The Supreme Court has upheld a government appeal that challenges the current approach to compensating landowners when their sites are bought by the state or local authorities, in a test-case decision.
Experts say the decision will have consequences for the development of HS2, the Britain’s proposed new high speed rail line being built from London to the North-West, and the largest infrastructure project in Europe, and could even lead to legislative change in this area of compensation and planning law.
The Secretary of State for Transport is buying four separate sites in Birmingham to unlock delivery of the new HS2 railway terminus around Curzon Street Station. All sites are being or have been bought via compulsory purchase order.
In response, all four affected landowners, including developer Quintain and Birmingham city council, applied a Certificate of Alternative Appropriate Development as they believe they have significant alternative planning potential on their sites and should receive greater compensation.
Known as CAADs, the certificates are used by developers to draw up alternative proposals in case a development such as HS2 is dropped.
In fact, previous court documents noted that the four sites were each a "substantial potential development site in its own right" and had been "cleared for expansion of the city centre" before the new HS2 terminus was proposed.
Site 1, known as City Park Gate, had a CAAD submitted by Quintain for 1 million square feet of development including residential, office, hotel and retail uses, together with student accommodation comprising up to 1,940 bedrooms. In 2018 the Financial Times reported that the value of the Quintain site was estimated for compulsory purchase at £20 million.
The Secretary of State argued that the applications should be considered together when determining whether a certificate should be granted. This is, the Secretary of State says, to avoid the public purse having to bear more compensation than it should.
The Upper Tribunal then agreed with the Secretary of State that the decision-maker must treat the applications collectively. That decision was appealed by the landowners and the Court of Appeal concluded that the landowners’ sites should all be considered separately, without taking the other applications into account.
The Secretary of State then appealed to the Supreme Court and the Supreme Court has now unanimously allowed the appeal, holding that the Upper Tribunal should be restored. The decision in Secretary of State for Transpot v Curzon Park Ltd can be viewed here.
Richard Flenley, partner, Charles Russell Speechlys, explains that the decision will come as a blow to the landowners as they each separately fight for better compensation and could have wider reaching consequences for both HS2 and other compulsory acquisition schemes.
"The judgment will come as a relief to HS2 as compensation for landowners may well be reduced, with doubt now being cast as to what the outcome of the Upper Tribunal’s review of the alternative appropriate development applications will be. This comes at the same time that the government is seeking to review and potentially reform the current system for compensation for the compulsory acquisition of land.
"This case challenges the current approach that is taken when assessing development potential of land subject to compulsory acquisition, and we will now await to see if the decision will lead to any legislative change in this area of compensation and planning law."