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Supreme Court backs "strict approach" to compulsory purchase

18 May 2010

The Supreme Court has decided, by a majority of four to three, that a “strict approach” should be taken to the rules allowing councils to make compulsory purchases.

Tesco made an agreement with Wolverhampton City Council that if it was allowed to develop the Raglan Street site, just outside the ring road, it would also develop the less attractive Royal Hospital site on the other side of the city.

Since Sainsbury’s owned most of the Raglan Street site, the council approved in principle a compulsory purchase order to allow the two Tesco developments to go ahead.

Sainsbury’s launched a judicial review. This was rejected by Mr Justice Elias at the High Court and unanimously by the Court of Appeal.

However, giving the leading judgment in R (on the application of Sainsbury’s) v Wolverhampton City Council [2010] UKSC 20, Lord Collins said: “There must be a real, rather than a fanciful or remote, connection between the offsite benefits and the development for which the compulsory acquisition is made.”

He said similar principles could be applied to compulsory purchase as applied to ordinary planning decisions, but “because of the serious invasion of proprietary rights involved in compulsory acquisition, a strict approach to the application of these principles” was required.

He said that section 226 (1A) of the Town and Country Planning Act 1990 “does not permit the council to take into account a commitment by the developer of a site part of which was to be the subject of a CPO to secure the development, redevelopment or improvement of another (unconnected) site and so achieve further well-being benefits for the area.

“The council was entitled to come to the view for the purposes of section 226(1A) that the Raglan Street site development would contribute to well-being in its area, but not on the basis of the benefits which would derive from the Royal Hospital site development.”

Lord Collins said it was wrong for the council to deprive Sainsbury’s of its property because the council would derive benefits “wholly unconnected” with its acquisition of that land.

He allowed Sainsbury’s appeal and made an order declaring that the opportunity for redevelopment of the Royal Hospital site was not a “lawful consideration” when deciding whether to make the CPO on Raglan Street.

Lord Walker, Lady Hale and Lord Mance agreed. Lord Phillips, president of the Supreme Court, Lord Hope, deputy president, and Lord Brown gave dissenting judgments.

Ashley Damiral, associate at CMS Cameron McKenna, said the judgment would have far-reaching consequences for regeneration schemes across the country that involved the use of local authority compulsory purchase powers for planning purposes.

“It also makes clear that compulsory purchase and related land disposal decisions by a local authority must be taken separately,” he said.

“It does not seem right that a party could be deprived of its interest in a site, because of benefits which are not related to the site involved.”

Damiral added that had this been approved by the Supreme Court, more “extreme examples” than the situation in Wolverhampton could have followed.

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