Challenging Compulsory Purchase Orders

Compulsory purchase powers are an essential tool for delivery of effective regeneration.

Once a Compulsory Purchase Order (“CPO”) is authorised a local authority can compulsorily acquire any land in their area if it will facilitate development, re-development or improvement on or in relation to the land and the acquiring authority must not exercise that power unless it is likely to contribute to the promotion or improvement of the economic, social and environmental wellbeing of their area.

In a recent high profile case a CPO made in 2012 by Haringey Council (“the Council”) was challenged by a landowner. The Tottenham land subject to the CPO was needed by Tottenham Hotspur Football Club (“Spurs”) to build its new stadium along with associated development supporting regeneration in the area.

The description of the CPO was “…for the purpose of facilitating the carrying out of development, redevelopment or improvement of the land comprising the demolition of existing buildings and comprehensive redevelopment to provide a new stadium and ancillary uses such as Club museum; shop and offices for the Tottenham Hotspur Foundation; residential; college and/or health centre and/or health club uses; and public realm improvements which will contribute to the achievement of the promotion or improvement of the economic, social or environmental well-being of the North Tottenham area”

The land subject to the CPO included land owned by Archway Sheet Metal Works, run by the Josif Family who objected to the CPO, resulting in a public inquiry in 2013. In February 2015 they lost their bid to stop the CPO after taking it to the High Court.

The grounds of challenge boiled down to:

  1. The Council have no authority to make the CPO – it made an internal resolution in 2010 to use compulsory purchase powers to acquire the land but these were subject to preconditions which weren’t discharged;
  2. Insufficient evidence of commitment from Spurs to deliver the scheme and no development agreement between Spurs and the Council; and
  3. an error in law – the Secretary of State, who decides whether the CPO is authorised by issuing a decision letter, wasn’t informed of material that emerged between the close of the inquiry and the decision letter

Having considered and addressed the grounds of challenge the court concluded “there was no legal flaw in the process which led to the conclusion that there was a compelling case in the public interest for this order to be made”

Points arising from the judgment include:

  • It is important to recognise the particular structure of the decision-making process which is involved in cases of this kind
  • if new matters emerge after an inquiry has closed those involved in the decision-making should inform the Secretary of State, but won’t be expected to do so if those matters are not sufficiently specific or clear such that the Secretary of State’s decision may be altered
  • the ideas relating to the development project had not crystallised and lacked sufficient certainty or clarity to have altered the Secretary of State’s decision
  • the Secretary of State did provide reasons in relation to the question of Spurs’ commitment to the scheme
  • depriving a person of their property by force is “an extremely serious matter” and there was no criticism of the Josifs for challenging the acquisition.

General repercussions for landowners who have a CPO made against them

Challenging the concept of a CPO itself is simply not an option for landowners and those facing a CPO should take immediate professional advice to explore all possible options (including the possibility of a Judicial Review at the appropriate time) with a view to securing the best possible practical and commercial outcome.

The landowner is entitled to compensation in exchange for his land being acquired from him. Assessment of compensation is governed by a complex framework of legislation but, broadly speaking, the level of compensation will represent the value of the landowner’s interest in the land, costs of acquiring / relocating to new premises and associated costs. On 31 March 2015 Spurs struck a private deal with the Josifs to buy the land which undoubtedly will have included compensation

Lessons the case offers for those facing or looking to enforce a CPO

  • acquiring authorities must ensure that they have complied with all the statutory requirements to limit the risk of a challenge
  • landowners should try to narrow the scope of a CPO whereas an acquiring authority should seek to keep the wording broad to make any potential challenge less straightforward
  • parties should seek to negotiate early on and those looking to enforce a CPO should offer fair and reasonable terms to a landowner in an attempt to settle at an early stage
  • landowners should consider whether it is actually worth challenging the CPO or refusing to sell
  • seek specialist advice when negotiating compensation as acquiring authorities may be prepared to pay more than the statutory compensation at different stages of the process
  • costs risks – the Council and Spurs were unable to seek reimbursement of the substantial costs they incurred in dealing with the challenge from the Josifs. This may give acquiring authorities a greater incentive to settle earlier on more favourable terms

As part of the 2015 Budget the government has issued a consultation on improving the CPO process with a view to making it clearer, fairer and faster. Views in response to the consultation must be received by 9 June 2015. For more information: https://www.gov.uk/government/consultations/improving-the-compulsory-purchase-process

This article first appeared on the 7 April 2015 in Property Investor News. Please click here to read the article.