Office to Residential Article 4 Directions – the fight back starts here

Brighton & Hove City Council is apparently considering making an Article 4 Direction in order to control the take up of the recently introduced office to residential change of use permitted development right. The Policy and Resources Committee will be considering the officers’ report on 11th July 2013. The Council’s press release is here.

Islington London Borough Council has also published just such an Article 4 Direction to cover those parts of the Borough not already covered by the exemption granted by the Secretary of State. See here.

I wrote about this innovative new PD right in Changing from office to residential – the reality on 21st May 2013 and indeed wrote about Article 4 Directions in passing when looking at Tories, Residential Extensions, Article 4 Directions and Compensation on 20th September 2012.

But what are Article 4 Directions, how are they made and more importantly how do they work?

The starting point is that under the terms of the Town and Country Planning Act 1990 (the Act), planning permission is by virtue of s.57(1) required for the carrying out on land of any development which is not, by virtue of s.55 (2), excluded. Development is defined in s.55(1) of the Act as the "carrying out of building, engineering, mining or other operations in, on, over or under the land, or the making of any material change in the use of any buildings or other land".

The Secretary of State may under s.59(1) however, by development order, grant deemed planning permission for specified development or classes of development. The Town and Country Planning (General Permitted Development) Order 1995 (the Order) is effectively a national grant of planning permission. The original form of the Order is available electronically but has not been amended to show the successive amendments culminating in the most recent changes to be found in The Town and Country Planning (General Permitted Development) (Amendment) (England) Order 2013. Accordingly, I set out the terms of Articles 4, 5 and 6 in full below.

Schedule 2 to the Order, grants planning permission for certain development described as "permitted development" which may be subject to certain exceptions, limitations and conditions as specified therein. It is however important to note that permitted development is still development for which planning permission is required. It is just that the application process is dispensed with and permission is deemed to have been granted.

Local planning authorities (LPAs) can also extend permitted development rights locally by making local development orders

Given that the character and appearance of buildings and neighbourhoods can be significantly damaged by alterations carried out as permitted development e.g. the introduction of unsympathetic modern windows and porches resulting in a uniform row of houses losing its character; or parts of designated conservation areas losing their status as conservation areas because permitted development has resulted in the loss of the "special architectural or historic interest" that the designation was introduced to protect, LPAs have been empowered to act.

LPAs can bring permitted development under planning control. They can for example impose a condition on a planning permission for a new house which restricts the permitted development rights by bringing them under the control of the LPA. Such conditions should however only be used in exceptional circumstances (see para 86-91 of Circular 11/95 - The use of conditions in planning permissions but also see three model conditions (conditions 50-52 in Appendix A to the Circular).

Another way of bringing permitted development under planning control is through an Article 4 direction which can restrict permitted development rights within a limited area although permitted development rights should only be withdrawn if there is reliable evidence to suggest that such rights could damage "an interest of acknowledged importance" (see Circular 9/95 - General Development Order Consolidation 1995).

The relevant extracts from the Order (as it currently stands) are as follows:  

“4 Directions restricting permitted development

(1) If the Secretary of State or the local planning authority is satisfied that it is expedient that development described in any Part, Class or paragraph in Schedule 2, other than Class B of Part 22 or Class B of Part 23, should not be carried out unless permission is granted for it on an application, the Secretary of State or (as the case may be) the local planning authority, may make a direction under this paragraph that the permission granted by article 3 shall not apply to—

(a) all or any development of the Part, Class or paragraph in question in an area specified in the direction; or

(b) any particular development, falling within that Part, Class or paragraph, which is specified in the direction,

and the direction shall specify that it is made under this paragraph.

(2) A direction under paragraph (1) shall not affect the carrying out of—

(a) development permitted by Part 11 authorised by an Act passed after 1st July 1948 or by an order requiring the approval of both Houses of Parliament approved after that date;

(b) development permitted by Class B of Part 13;

(c) development mentioned in Part 24, unless the direction specifically so provides;

(d) development in an emergency other than development permitted by Part 37;

(e) development permitted by Part 37 or 38.

