Practice Note 15/1: Material detriment
The Valuation Office Agency`s technical manual covering all aspects of compulsory purchase and compensation.
1.1 Inclusion in a number of statutes
Material detriment provisions are included in a number of statutes. These provisions vary according to the wording of the relevant Act and although this Practice Note covers particularly the provisions of section 8(1) CPA 1965 the substance of the content is equally relevant to the other cases.
1.2 Compulsory Purchase Act 1965
Section 8(1) CPA 1965 states:
‘No person shall be required to sell a part only –
of any house, building or manufactory, or
of a park or garden belonging to a house
if he is willing and able to sell the whole of the house, building, manufactory, park or garden, unless the Lands Tribunal determines that -
i) the case of a house, building or manufactory the part proposed to be acquired can be taken without material detriment to the house, building or manufactory, or
ii) the case of a park or garden, the part proposed to be acquired can be taken without seriously affecting the amenity or convenience of the house,
and, if the Lands Tribunal so determine, the Lands Tribunal shall award compensation in respect of any loss due to the severance of the part proposed to be acquired, in addition to its value; and thereupon the party interested shall be required to sell the acquiring authority that part of the house, building, factory, park or garden.’
1.3 Section 58(1) Land Compensation Act 1973
Section 58(1) LCA 1973 provides that in determining under section 8 CPA 1965 whether or not 1.2(b)(i) or (ii) above applies ……. ‘the Lands Tribunal shall take into account not only the effect of the severance but also the use to be made of the part proposed to be acquired, and in the case where the part is proposed to be acquired for works or other purposes extending to other land, the effect of the whole of the works and the use to be made of the other land.’
Section 58(1) applies with necessary modifications to any determination as to whether or not there is material detriment under any other statutory provisions.
1.4 Two separate matters
It will be seen that section 8(1) CPA 1965 deals ostensibly with two separate matters and to which different tests might be thought to be applied. This will sometimes present considerable difficulty but because of the wide interpretation given to ‘house’ (see paras 3.2 and 3.3) it seems improbable that para 1.2(b)(ii) would often have any material bearing on the determination of the question that is the subject of the exercise.
2.1 Any person having an interest in land
Any person having an interest in the land and upon whom a notice to treat is required to be served is within the section so far as that person’s interest extends. The whole of the land need not be held under the same demise or title. The decision in West Midland Baptist (Trust) Association (Incorporated) v Birmingham Corporation (1969) 20 P&CR 1052 would not seem to affect the hitherto accepted view that the extent of the ownership must be measured by the circumstances as at the date of notice to treat.
However section 4 ALA 1981 states that the Upper Tribunal (Lands Chamber) shall not take into account any interest in land created, if the Tribunal is satisfied that the creation of the interest was not reasonably necessary and was undertaken with a view to obtaining compensation or increased compensation. If the valuer considers that an interest was created with a view to obtaining compensation or increased compensation details should be sent to the PS Professional Guidance Team.
2.2 Structural alterations
No account shall be taken of any building erected, work done or improvement or alteration made, whether on the land purchased or on any other land of the claimant if such works were not reasonably necessary or were undertaken with a view to obtaining compensation or increased compensation (section 4 ALA 1981). Any such works that were reasonably necessary, eg essential repairs, and that were not done with a view to receiving increased compensation can be reflected in the compensation payable.
3.1 Owner specifying premises
Apart from the matter having implications for the purpose of paragraph 1.2b(ii), it is sufficient that the owner of premises, part of which is required by the authority, should specify the premises that the owner requires to be taken without stating whether the claim is made on the grounds that they are not a ‘house’, or a ‘building’, or a ‘factory’. Nonetheless it is relevant for the purpose of deciding whether the subject land forms part of a property such as is designated by the section to consider what kinds of premises fall within the several descriptions.
3.2 Interpretation of ‘house’
A wide interpretation is given to the word ‘house’, and the expression includes all that is within the curtilage. Normally what can be expected to pass on a sale can be regarded as being within the curtilage. The structure need not be designed, adapted, or used primarily as a residence but it must be adapted for one occupation or purpose (Governors of St Thomas’s Hospital v Charing Cross Railway (1861)). Premises used by the owner for the sale of goods, the manufacture of goods for sale, stables, housing of employees and for the owner’s own residential occupation have been held to be a ‘house’ for this purpose.
