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England and Wales Lands Tribunal
You are here: BAILII >> Databases >> England and Wales Lands Tribunal >> Port of London Authority v Transport for London [2007] EWLands ACQ_209_2006 (06 December 2007)
URL: http://www.bailii.org/ew/cases/EWLands/2007/ACQ_209_2006.html
Cite as: [2007] EWLands ACQ_209_2006, [2008] RVR 93

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ACQ/209/2006
LANDS TRIBUNAL ACT 1949
COMPENSATION – compulsory acquisition of rights over riverbed, soil and airspace –
application of statutory provisions – valuation – compensation determined at £50 - Land
Compensation Act 1961 section 5 rule (3)
IN THE MATTER of a NOTICE OF REFERENCE
BETWEEN
PORT OF LONDON AUTHORITY
Claimant
and
TRANSPORT for LONDON
Acquiring
Authority
Re: Riverbed, soil and airspace at River Lea, Bow Creek, London E14
Before: P R Francis FRICS
Sitting at: Procession House, 110 New Bridge Street, London EC4V 6JL
On
30 and 31 October 2007
Christopher Lewsley, instructed by Port of London Authority Legal Department, for the claimant
Graeme Keen, instructed by Eversheds LLP, solicitors of London EC4, for the acquiring authority
© CROWN COPYRIGHT 2007
1
The following cases are referred to in this decision:
Pointe Gourde Quarrying and Transport Co Ltd v Sub-Intendent of Crown Lands [1947] AC 565
Waters and Another v Welsh Development Agency [2004] 1 RVR 153
The following cases were also referred to in argument:
Mercury Communications Ltd v London and India Dock Investments Ltd) (1995) 69 P&CR 135
Railtrack PLC (In Railway Administration)v Guinness Ltd [2003] RVR 280
Trocette Property Co Ltd v Greater London Council and Southwark London Borough Council
[1974] RVR 306
2
DECISION
1.      This is a decision to determine the compensation payable by Transport for London
(“TfL”) to the Port of London Authority (“PLA”) for the compulsory acquisition of rights over
riverbed, soil and airspace at the River Lea at Bow Creek, London E14 (the subject land) under
the A13 Trunk Road (Ironbridge to Canning Town Improvement) Compulsory Purchase Order
(No PS 13) 1998 (the CPO).
2.      Christopher Lewsley of counsel appeared for the claimant and called Edward Martin
Sheard MA FRICS MRTPI MEWI of Matthews and Son, Chartered Surveyors of London
WC1. He had produced a report and two supplementary statements dealing with valuation
evidence and the statutory assumptions to be applied. Graeme Keen of counsel called Nicholas
John Eden MRICS MCI Arb of Kinney Green, Chartered Surveyors of London EC2 who gave
valuation evidence for the acquiring authority.
Background
3.      The claimant is a self-financing statutory body whose primary purpose, under the Port of
London Act 1968 (the PLA Act), is to provide, maintain, operate and improve port and harbour
services in, or in the vicinity of, the River Thames including its tributaries and feeders. On its
creation in 2000, TfL, the respondent, became the highways authority for a number of strategic
roads in London, including the A13. Part of a scheme for the widening of that road involved
the construction of two additional carriageways on new bridges on either side of the pre-
existing bridges, known as the Canning Town Flyover, across the River Lea at Bow Creek.
4.      The reference land comprises part of the River Lea, a non-navigable tributary of the
River Thames that it joins about half a mile downstream. It is just over 4 miles east of Central
London and about 1.75 miles south of Stratford centre. Canning Town underground, surface
rail and Docklands Light Railway stations are nearby, and London City Airport is about 1.5
miles to the south-east.