(3) A direction made or having effect as if made under this article shall not, unless the direction so provides, affect the carrying out by a statutory undertaker of the following descriptions of development—

(a) the maintenance of bridges, buildings and railway stations;

(b) the alteration and maintenance of railway track, and the provision and maintenance of track equipment, including signal boxes, signalling apparatus and other appliances and works required in connection with the movement of traffic by rail;

(c) the maintenance of docks, harbours, quays, wharves, canals and towing paths;

(d) the provision and maintenance of mechanical apparatus or appliances (including signalling equipment) required for the purposes of shipping or in connection with the embarking, disembarking, loading, discharging or transport of passengers, livestock or goods at a dock, quay, harbour, bank, wharf or basin;

(e) any development required in connection with the improvement, maintenance or repair of watercourses or drainage works;

(f) the maintenance of buildings, runways, taxiways or aprons at an aerodrome; or

(g) the provision, alteration and maintenance of equipment, apparatus and works at an aerodrome, required in connection with the movement of traffic by air (other than buildings, the construction, erection, reconstruction or alteration of which is permitted by Class A of Part 18).

(4) In this article and in articles 5 and 6 “local planning authority” means the local planning authority whose function it would be to determine an application for planning permission for the development to which the direction relates or is proposed to relate.

5 Procedure for article 4(1) directions

(1) Subject to article 6, notice of any direction made under article 4(1) shall, as soon as practicable after the direction has been made, be given by the local planning authority—

(a) by local advertisement;

(b) by site display at no fewer than two locations within the area to which the direction relates, or, if the direction is made under article 4(1)(b), on the site of the particular development to which the direction relates, for a period of not less than six weeks; and

(c) subject to paragraph (2), by serving the notice on the owner and occupier of every part of the land within the area or site to which the direction relates.

(2) In a case where this paragraph applies, the local planning authority need not serve notice on an owner or occupier in accordance with paragraph (1)(c), if they consider that—

(a) individual service on that owner or occupier is impracticable because it is difficult to identify or locate that person or

(b) the number of owners or occupiers within the area to which the direction relates makes individual service impracticable.

(3) Paragraph (2) shall not apply where the owner or occupier is a statutory undertaker or the Crown.

(4) The notice referred to in paragraph (1) shall—

(a) include a description of the development and the area to which the direction relates, or the site to which it relates, as the case may be, and a statement of the effect of the direction;

(b) specify that the direction is made under article 4(1) of this Order;

(c) name a place where a copy of the direction, and a copy of a map defining the area to which it relates, or the site to which it relates, as the case may be, may be seen at all reasonable hours;

(d) specify a period of at least 21 days, stating the date on which that period begins, within which any representations concerning the direction may be made to the local planning authority; and

(e) specify the date on which it is proposed that the direction will come into force, which must be at least 28 days but no longer than two years after the date referred to in sub-paragraph (d).

(5) Where a notice given by site display is, without any fault or intention of the local planning authority, removed, obscured or defaced before the period referred to in paragraph (4)(d) has elapsed, the authority shall be treated as having complied with the requirements of that paragraph if they have taken reasonable steps for the protection of the notice, including, if need be, its replacement.

(6) The local planning authority shall send a copy of the direction and the notice under paragraph (1), including a copy of a map defining the area to which it relates, or the site to which it relates, as the case may be, to the Secretary of State on the same day that notice of the direction is first published or displayed in accordance with paragraph (1).

(7) The direction shall come into force in respect of any part of the land within the area to which it relates on the date specified in accordance with paragraph (4)(e) but shall not come into force unless confirmed by the local planning authority in accordance with paragraphs (9) and (10).

(8) On making a direction under article 4(1)—

(a) a county planning authority shall give notice of it to any district planning authority in whose district the area or part of the area to which the direction relates is situated; and

(b) except in metropolitan districts, a district planning authority shall give notice of it to the county planning authority, if any.

(9) In deciding whether to confirm a direction made under article 4(1), the local planning authority shall take into account any representations received during the period specified in accordance with paragraph (4)(d).

(10) The local planning authority shall not confirm a direction until after the expiration of—

(a) a period of at least 28 days following the latest date on which any notice relating to the direction was served or published; or

(b) such longer period as may be specified by the Secretary of State following the notification by the local planning authority to the Secretary of State of the direction.

(11) The local planning authority shall, as soon as practicable after a direction has been confirmed—

(a) give notice of such confirmation and the date on which the direction will come into force; and

(b) send a copy of the direction as confirmed to the Secretary of State.

(12) Notice under paragraph (11)(a) shall be given in the manner described in paragraphs (1) and (4)(a) to (c); and paragraphs (2) and (3) shall apply for this purpose as they apply for the purpose of paragraph (1)(c).

(13) A local planning authority may, by making a subsequent direction, cancel any direction made by them under article 4(1); and the Secretary of State may, subject to paragraphs (3) and (4) of article 6, make a direction cancelling or modifying any direction under article 4(1) made by a local planning authority at any time before or after its confirmation.