3.3 Structures within the definition ‘house’
Any structure or group of structures occupied for one purpose and connected with one occupation and user may be a ‘house’ within the section. Thus, a public-house, an inn, a shop, storehouse, or office can be within the definition. A block of offices would appear to be within the definition when in single occupation but would probably not be if rooms were let separately (see paragraph 3.7).
3.4 Lands Tribunal decision on ‘house’
In Ravenseft Properties Ltd v London Borough of Hillingdon (1968) 20 P&CR 483 the property was originally two houses but for many years had been used as offices, latterly by the Council. At the rear was an access, a garage and a garden which retained its character as such. Most of the garden, the rear access and the garage would be lost by the purchase. The Lands Tribunal decided that the building was a house, quoting legal precedent, even though it was not used as a dwellinghouse. Further, it decided that ‘house’ meant that all that would normally pass on a conveyance with the house, including its garden. Therefore by taking part of the garden the Corporation were taking part of the house and section 8(1)(i) applied. The Tribunal seemed doubtful about the proposition that for reasons of historical legal precedent section 8(1)(ii) should not apply in preference to section 8(1)(i) since what was being taken was ‘part of a garden belonging to a house’. However, the Tribunal found that even if sub-paragraph (ii) had applied it would have produced the same answer on the facts of this case.
A study of the cases might lead to the conclusion that paragraph (ii) is relevant only where the acquisition is of part of a park or garden which is not within the curtilage of a ‘house’. In Randell v West Glamorgan CC [1975] 1 EGLR 195, a case under what is now section 166 TCPA 1990 where a similar consideration applied, the Lands Tribunal heard argument as to which paragraph was applicable following reference to the Ravenseft case and concluded that the result was the same whichever paragraph (i) or (ii) applied. See also paragraph 4.2 of this Practice Note.
3.5 Land included in CPO
The considerations determining whether land included in a CPO and not built upon fell within the provisions of section 92 Lands Clauses Consolidation Act 1845, the predecessor of section 8 CPA 1965, presented a good deal of difficulty. Broadly the decisions distinguish between land that is necessary for convenient use and occupation of premises and that which is subsidiary and merely for personal use and convenience. Thus the ornamental portions of a nursery garden were held to be garden and therefore part of a house, but gardens used for the purpose of trading in flowers and fruit were held to be more aptly described as ‘field’ and, not being part of a house, outside the scope of section 92 LCCA 1845.
3.6 Factory
The word ‘manufactory’ is only applicable to a place where a manufacturing process is carried on and in the past recourse has frequently been had to the Rating and Valuation (apportionment) Act 1928 for guidance from decisions in derating cases. Cottages used as a warehouse or a manufactory on the other side of the road were held to be part of the manufactory. In modern legislation ‘factory’ is used instead of ‘manufactory’.
3.7 Buildings
The inclusion of the word ‘building’ extends the provisions of section 8 CPA 1965 to a building that could not in any sense be described as in the nature of a house or factory. The extent to which a single structure might comprise one or more buildings has caused some difficulty in the Courts. In Greswolde and Williams v Newcastle-on-Tyne Corporation [1927] WN 325 a structure built architecturally as one building but divided by party walls into 14 parts and let out as offices was held to be one building for purposes of section 92 LCCA 1845. This property was however administered by the owners as one unit and lettings were so arranged that the separate tenancies were not necessarily confined within the party walls. It seems possible that if the owners had not retained rooms within the structure for their own use the Court might well have decided that the two parts included in the CPO comprised separate buildings. There was apparently no compelling reason for supposing that the severance was not a reasonable proposition structurally. It is of interest to record that in a judgement each part of the structure is repeatedly referred to as ‘a house’ but the judge was at pains at one point to emphasise that he did not use the expression ‘in the sense used in Section 92’. Similar questions have arisen in connection with the acquisition of units in blocks of flats and difficulties of this kind should be referred to the PS Professional Guidance Team as they arise. The distinction between a house and building might be of importance when a part of a garden belonging to such a structure is being taken but in view of the wide interpretation of ‘house’ and the doctrine that what is within the curtilage is within the scope of the section the occasions on which difficulties might be expected to arise must be few. It has been held that the term ‘building’ would not widen the scope so as to apply the provisions to an entire canal, railway or similar undertaking.
3.8 Owner’s entire interest to be taken
An owner succeeding in a claim to inclusion within section 8 CPA 1965 cannot require an authority to take anything less than the whole of the owner’s interest.