5.       The CPO was confirmed on 17 July 1998 and, following notices to treat and notices of
entry, possession was taken on 8 January 2001, that being the valuation date for the purposes
of this reference. The rights acquired (in perpetuity, but with freehold ownership of the
riverbed and soil remaining with the claimant) were:
Plot 31:             The right to maintain a [pre-existing] bridge carrying the A13 (East
India Dock Road) over 1,522 sq m of parts of the bed and banks of the River Lea (or
Lee), Bow Creek, E14 and E16
Plot 31A:          The right to enter over 2,469 sq m of parts of the bed and banks of the
River Lea (or Lee) Bow Creek including wreck on the north of the A13 (East India Dock
Road) E14 and E16 for all purposes connected with the construction and maintenance of
a bridge structure over an adjoining section of the River Lea (or Lea) [soil and airspace]
3
Plot 31B:          The right to construct and maintain a bridge over 1,187 sq m on parts of
the bed and banks...to the north of the A13... [airspace]
Plot 31C:          The right to construct and maintain a bridge over 1.299 sq m on parts of
the bed and banks...to the south of the A13.... [airspace]
Plot 31D:          The right to enter over 2,023 sq m of parts of the bed and
banks....including part of the bridge structure of the disused gas mains service bridge
across the River Lea...on the south of the A13...for all purposes connected with the
construction and maintenance of a bridge structure over an adjoining section of the /river
Lea (or Lee) [soil and airspace]
None of the supporting piers for the now constructed bridges (including the pre-existing one)
encroach upon the reference land, the bridges simply oversailing the creek. However,
fendering has been installed to the reinforced riverbanks to protect both the original and new
bridge structures. Plot 31 is the area of airspace occupied by, and below, the pre-existing
bridge, and with no additional land or airspace acquired under this CPO within that plot, it was
agreed that, with the only right being acquired being that to maintain the existing structure,
compensation relating to that plot would be nominal.
The claim
6. PLA claimed compensation of £117,000, being the open market value of the rights
acquired in plots 31A-D, calculated in accordance with section 5, rule (2) of the Land
Compensation Act (referred to hereafter as “section 5”). The sum was assessed on the basis of
7 allegedly comparable transactions said to have been negotiated under either section 5 or in
connection with River Works Licences applied for and granted under section 66 (and
compensated under section 67) of the PLA Act, or both, it being the claimant’s case that the
valuation assumptions required under each of the statutory provisions effectively produced the
same result. TfL, who agreed that the correct statutory provision for the assessment of
compensation was section 5, said that on that basis compensation should be a nominal £50 as,
in their view, the application of section 67 of the PLA Act, and consideration of settlements
negotiated under it, was inappropriate in compulsory acquisition cases, as the valuation
assumptions under the two statutory provisions were different. Furthermore, TfL said, any
comparables based upon such settlements would be self-serving. The parties having failed to
agree compensation by negotiation, PLA made a notice of reference to this Tribunal on 21
December 2006.
Issues
7. The following issues arise:
i. Whether or not there is a material distinction between valuations based upon
the provisions of section 67 and those based upon section 5.
ii. The value of the subject rights.
4
In respect of (ii) the Tribunal is required, under Rule 50(4) of the Lands Tribunal Rules 1996
(as amended) to provide an alternative valuation should the decision in respect of (i), which is
a point of law, be wrong.
The statutory provisions
8. Section 5 of the Land Compensation Act 1961 provides:
“5. 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 the 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.”
The relevant parts of sections 66 and 67 of the Port of London Act 1968 provide:
“66(1)(a) The Port Authority may for a consideration to be agreed or assessed in
accordance with section 67...grant to a person a licence to carry out, construct,
place, alter, renew, maintain or retain works, notwithstanding that the works
interfere with the public right of navigation or any other public right.
(b) A works licence granted under paragraph (a)...shall be deemed to confer on the
holder of the licence such rights in, under or over land as are necessary to enable
the holder of the licence to enjoy the benefit of the licence.
67(1) The consideration for a works licence shall be such as may be agreed between the
Port Authority and the applicant or as shall, failing agreement, be assessed in
accordance with subsection (2) of this section by an arbitrator appointed on the
application of either party, after notice to the other, by the President of the Royal
Institution of Chartered Surveyors.
67(2) The consideration shall be the best consideration in money or moneys worth
which, in the opinion of the arbitrator, can reasonably be obtained, having regard to
all the circumstances of the case including the value of any rights in, under or over
the land of the Port Authority deemed to be conferred by the licence, but excluding
any element of monopoly value attributable to the extent of the Port Authority’s
ownership of comparable land.
67(3) The assessment of the consideration for a works licence shall not be referred to an
arbitrator under this section until the other terms of the licence or, in the case of
variation the other terms proposed to be varied, have been determined.”
