Compulsory purchase in England and Wales

For the similar concept in other legal systems, see Eminent domain.

Compulsory purchase is the power to acquire rights over an estate in English land law, or to buy that estate outright, without the current owner's consent in return for compensation. In England and Wales Parliament has granted several different kinds of compulsory purchase power, which are exercisable by various bodies in various situations. Such powers are "for the public benefit", but this expression is interpreted very broadly.

History

After the enclosure movement, the Surrey Railways Act 1801[1] used compulsory purchase to build the Surrey Iron Railway. Courts since have fought over the extent to which eminent domain is used for the public good.

Although land may be acquired by consent, and conduct which raises another party's reasonable expectations, these private methods of acquiring land are often insufficient for adequate public regulation.[2] Building national infrastructure, such as railways, housing, and sewerage, as well as democratically determined planning rules, either by national or local government, typically requires compulsory purchase, because private owners might not give up land required for public works except at an extortionate price. Historically, compulsory purchases were carried out under the Inclosure Acts and their predecessors, where enclosure was frequently a method of expropriating people from common land for the benefit of barons and landlords. In the industrial revolution, most railways were built by private companies procuring compulsory purchase rights from private Acts of Parliament,[3] though by the late 19th century, powers of compulsory purchase slowly became more transparent and used for general social welfare, as with the Public Health Act 1875, or the Housing of the Working Classes Act 1885.[4] Compulsory purchase legislation was significantly extended during World War One for military use,[5] and after the war for housing, as certain principles became standardised.[6]

Local authority purchase

Today, the Land Compensation Act 1961 section 5 generally requires that the owner of an interest in land (e.g. a freehold, leasehold or easement as in Re Ellenborough Park[7]) receives payment for the "value of the land... if sold on an open market by a willing seller".[8] Compensation is often also available for losses to a home, or if one's business has to move.[9] The Compulsory Purchase Act 1965 set conditions for a purchase to be made, and the Acquisition of Land Act 1981 regulates the conditions for granting a "Compulsory Purchase Order". Typically, either central government represented by a Secretary of State, or a local council will be interested in making a compulsory purchase. The authority of local councils for make purchases for specific reasons can be set out in specific legislation, such as the Highways Act 1980 to build roads when strictly necessary. However the Town and Country Planning Act 1990 section 226,[10] which allows compulsory purchase to "facilitate the carrying out of development, re-development or improvement" for the area's economic, social, or environmental well being, must be confirmed by the Secretary of State, and similarly the Local Government Act 1972 section 121 requires the council seek approval from the government Minister, a time-consuming process which prevents compulsory purchase being carried out without co-ordination in central government.[11]

Leasehold purchase

The Grosvenor family, which arrived with William the Conqueror, own most of Mayfair and Belgravia in central London since Sir Thomas married into inheritance of the land in 1677. The Grosvenor estate lost human rights challenges to the Leasehold Reform Act 1967,[12] giving tenants a "right to buy", but the legislation was restricted.[13]

The most general power originally appeared in the Leasehold Reform Act 1967. Under that Act, the Leasehold Reform Act 1987, and the Leasehold Reform, Housing and Urban Development Act 1992, private individuals who are leaseholders have the power in certain circumstances to compel their landlord to extend a lease or to sell the freehold at a valuation.

Recompense, under compulsory purchase, is not necessarily a monetary payment of open market value (see James v United Kingdom [1986]), but in most cases a sum equivalent to a valuation made as if between a willing seller and a willing purchaser will fall due to the previous owner.

Utility companies

Utility companies have statutory powers to, for example, erect electrical substations or lay sewers or water pipes on or through someone else's land. These powers are counterbalanced by corresponding rights for landowners to compel utility companies to remove cables, pipes or sewers in other circumstances (see for example section 185 of the Water Industry Act 1991).

Compulsory purchase only applies to the extent that it is necessary for the purchaser's purposes. Thus, for example, a water authority does not need to buy the freehold in land in order to run a sewer through it. An easement will normally suffice, so in such cases the water authority may only acquire an easement through the use of compulsory purchase.[14]

Procedure

In most cases a Compulsory Purchase Order (CPO) is made by the purchasing authority or the Secretary of State. The CPO must unambiguously identify the land affected and set out the owners, where these are known. The order is then served on all owners and tenants with a tenancy with more than a month to run, or affixed to the land if some owners or tenants cannot be traced. A period of at least 21 days is allowed for objections. If there is a valid objection that is not withdrawn, an inquiry chaired by an inspector will take place. The inspector reports to the Secretary of State. If the Secretary of State confirms the CPO, then it becomes very difficult to challenge.

Once the CPO is confirmed, the purchasing authority must serve a Notice to Treat within three years, and a Notice of Entry within a further three years. It may take possession of the land not less than 14 days after serving the Notice of Entry. The Notice to Treat requires the land's owner to respond, and is usually the trigger for the land's owner to submit a claim for its value. If no claim is submitted within 21 days of the Notice to Treat, the acquirer can refer the matter to the Lands Tribunal. If the land's owner cannot be traced and does not respond to a Notice to Treat affixed to the land, then the purchasing authority must pay the compensation figure to the Court.

Crichel Down rules

The Crichel Down principles oblige central and local government, when, having acquired an estate compulsorily, they find they no longer need it, to offer it in the first instance to the person from whom they acquired it at its market value. However, this only applies where the land has not materially changed in character, and does not withstand the principle that councils may not dispose of land "for a consideration less than the best that can be obtained" under the Local Government Act 1972, section 123. This means that where it is difficult to value land for some reason, the land may need to be sold by tender or auction.

