Recent CPO Compensation decisions by the Upper Tribunal

In her October 2024 article, director Jen Ashwell set out practical takeaways from key CPO judgments and compensation decisions, following the team’s webinar on CPO promotion and compensation. As a few months have passed since then, we thought it would be an opportune time to provide an update on what has taken place in the world of CPO compensation since then.

Costs orders relating to an unsuccessful party

Jen’s article covered the substantive decision in Mohammed Bashir v The London Borough of Newham [2024] UKUT 00146 (LC). Shortly after, the associated costs decision was handed down. This is of note as the Upper Tribunal stated that it was the first occasion it had been asked to determine costs under rule10(6)(aa) of the Tribunal’s Procedure Rules which were amended following the decision of the Court of Appeal in Leech Homes Limited v Northumberland County Council [2021] EWCA Civ 198. The Acquiring Authority, who had refused the CAAD application which was later successful on appeal, sought an order for all of its costs. The Upper Tribunal confirmed that the Acquiring Authority was not the successful party and rejected that part of the application. On the Acquiring Authority’s alternative argument that an issues’ based order should be made, the Upper Tribunal held that an order that that the successful party will pay the otherwise unsuccessful party’s costs on one or more issues will only be made in exceptional cases. It went on to say that there was nothing exceptional about the appeal, apart from a discrete issue relating to heritage matters, where an order was made in respect of a small proportion of the Acquiring Authority’s costs. 

Outstanding mortgage debt

The decision in Bank of Scotland PLC v Burney Borough Council [2024] UKUT328 (LC) concerns the Upper Tribunal’s consideration of the payment of compensation to the former mortgagee of a property which had been compulsorily acquired, where the level of that compensation did not meet the outstanding mortgage debt. The authority served notice on the bank that a General Vesting Declaration (“GVD”) had been executed and the property would vest in the authority. Following various valuations from both the authority and the bank, the bank confirmed that the sum of £35,000 was acceptable as compensation but that the amount was less than the mortgage debt so the consent of the owner was required. The jurisdiction of the Tribunal was engaged under section 15(1) to determine the level of compensation payable following no response from the owner. The court considered the valuation evidence provided by the authority and the bank and was satisfied that the compensation sum agreed by the parties took account of prevailing market conditions at the date of valuation, with allowance made to reflect the condition of the property. Under section 15(2), the Tribunal determined that compensation of £35,000 plus any statutory interest (agreeable between the bank and the authority), was payable to the bank in part satisfaction of the mortgage debt secured against the property. This is useful to note in respect of compensation cases involving charges.

Injurious affection and disturbance

The decision in Mrs Margaret Jones  v Welsh Government [2024] UKUT 00316 (LC) concerns the Upper Tribunal’s consideration of the payment of compensation for an injurious affection and a disturbance compensation claim in relation to a CPO for upgrading a 5-mile stretch of the A465 road to a dual carriageway. The Tribunal found that the injurious affection claim was to take into account only what was known, or could reasonably have been anticipated, at the assessment date about the likely impact which construction of the new road would have on the property including the loss of direct access to the A465 and details of the proposed alternative route. The Tribunal considered that prospective purchasers affected by uncertainty exercise caution by discounting the price they are willing to pay. The amount of that discount will be the amount of injurious affection to be paid as compensation. The Claimant’s valuation estimated the injurious affection caused by the road scheme to amount to £28,000. The Tribunal concluded that the discounted figure offered by a purchaser would be a round figure of £20,000. Taking the Respondent’s valuation of £406,00, this would suggest a non-scheme world value of £426,000. The Tribunal was satisfied that this figure sat comfortably with the sales evidence of comparable properties. The Tribunal also considered two claims for disturbance compensation, the first being £1,580 for the cost of livery for a horse made necessary as a result of gates being left open and disturbance from blasting during construction works. The second claim concerns the sum of £6,000 plus VAT estimated for the control of Japanese Knotweed over a five-year period. The Judgement considered that the three-stage test laid down in Shun Fung (causal contention between acquisition and loss; remoteness and duty to mitigate) was met in both claims and awarded the compensation.