5
Claimant’s case
9.      Mr Sheard has over 30 years valuation experience, and his firm has advised the claimant
on property matters, including the valuation of rights to cross the river Thames and its
tributaries, and applications for river Works Licences, for a number of years. He said that
whilst he and Mr Eden had agreed that compensation was to be determined on the basis of the
open market value of the subject land at the valuation date in accordance with section 5, and
that there were no truly open-market transactions, the fundamental difference between them
related to whether the correct interpretation of the 1961 Act allowed assistance to be gained
from the comparable settlements. Mr Sheard’s view, in relying upon those comparables (some
of which had been assessed under section 5, and some under section 67 of the PLA Act), was
that, for all practical purposes there was, notwithstanding the difference in the statutory
formulation of the valuation assumptions, no material difference in valuation terms between
the two statutory provisions. Both, he said, had the same effect in reality and led to the
establishment of open market value, with both requiring the consideration of a hypothetical
transaction between willing parties in an open market.
10.    Section 5, he said, required that the open market value be assessed disregarding the fact
that the acquisition involved the exercise of compulsory purchase powers, any special
suitability or adaptability of the land which could not be purchased other than in pursuance of
statutory powers, and any additional value that may arise from that special suitability. Further,
the valuation must disregard any increase (or decrease) in value which is entirely attributable to
the acquiring authority’s scheme underlying the acquisition (the Pointe Gourde principle)
(Pointe Gourde Quarrying and Transport Co Ltd v Sub-Intendent of Crown Lands [1947] AC
565). Mr Sheard said that the requirement in section 67 of the PLA Act to disregard any
element of monopoly value had much the same effect as the Pointe Gourde principle, and
therefore the comparables upon which he relied in determining the open market value under
section 5 were good evidence. However, he did acknowledge in cross-examination that the
monopoly disregard related to supply, whereas the special suitability/Pointe Gourde principle
related to demand.
11.    He produced a schedule of transactions that had occurred over an eleven-year period –
from 6 years before the valuation date to 5 years after. However, his principal comparable,
which related to the acquisition of similar rights to enable the construction of a bridge for the
Channel Tunnel Rail Link, and relocation of a gas main over Rainham Creek (referred to
hereafter as the Rainham Creek comparable), had a valuation date only one month before the
subject land, and therefore required no adjustment. That transaction was also negotiated under
section 5 (at £100,000 to include an area of land, but with £38,300 relating to the airspace) and
equated, in respect of that airspace, to £20 per sq m. Applying that rate to the area taken for
the new bridges at the subject land (Plots 31B&C totalling 2,486 sq m) produced £49,720. As
to plots 31A&D, where the rights were acquired for the purposes of maintenance, Mr Sheard
said that there was no comparable evidence as the situation of acquiring rights to riverbed, soil
and airspace adjacent to but not actually occupied by the bridges, had not occurred previously.
He said that value must exist to those areas where access for maintenance and improvement
was allowed, and there would also be the potential for accommodating additional bridges, or
6
widening the existing ones in the future. Exercising what he described as “valuer’s
judgement”, he applied a figure of £15 per sq m, being a 25% discount, to the agreed area of
4,492 sq m to give £67,380. These two figures produced compensation of £117,100, which he
rounded to £117,000. The base figure upon which he had calculated the compensation due,
£20 psm, from the Rainham comparable was, he said, supported by the other 6 relevant
transactions that he had set out in his schedule.
12.    The other comparable where compensation had definitely been agreed under section 5, in
May 1998, related to the acquisition of similar rights over the River Roding at Barking Creek.
The figures equated to £40 per sq m for foundations (or the footprint where bridge supports
were to be constructed within the river), and £20 per sq m for airspace. Mr Sheard said that
his analysis of all the comparables indicated a “unit rate” for airspace of about half that
applicable for foundations, that relationship having been specifically agreed between the
parties in that case, and in another, negotiated under section 67, at Leamouth Bridge in
December 2005. There was some question as to how the consideration for the licence to
provide footbridges on each side of the Hungerford Bridge over the Thames (at £95,480) was
negotiated, it being possible that that transaction was, like all the remaining ones on his
schedule, based upon a River Works Licence under section 67. Nevertheless, that was agreed
on the basis of £35 per sq m for footprint, and £17.50 per sq m for airspace and supported, he
said, his argument that to all intents and purposes, whichever of the two statutory provisions
the agreements were negotiated under, made no difference in terms of value. He had received
confirmation of the details of the settlement on Hungerford Bridge from Richard Cobb FRICS
of G L Hearn (who had been unable to locate his files, but provided the information from
memory), and it was Mr Sheard’s view that when this and other settlements were actually
being negotiated, the respective parties’ professional advisers would not, realistically, have
been thinking about what statutory provision applied, but would just “get on and complete the
deal”, on the basis of past settlements.
