by DCC was adopted, such that enquiry was made as to what would have happened under the ROMP procedures in the absence of the modification order, then the necessary conclusion would be that the ROMP procedures would not have been determined for a significant time. Call this time X months where X may be more than twelve. Thus the compensation payable under section 107 for the modification order would include, even on DCC’s case, an assessment of the loss or profits and royalties for this X months without there being any question of an economic viability test being directly or indirectly relevant. Accordingly the principle contended for by DCC (namely that the whole thrust of the legislation was that there should be no compensation for the restriction of working rights unless the economic viability test was met) was in any event breached for this period of X months. If the principle could be breached for these X months this shows that the principle was in fact not a proper principle to apply at all in circumstances where a modification order had been made and where section 107 of the 1990 Act was triggered.

[58]In short, whatever might have been the position had there been no modification order and had the matter proceeded solely under the ROMP application, the making of the modification order has had the effect of disapplying the economic viability test.

[59]Mr Holgate pointed out that one possible outcome of the review under the Habitats Regulations was that a decision was reached that a planning permission should be revoked rather than merely modified. In such a case it was submitted there could be no application of an economic viability test. If that was so in the case of a revocation then the same should apply in the case of a modification.

[60]Mr Holgate drew attention to the substantial delay which, in the absence of the modification order, would in any event have arisen before the conclusion of the ROMP application. He drew attention to the need for a scoping opinion and then for an environmental statement and then for an assessment of such statement and then for a final decision to be reached.

[61]The Tribunal asked Mr Holgate what would be the position in a hypothetical case where a local authority was close to reaching a conclusion on a ROMP application in circumstances where it was common ground that this would substantially restrict the working of a site but in circumstances where it was also common ground that the economic viability test was not met, such that it was clear there would be no compensation payable. Suppose in such circumstances there was perceived to be an immediate threat from the resumption of quarrying to the integrity of an SAC such that the protection of the SAC could not wait even the fairly short time until the conclusion of the ROMP application. Suppose in those circumstances a local authority made a modification order to protect the SAC by the imposition of the same conditions as would soon become attached to the planning permission through the ROMP procedure. The Tribunal asked Mr Holgate whether in those circumstances the making of the modification order would mean that a claimant would be compensated for the full difference between(i) being entitled to work out the planning permission without any restriction for the rest of its duration and

(ii) being restricted as per the modification order. It was suggested to Mr Holgate that if compensation upon such a basis was available then the claimant would, by virtue of the modification order and the claim for compensation thereunder, be put into a substantially better position than it could ever have hoped to be in in the absence of the modification order. Mr Holgate’s response was that this might indeed be the position but to conclude otherwise would be to fall into the trap of allowing hard cases to make bad law. Discussion

[62]We consider the appropriate starting point is the wording of section 107 of the 1990 Act which provides that the claimants are entitled to compensation in respect of loss or damage which is directly attributable to the modification of the 1951 planning permission which was made by the modification order.

[63]In assessing the amount of such loss or damage the fundamental principle of equivalence must be applied. In Horn v Sunderland Corporation Scott LJ stated at page 49:

“The statutory compensation cannot, and must not, exceed the owner’s total loss, for, if it does, it will put an unfair burden on the public authority or other promoters who on public grounds have been given the power of compulsory acquisition, and it will transgress the principle of equivalence which is at the root of statutory compensation, the principle that the owner shall be paid neither less nor more than his loss. The enunciation of this principle, the most fundamental of all, is easy enough. Its justice is self-evident, but its application to varying facts is apt to be difficult.”

Also in Director of Buildings v Shun Fung Limited at page 125 the Privy Council stated:

“But subject to these qualifications, a claimant is entitled to be compensated fairly and fully for his loss. Conversely, and built into the concept of fair compensation, is the corollary that a claimant is not entitled to receive more than fair compensation: a person is entitled to compensation for losses fairly attributable to the taking of his land, but not to any greater amount. It is ultimately by this touchstone, with its two facets, that all claims for compensation succeed or fail.”

[64]In paragraph 2(v) of the claimants’ skeleton argument it is asserted on behalf of the claimants that:

“Without the modification order the Claimants would have been able to work the Coastal Strip profitably …”

DCC, correctly in our view, argues that this passage identifies a relevant consideration in the present case, namely whether without the modification order the claimants would have been able to work the Coastal Strip profitably (and if so how profitably). The only way of answering this question is by considering how happily placed the claimants would have been without the modification order.