Reasonableness of Legal fees

The decision in Tracy Chambers v Secretary of State for Transport [2024] UKUT 361 (LC) concerns the Upper Tribunal’s consideration of the amount of compensation payable to the claimant for the professional fees of the claimant’s solicitors for their advice in connection with the acquisition of her property and for acting on the sale. The property had been blighted by the HS2 railway scheme and the Claimant entered into an agreement for sale of the property with the Secretary of State for Transport for £162,500. The professional fees of the claimant’s solicitors totalled £12,682.20 inclusive of VAT, with the acquiring authority challenging the claimant’s full entitlement to recover this on the ground of mitigation.  Professional fees can be recovered if they were caused by the acquisition and are not too remote, provided the claimant behaved reasonably in mitigating the expense. The principle of mitigation requires claimants to behave reasonably in reducing their losses. If a reasonable person would not have incurred the expenditure, the authority should not be responsible for it. The acquiring authority argued that much of the work was unnecessary or duplicated by the surveyors, and that the same outcome could have been achieved at a lower cost.  The Tribunal determined that the conveyancing bill was out of proportion to the value of the Property and the complexity of the job. It held that the bill was not inflated by delay caused by the acquiring authority, as was asserted by the Claimant’s solicitors, but instead was due to unnecessary internal liaison and a higher level of communication with the client. The Tribunal determined that the solicitors did not contribute anything additional to the surveyors, who were themselves experts in compulsory purchase and compensation, and therefore allowed £1,000 for initial work and advice.  The Tribunal determined that the total amount awarded in relation to the disputed fees was £5,200 plus VAT of £1,040.

Preliminary issue on assessment of planning need

The decision in theSecretary of State for Transport and (1) Quintain City Park Gate Birmingham Limited (2) Birmingham City Unviersty (3) Curzon Park Limited (4) Eastside Partnership Nominee Company Limited and PMB General Partner Limited [2025] UKUT 00007 (LC) concerns the entitlement to compensation for the former owners of four plots of land at Eastside, Birmingham, acquired by the Secretary of State for Transport in 2018 for the construction of the HS2 railway’s Curzon Street terminus. The owners sought certificates of appropriate alternative development (“CAAD”) to support their compensation claims.  Each application was for a separate development on only one of the four adjacent sites but, in conjunction with other uses, each application identified purpose built student accommodation (“PBSA”) as an appropriate alternative form of development.  The applications for CAADs including an allowance for PBSA were granted by the Birmingham City Council to Respondents (2)-(4). The Secretary of State appealed to the Tribunal against those CAADs. The application by Respondent (1), and an earlier application by Respondent (4), were not determined by the City Council within the permitted time and were the subject of appeals against non-determination by the original applicants with the Secretary of State as respondent. In each appeal, the Secretary of State’s position was that at the relevant valuation date the need for student accommodation in the centre of Birmingham was fully satisfied by the existing supply of PBSA and by other forms of accommodation available to students and that a reasonable planning authority would not have granted planning permission for further PBSA at any of the sites. The site owners dispute that proposition and maintained that there was a substantial unmet need for PBSA at each valuation date which could have been satisfied by development at Eastside had their land not been acquired for HS2. The need for PBSA is common to each appeal and so the parties agreed the terms of the following preliminary issue.

The preliminary issue agreed by the parties was at each of the respective valuation dates, what was the level of planning need for PBSA and how, as a matter of fact, was each site located in terms of distance and travel time from the existing educational establishments (including other student housing)? The focus of the preliminary issue was the first bullet point in policy TP33, the City Council’s development plan policy on PBSA, which requires consideration of whether there is “a demonstrated need for the development”. The Tribunal found that:

• it is likely to be appropriate to have regard both to the need for PBSA in the city as whole and to any specific need in a particular location; and
• the need for PBSA should take into account future growth of student demand, with greater weight on growth in the shorter term.

The Tribunal were sceptical as to whether students living in ‘HMOs’ (i.e. all forms of private rented accommodation other than PBSA) should be included in the assessment of demand for PBSA.  The Tribunal concluded that there was an unmet need for substantial further PBSA at each valuation date. As such, the first bullet point in policy TP33 would not be an issue for any of the Eastside sites.

Our team has extensive experience in advising on CPO compensation, so please do not hesitate to contact us if you have queries in this area.