13.    Although the comparables covered a wide time span, Mr Sheard said that no indexation
needed to be applied to those upon which he was principally relying, as the transactions were
all close to the relevant valuation date. He said that he had not had specific regard to what
works had been done, other than the fact that 6 of the 7 comparables related the requirement to
build bridges, and had not therefore made any distinctions relating to size or nature of
construction.
14.    In cross-examination, Mr Sheard acknowledged Mr Eden’s suggestion that his
comparables were self-serving, in as much that each of the settlements he had referred to would
have taken account of the others. However, the two comparables upon which he principally
relied were negotiated on the same basis as the claimed compensation for the subject rights,
and the figures agreed for those, and all those negotiated under section 67, proved that there
must be a value over and above the “nominal” sum that Mr Eden considered appropriate.
Whilst it was accepted that there were no open market transactions as such, Mr Sheard said it
was appropriate for his valuation to be informed by settlement evidence as this was all that was
available. He pointed out that PLA granted 1,289 River Works Licences in 2006, producing
revenue of £4.5 million (some 11% of its income), and that proved the existence of value in
such cases. It was also submitted that it would not have been Parliament’s intention, when
drafting section 67, for licences to be granted at nominal value.
7
15.    Mr Sheard did not accept Mr Eden’s suggestion that location would affect value. The
fact, for instance, that the Rainham Creek comparable was 8 miles away would be much less
critical than if one were comparing, say, office buildings that far apart. Both the subject rights
and Rainham Creek were East London river crossings, and the value of them related the ability
to link roads or railways on each side of the river where the value of the riparian land on the
riverbank did not come into the equation. Site specific considerations, he said, only come in
to play when what is occurring on the bank may affect the positioning of the proposed
crossing. He accepted that the location was better at the Hungerford and Millenium Bridges,
but it did not appear to have affected the level of compensation agreed in comparison with
other, less central, comparables. It was also noteworthy, it was submitted, that Mr Eden had
not ventured any opinion of his own as to what affect locational differences should have on
value.
16.    Mr Sheard did acknowledge that section 67 does not refer specifically to open market
value, but in his view the reference to “the best value that can be obtained” had the same
meaning. However, he accepted that licence fees payable under section 67 could reflect the
use to which the land was to be put, whereas in compensation cases that had to be ignored. He
said that he had assumed a willing buyer in accordance with the requirements of the Land
Compensation Act, and that whilst accepting there was no evidence of any demand in this
specific location, absent the scheme, he pointed out that the number of licences granted and
physical facts proved there was a demand, generally, for bridge crossings. He also assumed a
willing seller (see Mercury Communications Ltd v London and India Dock Investments Ltd)
(1995) 69 P&CR 135).
17.    As to why he had applied a 25% discount for the airspace reserved for maintenance
purposes each side of the new bridges, Mr Sheard said that whilst no such discount had been
applied to similarly reserved airspace at Rainham Creek, and he was unaware of any other
cases where it had, he just considered it to be “the right and fair thing to do”. As such, he
stressed, it served to reduce the value of the claimant’s claim. In response to a question from
me, Mr Sheard said he had found no evidence of any negotiated settlements for bridge
crossings at nil or nominal value, and neither had Mr Eden. He accepted that there appeared to
be a standard tariff for tunnels (indexed from 1994 on the basis of £1 per foot run), and that
that had been described in correspondence between London Transport Property and the
claimant as nominal, but felt the circumstances there would be very different from bridges in
terms of demand from other parties.
Submissions
18.    In his submissions on the statutory framework relating to section 5, Mr Lewsley set out
in some detail relevant extracts from the principal authorities, although it was accepted as
common ground that a willing seller and willing buyer were to be assumed, that the willing
seller would seek the best price reasonably obtainable and the willing buyer would bid up to
what he regarded as a reasonable price. It was also common ground, established during the
hearing, that both section 5 and section 67 were based on open market value, but it was the
assumptions by which that value was reached that differed. Mr Eden, in his evidence, had
produced a comparison table that set out the differences between section 5 and section 67 in
terms of the valuation assumptions.
