Four adjoining sites were acquired for the HS2 terminus in Birmingham. Each owner claimed that its land could otherwise have been developed for student housing. Assessing one site in isolation risked assuming the same demand several times. The Supreme Court explained which evidence about neighbouring sites could be used when estimating the planning prospects of each site.
The four sites
The four sites at the eastern edge of Birmingham city centre had been cleared for development and already had planning permissions. The compulsory acquisitions took effect on different dates in 2018. Each site had to be valued at its own acquisition date.
Each owner asked Birmingham City Council for a certificate setting out the development that could reasonably have been expected without HS2. All the proposals included substantial student accommodation. The council considered each site separately. It reasoned that, if the railway project had been cancelled, there would have been no compulsory acquisition and no applications for certificates on the neighbouring sites.
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Compensation and the certificate
Rule (2) in section 5 of the Land Compensation Act 1961 measures compensation by the open-market price a willing seller might be expected to realise. Section 14 also allows account to be taken of planning permission already in force, the prospect of permission being granted later, and appropriate alternative development.
Appropriate alternative development is assessed on prescribed assumptions, including cancellation of the public scheme on its launch date. Otherwise the assessment uses circumstances known to the market at the valuation date. If planning permission could reasonably have been expected on that basis, it is treated as in force or certain to be granted. That is worth more than the discounted value of a mere possibility of permission.
The preliminary issue and the courts below
The four certificate decisions were appealed. The Upper Tribunal asked whether, and if so how, a decision-maker may take account of development of other land proposed in other certificate applications or decisions arising from acquisition for the same scheme.
The Upper Tribunal distinguished an application for a certificate from an application for planning permission. An adjoining owner’s certificate could be evidence of how the authority might have approached a hypothetical planning application. It did not itself carry permission to build.
The Court of Appeal took a different view. Once the railway scheme was assumed away, it thought the neighbouring certificates should be ignored. It also identified the practical difficulty of allocating a limited number of possible student places between owners whose sites had been acquired at different times.
Evidence is not assumed away
Lord Sales and Lord Hamblen, with whom Lord Kitchin, Lord Leggatt and Lady Rose agreed, rejected the cancellation argument. Section 14(4) permits any relevant real-world evidence of circumstances known to the market at the valuation date. It requires the stated assumptions, but no further consequential assumptions. If another certificate application or decision was known to the market and relevant, it could be considered. The Act does not clearly exclude useful real-world evidence.
A planning authority considering student housing might ask how demand would be affected if another suitable site came forward. That is a question about actual market circumstances. A certificate for one owner does not itself give that owner priority over a neighbour.
No reconstruction of the intervening period
The decision-maker may not speculate about permissions that might have been granted, for the valued land or other land, between cancellation and the valuation date. Section 14 looks to permissions in force at the valuation date and to prospects judged from circumstances then known to the market. That conclusion followed from the statutory language, the reality principle explained in Transport for London v Spirerose Ltd, and Lord Hope’s statement in Fletcher Estates that authorities apply ordinary planning principles to existing circumstances rather than reconstruct an uncertain past.
A certificate application is not a planning application, and a certificate neither authorises development nor shows what would actually have happened. Neither is a material planning consideration. The Secretary of State’s original case therefore failed. A certificate for student accommodation on one site would not cap or allocate the amount capable of qualifying on another.
Information submitted with a neighbouring application could still help establish what the market knew at the valuation date. For example, evidence about available sites or likely demand might be relevant regardless of which application first brought it to light. The decision-maker must assess how far it assists with the particular site.
Verdict: The Court unanimously allowed the Secretary of State’s appeal to a limited extent and restored the Upper Tribunal’s declaration. Other certificate applications and decisions could be considered as evidence, with appropriate weight. They were neither planning permissions nor material planning considerations in their own right. No individual compensation award was determined.
Source: Secretary of State for Transport v Curzon Park Ltd and others [2023] UKSC 30