4.1 Major cases dealing with assessment of material detriment
Greswolde and Williams v Newcastle-on-Tyne Corporation [1927] WN 325
In this case Counsel for the authority argued that the test as to whether the authority should be required to take the whole was “Is the abstraction …… (ie the taking of the part by acquisition) ……. of that which it is proposed to abstract merely a quantitative abstraction? If it is, it is suggested that the plaintiffs cannot complain - or is it a qualitative abstraction which would leave a diminished or different quality of article in the hands of the plaintiffs?” It is suggested that the qualitative approach is another guide to what is meant by ‘material detriment’.
Ravenseft Properties Ltd v London Borough of Hillingdon (1968) 20 P&CR 483
In this case the Lands Tribunal rejected the proposition that there could be no material detriment unless some severance is caused for which compensation is not an adequate remedy. It held that ‘material detriment’ would occur if, ‘as compared with the property as it previously existed, the remainder, after the part is taken, is less useful or less valuable in some significant degree’.
Randell v West Glamorgan CC [1975] 1 EGLR 195
In this case the Lands Tribunal summarised the considerations as follows:
“In my judgement the strip of land in the present case cannot be taken without material detriment to the house nor can it be taken without seriously affecting the amenity of the house. In other words I accept the evidence of Mr Wynne Davis that the removal of the strip takes the house out of one category and puts it into another of a quite different character.
Finally I should say that I have reached this conclusion on the evidence. It also seems to me that this is the conclusion which best accords with the rights of the citizen which Parliament has been at some pains to protect. The claimant is quietly enjoying her property when the County Council come along and require to take some of that property away. It is true that under the compensation code she is to be compensated………. But she no longer wishes to live in the house in its changed surroundings ……….”
The facts in the Randell case were that some 263m2 out of 2,885m2 were required. Before the acquisition the house at its nearest point was some 16.5 metres from the boundary. After the taking of the strip that distance would be reduced to 10.5 metres. The acquisition of the strip would result in the destruction of a large part of the existing screen of trees and shrubs which the Lands Tribunal decided would have the effect of taking the house out of one category and putting it into another of quite different character.
Halliday and Few v Secretary of State for Transport [1991] 31 RVR 40
The CPO for a road scheme provided for the acquisition of the 25m2 site of a garage belonging to a ground floor converted flat in an end of terrace house. The owners served a blight notice requiring the Secretary of State to acquire the whole property. The SoS objected to the blight notice on the grounds that only part of the property was required. The Tribunal had to determine under (what is now) section 166 T&CPA 1990 whether the part could be taken without causing material detriment to the remainder. (Section 166 T&CPA 1990 effectively restates the provisions of section 8 CPA 1965).
The SoS argued that the material detriment should be considered only in relation to the ‘house’ (flat) and not in relation to the garden. The SoS also argued that only the works on the subject land were relevant and that the subsequent use of the proposed new road should not be taken into account.
The Tribunal held that the flat, garden and garage should be considered as a composite whole as being included within the definition of ‘house’ in the statute. The already small garden would be significantly reduced and the garage lost. The disturbance from construction works and the subsequent use of the scheme should be taken into account and would be likely to affect the amenity and convenience of the flat. The blight notice was upheld and the SoS was required to take the whole of the property.
Smith v Kent County Council [1995] 2 EGLR 196
Following the service of a blight notice by the claimant, the authority in its counter notice contended that it proposed to acquire part of the property and no other part. On the claimants’ reference to the Tribunal, the issue under section 166(2)(b) of the 1990 Act was whether the loss of part of the garden of the subject property could be taken without seriously affecting the amenity or convenience of the whole. 9m2 of the property’s front garden was to be taken permanently together with the loss of some tree cover (not on the claimants’ land).
The Tribunal held that neither the taking of the 9m2 alone nor the temporary construction works would have a serious effect on the convenience of the house but the construction and use of the scheme in its entirety, including the loss of tree cover, meant that the property would suffer material detriment and the claimant’s blight notice was upheld.
Blyth v Humberside County Council [1995] 2 EGLR 196
The subject property comprised a house together with 45m2 of land in front of it that was separated from the house by a public footpath. The owner had served a blight notice to which the acquiring authority had served a counter notice and the authority had also served a notice to treat for the acquisition of the 45m2 of land only. Both references were heard together.