8
19.    As to the identity of the willing seller, it was accepted that that under section 5 the seller
was hypothetical, and that under section 67 it was the PLA. Mr Lewsley said it was the
claimant’s case that under section 5 the hypothetical seller should be considered to be a
reasonable Port Authority – that principal having been established in Railtrack PLC (In
Railway Administration)v Guinness Ltd [2003] RVR 280. In that court of appeal decision,
Railtrack’s contention that the Lands Tribunal had failed to assume a sale by a willing seller,
but had instead assumed a sale by a company regulated and subsidised by central government
and subject to political pressures, was rejected. Carnwath LJ said, at para 28:
“In the present case the tribunal had to assume a sale of access rights over a railway
between a willing seller and a willing buyer. I agree with counsel for Guinness that it
was not required to ignore the fact that, since these were access rights over a railway, the
willing seller would by definition be a railway company. In any event the only ‘political
pressures’ which could be relevant would be pressures to sell at a price less than that
which would otherwise be obtained. Outside any special statutory or commercial
context, any company (statutory or not) would normally be expected to seek the best
price for its assets. It is not clear why a railway company should be any different. Not
surprisingly, the tribunal found that, whatever the pressures, the hypothetical railway
company ‘would be concerned to extract a proper value for the rights that it granted’.”
It was submitted that, in reality, the way the seller is described in the two sections should not
make any difference as to value, and it was noteworthy that Mr Eden did not suggest any.
20.    It was also accepted that under s.5 the buyer is abstract, but under section 67 he is
known. However, save in exceptional circumstances that are not relevant to this case, PLA
does not seek to include in section 67 settlements any amount derived from the particular
proposals of the proposed purchaser (beyond the basic fact that he wants to acquire bridge
rights). Again, Mr Lewsley said, it should be noted that there was no evidence, or even a
suggestion by Mr Eden, that any of the comparables contained any additional value reflecting
the particular proposals of the purchaser. On the subject of the buyer, the fact that there is
only likely to be one in the market for the subject land at the valuation date does not lead to a
nominal value. This is consistent with Waters and Another v Welsh Development Agency
[2004] 1 RVR 153 where lord Brown, referring to Raja Vyricherla Narayana Gajapatiraju v
Revenue Divisional Officer, Vizagapatam (the Indian case) [1939] AC 302, said at para 138:
“What, of course, it established was that even where land has a particular value only for
one potential purchaser, that purchaser will none the less be willing to pay for it.”
21.    Mr Lewsley said that “the best consideration...which can reasonably be obtained...in
money or money’s worth” in section 67(2) was the same concept as open market value that
would be agreed between a willing seller and a willing buyer in the context of assessing
compensation for compulsory purchase.
22.    Turning to the fact that there is the requirement in section 67(2) that in calculating the
consideration, regard shall be had to “all the circumstances of the case” (subject to the
qualification that excludes any element of monopoly value attributable to the extent of the port
authority’s ownership of comparable land), whereas section 5 has no such requirement, it was
submitted that compensation case law establishes that circumstances should be kept as near as
9
possible to reality. In Trocette Property Co Ltd v Greater London Council and Southwark
London Borough Council [1974] RVR 306, Lawton LJ said, at p311:
“The assessment of compensation in cases such as this is a most difficult task calling for
the judicial use of fertile imagination. Assumptions have to be made (see ss 14, 15 and
16) and some realities disregarded (eg any increase in value which is entirely due to the
scheme underlying the acquisition – the so called Pointe Gourde principle). It is
important that this statutory world of make believe should be kept as near as possible to
reality. No assumption of any kind should be made unless provided for by statute or
decided cases.”
So, Mr Lewsley said, in compensation for compulsory purchase, as under section 67, the
valuation is based upon all the circumstances of the case subject to the stated qualifications.
23.    He said that it was instructive to note that TfL, through Mr Eden, had provided no
analysis, apportionment or opinion evidence of any value effects between the language of
section 5 and section 67, beyond Mr Eden’s assertion that the rights had “nominal” value. Mr
Eden had said that he had “hunted for value” but had found none. It was submitted that the
evidence was there in the comparables.
24.    Finally, Mr Lewsley said that PLA accepted that the subject land is situated outside its
navigational jurisdiction, that jurisdiction ending just south of the cable bridge located a little
way downstream, and that section 67 applied only within the navigable area. However, it was
the claimant’s case that nothing in this reference turns on that fact, as section 67 settlements
are supporting evidence of value both within the navigable limits, and beyond to the extent of
the tidal limits over which PLA has ownership. Indeed, he said, the principal comparable at
Rainham Creek was also outside the section 67 jurisdiction.