(14) Paragraphs (1) to (12) shall apply in relation to any direction made under paragraph (13) by a local planning authority unless the direction it is cancelling is a direction to which article 6 applied.

(15) Paragraphs (2) to (10) of article 6 shall apply in relation to any direction made by a local planning authority under paragraph (13) cancelling a direction to which article 6 applied.

(16) The Secretary of State shall notify the local planning authority as soon as practicable after making a direction under paragraph (13).

(17) Paragraphs (1) to (3) and (4)(a) to (c) shall apply to any direction made under paragraph (13) by the Secretary of State.

(18) A direction made under paragraph (13) by the Secretary of State shall come into force in respect of any part of the land within the area to which it relates—

(a) on the date on which the notice is served in accordance with paragraph (1)(c) on the occupier of that part of the land or, if there is no occupier, on the owner; or

(b) if paragraph (2) applies, on the date on which the notice is first published or displayed in accordance with paragraph (1).

6 Directions with immediate effect

(1) This article applies where—

(a) a direction relating only to development permitted by any of Parts 1 to 4, or Part 31, of Schedule 2 has been made by the local planning authority under article 4(1) and the authority consider that the development to which the direction relates would be prejudicial to the proper planning of their area or constitute a threat to the amenities of their area; or

(b) a direction within the whole or part of any conservation area has been made by the local planning authority under article 4(1) which the authority consider should have immediate effect and the development to which the direction relates is described in sub-paragraphs (a) to (j) of paragraph (3).

(2) Subject to paragraphs (3), (4) and (5) of this article, paragraphs (1) to (3), (4)(a) to (d), (5), and (8) to (10) of article 5 shall apply, in relation to a direction to which this article applies; and the planning authority shall notify the Secretary of State of the direction on the same day that notice is given under paragraph (1) of article 5.

(3) The Secretary of State may not make a direction under paragraph (13) of article 5 within the whole or part of any conservation area where the development to which the direction relates is described in—

(a) Class A of Part 1 of Schedule 2, consisting of the enlargement, improvement or other alteration of a dwellinghouse, where any part of the enlargement, improvement or alteration would front a relevant location;

(b) Class C of Part 1 of that Schedule, where the alteration would be to a roof slope which fronts a relevant location;

(c) Class D of Part 1 of that Schedule, where the external door in question fronts a relevant location;

(d) Class E of Part 1 of that Schedule, where the building or enclosure, swimming or other pool to be provided would front a relevant location, or where the part of the building or enclosure maintained, improved or altered would front a relevant location;

(e) Class F of Part 1 of that Schedule, where the hard surface would front a relevant location;

(f) Class H of Part 1 of that Schedule, where the part of the building or other structure on which the antenna is to be installed, altered or replaced fronts a relevant location;

(g) Class A of Part 2 of that Schedule, where the gate, fence, wall or other means of enclosure would be within the curtilage of a dwellinghouse and would front a relevant location;

(h) Class G of Part 1 of that Schedule, consisting of the installation, alteration or replacement of a chimney on a dwellinghouse;

(i) Class C of Part 2 of the Schedule, consisting of the painting of the exterior of any part of—

(i) a dwellinghouse; or

(ii) any building or enclosure within the curtilage of a dwellinghouse,

which fronts a relevant location;

(j) Class B of Part 31 of that Schedule, where the gate, fence, wall or other means of enclosure is within the curtilage of a dwellinghouse and fronts a relevant location.

(4) The Secretary of State may not modify a direction to which this article applies or a direction which relates to—

(a) a listed building;

(b) a building which is notified to the authority by the Secretary of State as a building of architectural or historic interest; or

(c) development within the curtilage of a listed building,

and does not relate to land of any other description.

(5)Paragraph (8)(b) shall not apply in relation to a direction to which paragraph (3) of this article applies or to a direction which relates to—

(a) a listed building;

(b) a building which is notified to the authority by the Secretary of State as a building of architectural or historic interest; or

(c) development within the curtilage of a listed building,

and does not relate to land of any other description.

(6) The direction shall come into force in respect of any part of the land within the area to which it relates—

(a) on the date on which the notice is served in accordance with paragraph (1)(c) of article 5 on the occupier of that part of the land or, if there is no occupier, on the owner; or

(b) if paragraph (2) of article 5 applies, on the date on which the notice is first published or displayed in accordance with paragraph (1) of article 5.