The authority argued that the land and the house were not one hereditament. The Tribunal determined that the house and the land were one hereditament because they would have been entered into the valuation list as one hereditament since the occupation of the land was private, domestic, exclusive, continuous for many years and beneficial to the claimant in her occupation of the house. The land could not be taken without seriously affecting the amenity of the house having regard to section 58(1) LCA 1973 (subsequent use of the scheme to be taken into consideration). The Tribunal determined that the authority should take the whole property.
4.2 Betterment to other land of owner not within the curtilage
To apply the test it is necessary to look not only at what is left of the property but at how that remainder will be affected for better and/or worse by the whole of the scheme giving rise to the acquisition. However, there is no authority for taking into account benefits to other land owned by the claimant but outside the curtilage with a view to attempting to demonstrate the lack of overall detriment; that is a matter to be taken into account in assessing compensation. The extent of the curtilage is a matter of fact in each case.
4.3 Accommodation works
The willingness of the authority to carry out ‘accommodation works’ or pay for them should be taken into account as should any undertaking eg to allow access or provide an alternative right of way. In Re Gonty and Manchester, Sheffield and Lincolnshire Railway [1896] 2 QB 439 (referred to in the Lands Tribunal decision in ‘Ravenseft’) it was decided that the provision of an alternative means of access that the promoters were obliged to provide would obviate material detriment. In that case a good deal of emphasis was laid upon the obligation of the promoters to provide the access but one of the learned judges said that even if there had been no such obligation an undertaking to grant a permanent easement of access would have been taken into account by him provided that to do so would not be ultra vires the promoter’s powers. It is thought in some quarters that a Scottish case (Ayr Harbour Trustees v Oswald (1883) 8 App Cas 623) which was considered in the House of Lords casts a slight doubt on the validity of the ‘Gonty’ decision. In that case the House of Lords decided that the Ayr Harbour Trustees had no authority to enter into an agreement, for the purpose of diminishing the probable amount of damage to the claimant, that might restrict them or their successors from carrying out their statutory duties.
4.4 Temporary injury to land
Regard should be had to the injury that may be caused during the carrying out of the whole of the works in addition to consideration of the effect of those works when completed (section 58(1) LCA 1973). In extreme cases the construction period may be prolonged, and the effects may be sufficient to give the claimant the benefit of the material detriment provisions, even where it is clear that on completion of the scheme the injury arising from the subsequent existence and use of the works is insufficient by itself to merit acceptance of the notice.
4.5 Material detriment to potential use of land
The question whether material detriment to a potentially rather than to the existing use is within the scope of the section has its difficulties and was referred to in the ‘Ravenseft’ case. Present day thought might suggest that potential use should not be contemplated for this purpose but in a case under section 92 LCCA 1845 relating to the purchase of land intended to be a garden for a house which was in course of erection at the date of notice to treat it was held that the section applied. Caledonian Railway v Turcan [1898] AC 256 also lends some support to the proposition and any case where the owner relies on damage to potential to establish a claim should be submitted to the PS Professional Guidance Team for advice. Similar action should be taken where, although not pleading material detriment to a potentiality, the claimant would be entitled to be compensated on the basis of value for a potential use whether or not the material detriment plea succeeds. In other words there may be cases where payment for potential value and pleas of material detriment are so inconsistent as to justify careful examination of the case, if necessary with legal assistance.
4.6 Subjective view of claimant
In the ‘Ravenseft’ case the Tribunal said “it seems to be intended that the significance or materiality of the detriment should be considered and determined by reference to its nature and degree and that at the end of the day the question should be whether it is reasonable to subject the owner against his will to a truncation of his property (with compensation) rather than make a clean sweep by taking the whole”. It has been suggested that this means that the personal views of the actual owner are paramount and the wider scope introduced by LCA 1973 whereby works and uses are to be taken into account in addition to the act of severance, may lead to greater emphasis being laid on the susceptibilities of the actual owner. The view that the Upper Tribunal would take on this point may be deduced from the ‘Randell’case above, and although there is every justification for having regard to the effect of the proposals on the suitability of the property for the owner’s purposes the decision should continue to be construed as though ‘the owner’ means a reasonable owner.