Acquiring authority’s case
25.    Mr Eden is senior partner of Kinney Green, and has been dealing with commercial
property in London for some 30 years. In his view, the value of the rights acquired could only
be nominal as there was no use to which they could be put in the absence of the requirement to
build and maintain bridges. By virtue of rule 3 of section 5, he said the use and purpose to
which those rights are to be put must be ignored for valuation purposes. There was also no
evidence of demand for the rights, other than from the acquiring authority in connection with
its scheme, Bow Creek being a tidal tributary about 1 mile upstream of the Thames and now
appearing tired and down at heel. Its surroundings were industrial in nature and downcast and
there were, in his opinion, no development opportunities such as for the provision of moorings
or marina facilities. In what he described as his “hunt for value”, he said that there was
perhaps a chance of amenity use as part of an Ecology Park, but in any event, it was difficult to
see what value airspace could possibly have in connection with such a proposal. In that
regard, the existence of the original bridge, and the fact that part of the area was oversailed by
power cables would be a further detraction. He concluded, therefore, that whilst the site had
special suitability or adaptability for the required purposes (which had to be ignored under rule
(3)) there was no other use that was likely to engender real value.
10
26.    None of the comparable evidence produced by Mr Sheard could be considered reliable as
in the majority of cases there were crucial differences, and the transactions to which he had
referred were self-serving in that each settlement relied upon an earlier one. Whilst it was
agreed that the valuation of the subject rights was to be on the basis of section 5, Mr Eden said
any such assessment was wholly dependent upon the interaction or assumed interaction of
supply and demand, whereas section 67 settlements had a fundamentally different basis of
assessment. Most of Mr Sheard’s comparables had their valuation basis under section 67, all
the transactions involved special purchasers, and in none of the cases could it be said that there
was a general market.
27.    Looking firstly at Rainham Creek, the comparable upon which Mr Sheard had placed
most reliance, he said it was “on the top of a tottery pile of evidence”. He accepted that
superficially it appeared to be useful in that compensation was settled under section 5, the
valuation date was close, and the requirement was for similar purposes. However, the site was
located some 8 miles away where geographical circumstances would be different, and
reference to the correspondence between the valuers who negotiated the settlement showed that
it was clearly a “horse deal” and that it was unlikely they had even considered the statutory
provisions in coming to an accommodation at a price that fell precisely midway between their
respective starting figures. Indeed, he said, in the confirmatory email responding to his
request for information on the comparable, Mr Cobb of G L Hearn had said “Comparisons [we
were making] were from earlier agreements with TfL, DLR and low grade land acquisitions in
the locality under the CTRL scheme”. Such a comment was clearly proof of his contention
that the agreement was self-serving, and that the parties had not applied their minds to open
market value.
28.    As to the River Roding crossing at Barking Creek, which he acknowledged as being an
acquisition made in connection with the same scheme, and compensation for which was agreed
between two properly informed professional valuers, Mr Eden said that he could not state what
evidence they had relied upon. He felt sure that the negotiations would have been influenced
by section 67 settlements and as a result of this, the locational and time differences and demand
implications, he could afford no weight to that comparable, or indeed any, where section 67
might have been a factor.
29.    On the question of the Millenium and Hungerford bridges over the Thames in central
London, he said that in addition to the fact that they were both likely to have been section 67
settlements (the situation in one of them being unclear), there were other characteristics that
made them incomparable. Such matters as their location, where value could well be added to
reflect the benefits created to land on either side, and the potential for income from related
advertising hoardings could cloud the issue.
30.    In summary, he said that in his view, in the absence of open market evidence, a
convenient convention had arisen in the valuation of such rights, but that did not mean such a
convention was right. The fact that, historically, sums exceeding nominal amounts in section 5
settlements (all of which, he thought, would have been made by reference to previous section
67 settlements) had been agreed, did not prove that the valuation assumptions to be applied
were the same under the two statutory provisions. During cross-examination (and thus after
examination in chief had been completed), he produced a schedule that outlined the differences
11
between the two statutory provisions, and upon which Mr Keen expanded in submissions. For
instance, under section 67 it was necessary to take into account all the circumstances of the
case, which would include the use to which the rights were to be put (the scheme), whereas
under section 5 such circumstances were to be ignored (no account to be taken of the fact that
the purchase was compulsory). Similarly, in his view, there was a difference, in terms of
valuation, between the section 67 requirement that monopoly value was to be excluded, and the
requirement under s.5 (Rule (3)) that the special suitability and adaptability of the land was to
be ignored. The definition of open market value (section 5) and best price reasonably
obtainable (section 67), he said, could only be interpreted to mean the same thing if all the
other assumptions in the statutory provisions were the same.