[65]If the modification order had not been made the claimants would not have enjoyed the right to work out the Coastal Strip in accordance with the 1951 planning permission unmodified until the expiration of that permission and without further restriction. Instead the claimants would have been owners of land which had the benefit of the 1951 planning permission but where that planning permission was already the subject of a ROMP application which had to be determined in due course. It appears to be common ground (and certainly on the material before us we find) that as at the valuation date there was no possibility of the claimants being able (in the absence of the modification order) to work out the Coastal Strip in accordance with the unamended terms of the 1951 planning permission until its expiry and without further restriction. There being no possibility that the claimants would have been entitled to such benefits in the absence of the modification order, we consider it clear that compensation in the present case cannot be calculated on the basis that they would have enjoyed such rights.

[66]We accept the principle as recorded in paragraph 29 above that compensation should be assessed applying the “reality principle” i.e. it should be assessed keeping as near as possible to the real world, such that no assumptions should be made departing from reality except in so far as is required by a statutory provision.

[67]In the present case the real world involves the circumstance that, as at the valuation date, the 1951 planning permission was already the subject of a ROMP application which DCC was obliged in due course to determine. It would be an unjustified departure from the reality principle to ignore that fact.

[68]We realise that the assessment of how happily placed the claimants would have been as at the valuation date in the absence of the modification order, but with the planning permission being already subject to the ROMP application, may not be entirely easy to assess. It will involve consideration of how matters are likely to have turned out in the future in so far as these affect whether the claimants would have been able profitably to work the land. These matters will include how and when the ROMP application would have been determined; whether the ROMP determination would have resulted in restrictions on working rights, which were the same or similar to those in the modification order, being imposed upon the 1951 planning permission; and whether such restrictions of working rights would satisfy the economic viability test in paragraph 10(2) of Schedule 13 to the 1995 Act, such that the claimants would have got compensation under Schedule 13. Such an exercise may require careful analysis of evidence and argument. However there are not such substantial difficulties (as apparently contended for by the claimants) that the exercise should not be performed at all.

[69]It was an important strand of Mr Holgate’s argument that to assess compensation under section 107 in this manner would in effect result in reading into section 107 an economic viability test which was not there. We do not agree that this is so. Consider a case where a modification order is made in respect of a mineral permission which is not subject to a ROMP application. If in those circumstances in calculating compensation for the modification order under section 107 an economic viability test was applied, then this would indeed involve reading an economic viability test into section 107. However section 107 directs the parties to consider what is the loss or damage directly attributable to the modification of the 1951 planning permission. This requires a comparison between how happily placed the claimants are as a result of the modification order and how happily placed the claimants would have been in the absence of the modification order. If the latter position would in fact have been a position where the claimants would have been restricted (or prevented) from working the land and could only have obtained any compensation if the economic viability test was passed, then the bringing in of this economic viability test is merely an ingredient in working out how happily placed the claimants would have been in the absence of the modification order. It is not reading an economic viability test into section 107 – it is merely recognising that the value of the claimants’ existing position (i.e. in the absence of the modification order) was already potentially affected by the economic viability test. The economic viability test arises not under section 107, but by reason of the position the claimants were already in before the valuation date and before section 107 came to be applied.

[70]As regards Mr Holgate’s circularity argument we do not see substance in this point. Examining the way in which the circularity argument is advanced in paragraphs 14-20 of Mr Holgate's note (see paragraph 37 above) we conclude as follows. Paragraph 14 is agreed – the modification order there referred to is the actual modification order made in this case under the Habitats Regulations. Paragraph 15 is agreed. The crucial passage in paragraph 15 is the following:

"assuming the MO had not been made" – i.e. assuming that the modification order made under the Habitats Regulations had not been made. Paragraph 16 is agreed. We assume that paragraph 17 is correct. Paragraph 18 would appear to be correct. However paragraph 19 is not correct. The fundamental basis of the process being undertaken is the basis identified in paragraph 15, namely "assuming the MO had not been made"

. This assumption must continue throughout the process. Therefore in the circumstances considered in paragraph 19, where consideration is being given to the position which would have existed if the ROMP modification order had not been made, there can be no reintroduction of a modification order made under the Habitats Regulations because that would be to contradict the assumption upon which the exercise is being performed. The comment in paragraph 20 is therefore unjustified.