Human rights

Because of property's social importance, either for personal consumption and use or for mass production,[15] compulsory purchase laws have met with human rights challenges. One concern is that since the 1980s privatisations, many compulsory purchase powers can be used for the benefit of private corporations whose incentives may diverge from the public interest.[16] For example, the Water Resources Act 1991[17] continues to allow government bodies to order compulsory purchases of people's property,[18] although profits go to the private shareholders of UK water companies. In R (Sainsbury's Supermarkets Ltd) v Wolverhampton CC[19] the Supreme Court held that Wolverhampton City Council acted for an improper purpose when it took into account a promise by Tesco to redevelop another site, in determining whether to make a compulsory purchase order over a site possessed by Sainsbury's. Lord Walker stressed that "powers of compulsory acquisition, especially in a "private to private" acquisition, amounts to a serious invasion of the current owner's proprietary rights."[20] Nevertheless compulsory purchase orders have frequently been used to acquire land that is passed back to a private owner, including in Alliance Spring Ltd v First Secretary[21] where homes in Islington were purchased to build the Emirates stadium for Arsenal Football Club. By contrast, in James v United Kingdom[22] Gerald Grosvenor, 6th Duke of Westminster, the inherited owner of most of Mayfair and Belgravia, contended that leaseholders' right to buy had violated their right to property in ECHR Protocol 1, article 1. The European Court of Human Rights ruled that the Leasehold Reform Act 1967, which allowed tenants to purchase properties from their private landlords, was within a member state's margin of appreciation. It was competent for a member state to regulate property rights in the public interest.

Another issue of whether regulatory or planning decisions in general might breach property rights has not been important for the United Kingdom. In a divided case by the US Supreme Court called Lucas v South Carolina Coastal Council[23] a majority held that if a regulation prevented a property owner developing land (in this case to preserve coastline beaches) compensation would have to be paid. This has not been followed in most of the rest of the Commonwealth,[24] and in Grape Bay Ltd v Attorney General of Bermuda[25] the Privy Council advised that a decision by a democratic legislature is better than a court to determine issues of social and economic policy in relation to property. Here, McDonald's attempted to sue Bermuda for passing legislation to prevent it opening a restaurant as a breach of "property rights" under the Bermudan constitution, which it said consisted in the expectation of being able to run a business and various contractual arrangements to that end. Lord Hoffmann held that there was no such violation of property, noting that the "give and take of civil society frequently requires that the exercise of private rights should be restricted in the general public interest." The jurisprudence of the European Court of Human Rights, though not fully clear, indicates a similar approach.[26]

See also

References

Notes

  1. ↑ This is a Local Act of Parliament, found under the reference of Acts in 1801 (41 Geo. 3) c. xxxiii, Surrey Railways. Listed at legislation.gov.uk
  2. ↑ See K Gray and SF Gray, Land Law (7th edn 2011) Ch 11, 563–569
  3. ↑ Procedures were consolidated by the Land Clauses Consolidation Act 1845 and the Inclosure Act 1845.
  4. ↑ See Public Health Act 1875 ss 175–178 and Housing of the Working Classes Act 1885 s 2(2) for compulsory purchase provisions.
  5. ↑ Defence of the Realm (Acquisition of Land) Act 1916
  6. ↑ See Acquisition of Land (Assessment of Compensation) Act 1919
  7. ↑ [1955] EWCA Civ 4, [1956] Ch 131
  8. ↑ See Director of Buildings and Lands v Shun Fung Ironworks Ltd [1995] UKPC 7, on the assessments for compensation.
  9. ↑ See DHN Food Distributors Ltd v Tower Hamlets London Borough Council [1976] 1 WLR 852
  10. ↑ Inserted by the Planning and Compulsory Purchase Act 2004 s 99
  11. ↑ Local Government Act 1972 s 121
  12. ↑ James v United Kingdom [1986] ECHR 2
  13. ↑ Leasehold Reform, Housing and Urban Development Act 1993
  14. ↑ Although this principle protects the land above the pipe, in practice, water pipes and their associated manholes and inspection chambers are owned by the water authority in fee simple, until the pipe reaches the boundary of the property it serves, irrespective of who owns the land above.)
  15. ↑ AA Berle, 'Property, Production and Revolution' (1965) 65 Columbia Law Review 1, distinguishes personal and productive property, and posits that the justifications for regulation of productive property, particularly that held collectively by a corporation, become stronger.
  16. ↑ K Gray and S Gray, 'Private Property and Public Propriety', in J McLean (ed), Property and the Constitution (Hart 1999) 36-7
  17. ↑ s 154
  18. ↑ Currently the Environment Agency under the Environment Act 1995 s 2(1)(a)(iv)
  19. ↑ [2010] UKSC 20
  20. ↑ [2010] UKSC 20, [84]
  21. ↑ [2005] EWHC 18 (Admin)
  22. ↑ [1986] ECHR 2
  23. ↑ 505 U.S. 1003 (1992)
  24. ↑ e.g. in Canada, Mariner Real Estate Ltd v Nova Scotia (1999) 177 DLR (4th) 696
  25. ↑ [1999] UKPC 43
  26. ↑ e.g. Matos e Silva, LDA v Portugal [1996] ECHR 37
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