31.    Mr Eden accepted that there was, in reality, no evidence to indicate that settlements or
transactions under either section 5 or section 67 were any different, and in connection with his
own views, he admitted that he had not personally produced any evidence of settlements at nil
consideration. He also confirmed that, prior to his involvement with this case, he had no
previous experience of the issues that were before the Tribunal in this case.
Submissions
32.    Mr Keen said that the approach adopted by the PLA was fundamentally flawed, relying
as it did, on settlement comparables that were all either negotiated under section 67, or took
section 67 settlements into account. PLA’s comparables demonstrated evidence of demand by
only one special purchaser in each case over an 11 year period, but none at the location of the
reference land at the relevant valuation date. Put simply, in the absence of any demand, the
rights must have only a nominal value. In the absence of the scheme, which is to be
disregarded by virtue of rule (3) of section 5 and the Pointe Gourde principle, no other party
would speculate the £117,000 claimed, or any other material amount, to acquire rights to
construct and maintain landlocked bridges at such a location. In Waters, Lord Nicholls gave
pointers as to the application of Pointe Gourde, the third of which was (para 63):
“A valuation result should be viewed with caution when it would lead to a gross disparity
between the amount of compensation payable and the market values of comparable
adjoining properties which are not being acquired.”
There was no good reason, Mr Keen said, why anybody would pay £117,000 for the right to
construct and maintain bridges which could not be built without acquiring land on either side
of the river or creek.
33.    The biggest difference between assessments made under section 5 and section 67, Mr
Keen said, was the fact that under the latter, the taking into account of “all the circumstances”
must include the scheme underlying the acquisition, and therefore the use and purpose to which
the rights were to be put, rather than the inherent value of the land itself. He did not agree
with the PLA that the exclusion of monopoly value attributable to its ownership of comparable
land has the same effect as rule (3) and the Pointe Gourde principle. Under section 67, the
PLA’s ownership of the subject land can, and must, be taken into account. Where that land (or
airspace) is required to, say, link two roads by a bridge, it is the only land that can be used for
that purpose and the PLA are therefore in a position to ransom the land. If, at the valuation
12
date, the purchaser had a choice of changing its scheme and acquiring an alternative piece of
PLA river, then this effect would need to be disregarded under that monopoly provision. On
the other hand, it was submitted, if the purchaser had no such opportunity, then the element of
monopoly value would not be disregarded because there could be no question of taking
comparable land. However, Pointe Gourde requires that both such ransom elements (the
acquisition land and comparable land) are to be disregarded altogether.
34.    As to the claimant’s submissions relating to Guinness v Railtrack, Mr Keen said that was
not a compulsory acquisition, but an agreement by the parties to refer the case to the Tribunal.
The agreed terms of reference, inter alia, specifically disapplied rule (3) and provided that the
Pointe Gourde principal did not apply, so as to exclude consideration of the proposed
development of land owned by Guinness. It was the nature of the airspace, being above a
railway, rather than the nature of the actual seller that caused the Court of Appeal to state that
the seller must be assumed to be a hypothetical railway company. The abstract seller in the
present case cannot be clothed with the same characteristics as the PLA because it exists as the
actual owner of adjacent areas. It would, as Mr Sheard had conceded, be odd for there to be
two port authorities.
Conclusions
35.    Although it was acknowledged by both parties that the sums at stake in this reference
were not high, and the cost of pursuing the matter to the Lands Tribunal may be
disproportionate to them, there was a matter of legal principle involved, which was of wide
importance, and for which the assistance of the Tribunal was considered important.
36.    It seems to me that, precisely as Mr Eden said, a convenient convention has built up over
the years, and it is most unlikely that those negotiating settlements for River Works Licences,
or the acquisition of rights under section 5 have ever really had the particular valuation
assumptions to be made under the statutory provisions foremost in their minds. In respect of
Mr Sheard’s comparables, if I conclude that the valuation assumptions under section 5 and
section 67 lead to the same result, whether or not the evidence is self-serving is of no
consequence. I shall therefore return that question later.