[71]We were struck by Mr Holgate’s answer, namely that hard cases make bad law, to the hypothetical question raised by the Tribunal as described in paragraph 61 above. Such a case involves it being common ground that, absent the modification order under the Habitats Regulations, both(i) a ROMP application would soon be determined imposing the same conditions as in the modification order;

(ii) the restriction on working rights thereby caused would not satisfy the economic viability test; and

(iii) in consequence the claimant would soon be subject to the same conditions as in the modification order but in circumstances where no compensation would be payable. In our judgment it would be strange if in such a hypothetical case a claimant could indicate an intention to start immediate quarrying such as to affect the integrity of a SAC; could thereby in effect force the local planning authority to make a modification order with immediate effect; and could thereby elevate itself into a position of receiving compensation calculated on the basis that, without the modification order, the claimant could have worked out the planning permission unmodified (and without risk of modification through any ROMP application) for the remainder of its duration. Such a conclusion would follow from the claimants’ arguments. However such a conclusion is in our judgment one which offends the principle of equivalence and which (to return to the words of section 107) would involve doing something beyond compensating the claimant in respect of “loss or damage which is directly attributable to the ……. modification.”

[72]We accept that for the period from the valuation date until such date as the ROMP application would have been decided the claimants may be entitled to compensation which is not assessed by reference to how happily placed they would have been under the planning permission once the ROMP application had been decided. However this fact does not justify adopting a different (and in our judgment wrong) basis for calculating compensation for the period beyond the date when the ROMP application would have been decided. Conclusions

[73]For the reasons set out above we conclude that the answer to preliminary issue (ii) is as follows. The first limb of this preliminary issue is the central point of this preliminary hearing. In assessing the loss or damage directly attributable to the modification order it is relevant in law to consider the effect of the ROMP application and the compensation provisions under the Environment Act 1995 on the basis that the modification order had not been made. As regards the second limb of this preliminary issue we do not see this as likely to be a point of any substantial significance in the calculation of compensation payable. However insofar as the point is of significance then we agree that at the date that the ROMP is in due course determined the modification order will have been made and account should be taken of that fact.

[74]As regards preliminary issue (iii) as amended (see paragraph 16 above) we do not see how this can be answered by giving an exhaustive list of every point which may be of potential relevance. The question can only be answered generally. The answer is in substance contained in paragraph 68 above. In assessing how happily placed the claimants would have been if the modification order had not been made and if instead they had been left as owners of the relevant land with the benefit of the 1951 planning permission but recognising that that planning permission was subject to the ROMP application, it will be necessary to assess what would have happened in such circumstances. This analysis will include considering when the ROMP application would have been determined, what would have been the restrictions of working rights contained in this determination, whether compensation would have been available under Schedule 13 paragraph 10 for such restrictions of working rights, if so what would have been the amount of such compensation, whether the modification order made under the Habitats Regulations in February 2009 was more restrictive than the outcome that would have been reached by the determination of the ROMP application, if so what is the compensation payable to the claimants for loss or damage directly attributable to these additional restrictions for the period subsequent to the date when the ROMP determination would have been made, and what is the compensation payable to the claimants for loss or damage directly attributable to the modification order for the period between the valuation date and the date when the ROMP application would have been determined. If DCC is given permission to raise the additional argument based upon the Environmental Damage Regulations 2009 (as referred to in paragraphs 36 and 54 above) then considerations under these regulations may also be relevant. In considering the question of how happily placed the claimants would have been in the absence of the modification order it is necessary to assume that the modification order had not been made but that otherwise the circumstances as at the valuation date were as they in fact existed. This includes not only the fact that the 1951 planning permission was the subject of the continuing ROMP application but also the fact that the SSSI and the SAC had been designated.

[75]The parties have agreed that the answer to preliminary issue (i) is: yes.

[76]For the reasons recorded in paragraph 15 above we do not make any decision upon preliminary issue (iv).

[77]This decision is final on all matters in the preliminary issues other than costs. The parties may now make submissions on costs and a letter giving directions for the exchange of submissions accompanies this decision. Dated 4 December 2014 His Honour Judge Nicholas Huskinson A J Trott FRICS

Cited in 1 later judgment

Huddlestone v Bassetlaw District Council 2019