(7) A direction to which this article applies shall expire at the end of the period of six months beginning with the date on which it comes into force unless confirmed by the local planning authority in accordance with paragraphs (9) and (10) of article 5 before the end of the six month period.

(8) The local planning authority shall, as soon as practicable after a direction has been confirmed—

(a) give notice of its confirmation; and

(b) send a copy of the direction as confirmed to the Secretary of State.

(9) Notice under paragraph (8)(a) shall be given in the manner described in paragraphs (1) and (4)(a) to (c) of article 5; and paragraphs (2) and (3) of that article shall apply for this purpose as they apply for the purpose of paragraph (1)(c) of article 5.

(10) In this article “relevant location” means a highway, waterway or open space.”

There are a number of permitted development rights that cannot be restricted by an Article 4 direction. These include temporary rights of up to four months for mineral exploration; removal of material from mineral working deposits other than a stockpile; development under local or private Acts or Orders; development for national security purposes; development by highways authorities; development undertaken in an emergency (including emergency development by the Crown); any telecommunications development permitted unless the direction provides otherwise; and certain operations by statutory undertakers.

The making of an Article 4 Direction is a formal process and there are model forms of Article 4 directions set out in Appendix 4 of Circular 9/95. When drafting a direction, the LPA needs to consider carefully the classes or parts of classes of Schedule 2 to the Order to be restricted and the proposed wording of the restriction. It is essential that the restrictions are set out clearly and precisely to enable landowners and occupiers to understand what they cannot do although note that they do not need to be notified before an Article 4 direction is made. The properties and land should be clearly identified on an Ordnance Survey plan and individually listed in a schedule. The LPA must sign, seal and date the Article 4 direction.

Following the making of an Article 4 direction, the LPA must publish a notice of the direction in a local newspaper. It must display at least two site notices for a period of not less than six weeks and notify the owners and occupiers of the affected properties and land, unless this is impractical. While individual notification may be considered impractical due to the number of owners or occupiers or because of problems associated with identifying one or more of them where the owner is a statutory undertaker or the Crown, they must be individually notified. Although not a statutory obligation, it is considered good practice to publish a notice of the Article 4 direction on the LPA's website.

The notice of the Article 4 direction must: Include a description of the development, the area to which the direction relates and a statement of the effect of the direction; Specify that the direction is made under Article 4(1) of the Order; Name the place where the direction and a map of the affected area can be inspected; Specify a minimum period of 21 days for representations to be made to the LPA (the date the representation period begins must be stated in the notice and any representation received by the LPA during this period must be taken into account by the LPA in deciding whether to confirm the Article 4 direction); and Specify the date that the Article 4 direction comes into force which date must be between 28 days and two years following the date on which the representation period began.

On the date the notice is first published or displayed, the LPA must send a copy of the Article 4 direction and the notice of the direction to the Secretary of State. An Article 4 direction cannot come into force on the date specified in the notice unless it has been confirmed by the LPA. The approval of the Secretary of State is not required.

The Article 4 direction cannot be confirmed until 28 days following the latest date the notice was served or published, or such longer period as specified by the Secretary of State.

When the Article 4 direction has been confirmed, the LPA must give notice of the confirmation and specify the date the Article 4 direction comes into force, to affected owners and occupiers in the same way as required for the notification of the making of the direction and send a copy of the Article 4 direction to the Secretary of State.

An Article 4 direction will usually come into effect following its confirmation by the LPA however in certain circumstances an Article 4 direction can come into effect immediately. Once an Article 4 direction comes into force it remains in force indefinitely (see below), unless the direction is cancelled by a further direction. An Article 4 direction is registered as a local land charge, and so should be revealed to subsequent purchasers by a local search.

A procedure is available to make an Article 4 direction immediately if an LPA wants to restrict certain permitted development rights quickly namely if such rights would be "prejudicial to the proper planning of their area or constitute a threat to the amenities of their area".

Once the emergency Article 4 direction has been made, the LPA must carry out the same publicity requirements as required for non-emergency Article 4 directions. The notice requirement for an emergency Article 4 direction is slightly different than for a non-emergency direction. The notice must: Include a description of the development, the area to which the direction relates and a statement of the effect of the direction. Specify that the direction is made under Article 4(1) of the Order. Name the place where the direction and a map of the affected area can be inspected. Specify a minimum period of 21 days for representations to be made to the LPA. The date the representation period begins must be stated in the notice. Any representation received by the LPA during this period must be taken into account by the LPA in deciding whether to confirm the Article 4 direction.