37.      In my judgment, there are indeed material distinctions between the assumptions to be
made under each of the two statutory provisions, and I find the evidence of Mr Eden and the
submissions of Mr Keen entirely persuasive. It was agreed that it is to be assumed that the
transactions under both provisions are between a willing buyer and a willing seller, and I do
not think that whether that person or company is abstract or known makes a material
difference. The key differences, in my view, relate to the disregards – these being what Mr
Lewsley stated as “qualifications”. Under section 5, rule (3), the special suitability or
adaptability of the land is not to 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.” To the
extent that rule (3) does not apply so as to do so under the Pointe Gourde principle, the
valuation must disregard any increase or decrease in value that is entirely attributable to the
scheme. In section 67(2) the “best consideration” is clearly stated to have regard to “all the
13
circumstances of the case”, including the value of any rights in, under or over the land to be
conferred [in the licence]. That means that value (if indeed there is any) created by the
applicant’s proposal can and, indeed, must, be taken into account. Therefore, not only can the
special suitability or adaptability be taken into account, but any additional value that is
attributable to the scheme is also to be taken into consideration. I do not agree with Mr Sheard
that the exclusion of any monopoly value attributable to the PLA’s ownership of other land had
much the same effect as the Pointe Gourde principle because, as he acknowledged, the
monopoly question relates to the supply of land, and Pointe Gourde relates to demand.
38.    The land acquired consists of the right to construct and maintain bridges in airspace
owned by the claimant. It is clear that the airspace has a special suitability for the construction
of the bridges because of its physical relationship to the A13 road. In terms of rule (3) it is
appropriate, in my view, to treat this special suitability as belonging to the land acquired, even
though formally the land acquired consists of a right over land rather than the airspace itself.
It is evident that there is no market for the land for the purpose of constructing the bridges
apart from the requirements of TfL, which is an authority possessing compulsory purchase
powers. Indeed, as Mr Sheard acknowledged, nobody had been able to produce any evidence
of open market transactions, all of the settlement evidence relied upon related to statutory
undertakings with compulsory purchase powers (whether they were used or not), and there
would be no demand for the right to build a bridge at this location other than from TfL.
39.    Rule (3) thus applies in the present case, and it operates so as to exclude any value of the
land to TfL by reason of its special suitability for construction of the bridges. Pointe Gourde,
which only falls to be brought into play if needed to supplement the statutory provisions (see
Waters), does not apply because rule (3) is effective in this instance to exclude any additional
value due to the scheme. If applied, however, it would have had the same effect.
40.    I conclude therefore that the valuation assumptions are different, and it is thus not
possible to rely upon comparables that were either negotiated under section 67, or in section 5
cases, may have been settled “by convention” on the basis of earlier section 67 settlements.
There being in my judgment no market for the subject rights in a “no-scheme world”, I
determine that the value is nominal, and accept Mr Eden’s assessment of that figure at £50.
41.    If I am wrong on this legal principle, and it should be held that to all intents and
purposes, the valuation assumptions are the same, then the comparables upon which Mr Sheard
relied, albeit that they relate to settlements in the absence of any open market transactions,
must carry some weight. In my view the Rainham Creek comparable, in such circumstances,
must be attributed the most weight due to its similarities. There was nothing to suggest that
Rainham Creek was any better or worse in terms of geographic location and I am satisfied that
this, together with the evidence relating to the Roding River crossing, support Mr Sheard’s
contentions as to value. With Mr Eden having produced no comparable evidence of his own,
I accept Mr Sheard’s evidence, and conclude that his figure of £117,000 should be applied in
the alternative. The strength of the Rainham Creek comparable, albeit having been, as I
accept, a “horse deal” outweighs the arguments about the increased value that could be
expected to apply in locations such as where the Millenium Bridge exists. I would anticipate
that, if the case were to be re-argued on the assumption that the statutory provisions were the
same in terms of valuation assumptions, more evidence to argue locational differences would
14
be produced, and indeed I would expect the acquiring authority to produce comparables of its
own.
42. I determine that the acquiring authority shall pay compensation to the claimant in the
sum of £50. This determines the substantive issues in this reference, which will take effect as a
decision when the question of costs is resolved. A letter is enclosed regarding the procedure
for making written submissions on costs.
Dated 6 December 2007
Signed                                    P R Francis FRICS
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