The emergency Article 4 direction takes effect: On the date the notice of the direction is served on the occupiers, or if there are no occupiers, the owners. If no notice of the direction has been served on the owners or occupiers, the date the notice is first published or displayed. A copy of the Article 4 direction must be sent to the Secretary of State on the date the notice of the direction is first published or displayed. If the LPA does not confirm the direction within six months following the date it came into force, the direction will expire and have no effect.

Once the LPA has confirmed the direction, notice of confirmation and, in certain cases, a copy of the direction must be sent to the Secretary of State. A copy of the direction does not need to be sent to the Secretary of State if it applies to: certain development in conservation areas; a listed building only; a building of architectural or historic interest only; or development with the curtilage of a listed building only.

The effect of an Article 4 direction withdrawing permitted development rights means that deemed planning permission is no longer granted automatically by the Order and that a planning application needs to be made to the LPA. An Article 4 direction does not prohibit development but enables the LPA to have some control over the proposed development.

A planning application for development normally allowed by the Order, but for the Article 4 direction, is made to the LPA in the usual way except no fee is payable. The planning application will be considered on its planning merits and the LPA will assess the proposed development in the light of policies in its development plan documents and consider any other material factors. The normal right of appeal to the Secretary of State is available if permission is refused, granted subject to unacceptable conditions, or is not determined within the statutory eight week period.

The sting in the tail however is that the Secretary of State can, pursuant to Article 5(13), make a direction cancelling or modifying any non-emergency Article 4 direction made by an LPA at any time before or after its confirmation. For Article 4 directions that come into effect immediately, the powers of the Secretary of State are more limited.

 

There is no right of appeal against an Article 4 direction. The decision of the LPA to make an Article 4 direction can be subject to judicial review proceedings. If the proceedings are successful the Article 4 direction could be quashed.

A claim for compensation can be made to the LPA if planning permission is refused or granted subject to conditions other than those conditions imposed by the Order (s.108 of the Act). Many LPAs have not introduced Article 4 directions because of the potential liability to pay compensation. The claim for compensation can include abortive expenditure and other loss or damage directly attributable to the withdrawal of the permitted development right. This can include the difference in the value of the land if the development had been carried out and its value in its current state, as well as the cost of preparing the plans for the works (s.107 of the Act). There are separate compensation arrangements for statutory undertakers affected by an Article 4 direction (ss 279-282 of the Act).

On 6 April 2010, s.189 of the Planning Act 2008 came into force and inserted ss 108(2A) and 108(3B) to (3D) into the Act. S.108(2A) provides that compensation is only payable if an application for planning permission for certain development formerly permitted by the Order is made within 12 months of the Article 4 direction taking effect. However, no compensation for the withdrawal of certain permitted development rights is payable if an LPA gives notice of the withdrawal between 12 months and 24 months in advance.

On 6th April 2012, the Town and Country Planning (Compensation) (England) Regulations 2012 came into force and prescribed the types of development in Schedule 2 of the Order to which the new compensation provisions will apply. The Regulations also prescribe the manner in which the planning permission is to be withdrawn (by an Article 4 direction) and the manner and the maximum period in which notice of withdrawal, revocation, amendment or directions is to be given.

The coming into force of s.189 of the Planning Act 2008 does not affect any Article 4 direction made before 6th April 2010. S.189 also applies where a local development order is revoked or amended to become more restrictive.

 

No doubt the Brighton & Hove City and Islington London Borough Councils' approach will be much scrutinised and the progress followed intently by other LPAs which were unsuccessful in their applications for exemption from the permitted development for change of use from office to residential without the need for planning permission.

Certainly Brighton & Hove City Council will be concerned to see if the Secretary of State, having rejected its earlier application for exemption, seeks to cancel or modify its Article 4 Direction.   

Crossrail compulsory purchase compensation

The transcript of the long awaited decision of the Upper Tribunal (Lands Chamber) in GPE (Hanover Square) Ltd and others v Transport for London [2012] UKUT 417 (LC) has finally become available.

The decision is important in a number of respects. It may very well be the most high-profile compensation claim to affect the Crossrail project (at least so far) and, in addition to compensation claims arising out of Crossrail, may have a wider relevance in calculating compulsory purchase order statutory compensation in other circumstances under the already complex rules in Part II of the Land Compensation Act 1961 (the Act).

These are designed to ensure that the landowner who is to be compensated for the loss of his or her land receives neither a thoroughly depressed value (due to the "blight" created by the scheme) nor an unwarranted windfall (because the land is a crucial component of the scheme and therefore attracts a premium, or to reflect the improvements to surrounding land due to implementation of the scheme).

The decision, in short, examines the basis of compulsory purchase compensation under section 9 of the Act and dismisses the argument that compulsory purchase compensation (for a freehold interest subject to occupation leases) should be calculated on the basis of the better occupation lease terms that might have been secured if the scheme (Crossrail) had not been announced.

Section 5 of the Act, in essence, requires the assessment of the open market value of the interest that is being acquired compulsorily but with no allowance for the fact that the acquisition is compulsory providing as follows:

“Compensation in respect of any compulsory acquisition shall be assessed in accordance with the following rules:

 (1) No allowance shall be made on account of the acquisition being compulsory:

 (2) The value of land shall, subject as hereinafter provided, be taken to be the amount which the land if sold in the open market by a willing seller might be expected to realise:

 (3) The special suitability or adaptability of the land for any purpose shall not be taken into account if that purpose is a purpose to which it could be applied only in pursuance of statutory powers, or for which there is no market apart from  the requirements of any authority possessing compulsory purchase powers:

 (4) Where the value of the land is increased by reason of the use thereof or of any premises thereon in a manner which could be restrained by any court, or is contrary to law, or is detrimental to the health of the occupants of the premises or to the public health, the amount of that increase shall not be taken into account:

 (5) Where land is, and but for the compulsory acquisition would continue to be, devoted to a purpose of such a nature that there is no general demand or market for land for that purpose, the compensation may, if the Upper Tribunal is satisfied that reinstatement in some other place is bona fide intended, be assessed on the basis of the reasonable cost of equivalent reinstatement:

 (6) The provisions of rule (2) shall not affect the assessment of compensation for disturbance or any other matter not directly based on the value of land:

and the following provisions of this Part of this Act shall have effect with respect to the assessment.”

 

 Section 9 of the Act goes further stating that in that valuation:

“No account shall be taken of any depreciation of the value of the relevant interest which is attributable to the fact that (whether by way of allocation of other particulars contained in the current development plan, or by any other means) an indication had been given that the relevant land is, or is likely, to be acquired by an authority possessing compulsory purchase powers.”

 

The House of Lords in Transport for London (London Underground Limited) v Spirerose Limited (in Administration) [2009] UKHL 44 has previously held that when valuing a piece of land which was acquired compulsorily, it was not legitimate to assume that a particular planning permission would have been granted before the valuation date (if there had been no indication of the proposed compulsory purchase). Instead, it was held that the valuation may only take into account the "hope" that such planning permission would have been granted. This is a percentage of the full value discounted for the chance that permission would not be granted.

In that case the House of Lords overturned the Court of Appeal's decision and reduced the level of compensation payable because, at the valuation date, planning permission for the redevelopment of Spirerose's land would only have been granted on the balance of probabilities. It was not a certainty and therefore the Lands Tribunal was not entitled to value the land on the basis that permission would actually have been granted and it had, therefore, been wrong of the Court of Appeal to uphold the Lands Tribunal's decision.

In the present case two properties, subject to three occupation lettings, had been included in the list of those likely to be compulsorily acquired to allow construction of Crossrail. Following Royal Assent to the Crossrail Act 2008 a notice of the compulsory purchase was served.

The freeholder and long leaseholder argued that the occupation leases had been on "softer terms" than would have been the case if the tenants had not been aware that the property was to be compulsorily acquired. It was suggested that they would either have taken a longer lease, or not been offered an early right to break, or paid more rent, or the lease would have been granted to a tenant of better reputation and covenant strength.

All of these differences, they argued, would have improved the value of the reversionary interests (both freehold and long leasehold) and that accordingly the compensation should be calculated on the basis that the occupation leases were granted on the terms which would have been achieved if there had been no advance notification of the Crossrail compulsory acquisition, rather than the terms of the leases as actually granted.

While the arguments may at first glance appear attractive they were, not unsurprisingly, rejected with the Tribunal concluding that:

• Section 9 requires valuation of the actual interest that is being acquired compulsorily, not of a hypothetical interest which might have existed if the circumstances had been different;
• It deals with decreases in value of the relevant interest and does not deal with potential increases in value;
• There was, if the Claimants’ argument were correct, potentially no limit to the extent to which past events could be re-constructed which would cause great uncertainty;
• It would be anomalous for reversionary interests to receive compensation based on hypothetical occupation lease terms, while compensation to actual occupation tenants would be based on leases as actually granted; and
• Spirerose provided no useful assistance or authority for the application of section 9 in the manner suggested.