4.7 Nature of the owner’s interest
Although the matter does not seem to have been before the Courts as a direct issue it would seem that the criteria referred to above should not be examined without regard to the nature of the owner’s interest. Such a contention would be consistent with the proposition that what is to be considered is the nature of the claimant’s interest in the house, building etc which is merely descriptive of the land as defined in CPA 1965. That to which it might be unreasonable to subject an owner/occupier might be tolerable to a reasonable owner who has no intention of entering into occupation and owns the land merely as an investment. If this view of the law is opposed the case should be submitted to the PS Professional Guidance Team.
4.8 Whether the amenity or convenience of house affected
There was some discussion in the ‘Ravenseft’ case as to whether the test for material detriment is a less onerous one than that for determining whether the amenity or convenience of a house is seriously affected. Counsel for the claimants contended that even slight damage would be sufficient to establish an owner’s claim in paragraph (i) test whereas where paragraph (ii) applies more severe damage would have to be shown in order to qualify. Taking the use of the words alone this might well be true, but as has been stated above there would be few cases that do not fall within paragraph (i). In any event, in view of the anomaly whereby it appears that on a strict reading paragraph (ii) could result in the whole of the park having to be taken but not the house it is probable that a well advised claimant would not attempt to rely upon that paragraph. Regard should be had to the Land Tribunal’s comments in the Randell case (see Paragraph 4.1).
5.1 General
Where it has been decided that part of a property cannot be acquired without causing material detriment the compensation will be assessed as though Notice to Treat had been served in respect of the whole. This can result in the application of Rule (5) section 5 LCA 1961 where appropriate.
5.2 Valuation Date
The valuation date of the land to be acquired will depend upon the relevant dates of entry of the lands to be acquired if entry precedes any agreement of compensation or Upper Tribunal hearing. In this respect section 5A LCA 1961 will apply so that if the acquiring authority enters on and takes possession of part of the land specified in a Notice of Entry (or in respect of which payment into court has been made) the authority is deemed to have entered on and taken possession of the whole of that land on that date.
Any person having an interest in the land at the date Notice to Treat is served or deemed to be served can be within the provisions. Structural alterations or interests created shall not be taken into account if they were not reasonably necessary or were made with a view to obtaining increased compensation.
A claimant need not specify the character attributable to the land and need make clear only which severed land the authority is required to take.
The expression ‘house’ is not confined to a residence and includes all that within the curtilage. It includes all the land that might be expected to pass on a sale.
Land held with the subject land but not reasonably necessary for the convenient use and occupation of it might be outside the scope of the provisions.
The word ‘manufactory’ (or ‘factory’) applies only to a place where a manufacturing process is carried on.
The expression ‘building’ extends the scope beyond what could be described as a ‘house’ or ‘manufactory’ but not so as to include an entire undertaking. A claimant might succeed in a demand to have the whole of the claimant’s property taken if it is regarded as a building and fail if it is treated as a house.
The application of the provision is not limited to cases where the injury would not be adequately compensated in terms of money.
The use to which the land taken from the claimant will be put is a relevant consideration, as is the construction of any works on that land. Where such uses or works extend to other land, the whole of the proposals are to be taken into account.
The willingness of the authority to carry out accommodation works or to give legal undertakings that would mitigate the detrimental effect of the severance should be taken into account.
Where the material detriment is founded upon injury to a potentiality, or where the compensation for the land taken or the severed land would fall to be assessed on the basis of potentiality, the case should be submitted to the PS Professional Guidance Team for advice.
The significance or materiality of the detriment should be considered by reference to its nature and degree and if it is not reasonable to subject the owner to a truncation of the owner’s property in the manner proposed the whole should be taken. This would not preclude the taking of less than the whole where the parties were agreeable.
The effect of the proposals should be considered in relation to the nature of the interest that comprises the subject of the claim. Thus what might be tolerable for a landlord might not be tolerable for an occupier.
Where the criterion is whether the amenity or convenience of a house were seriously affected there might be a higher standard of proof on the claimant than where material detriment is the issue.
Compensation will be assessed in accordance with the normal rules and the basis laid down in section 5 LCA 1961. Rule (5) would apply where appropriate.
The law is such that a person owning landed property cannot expect to be immune from the effect of schemes authorised ‘for the public good’ and for which there are compensation provisions relating to damage by severance and injurious affection. It is therefore reasonable to suppose that the effective application of the material detriment provisions will be exercised more ‘in the exception than the rule’ and that they will not be used to overcome alleged deficiencies in the general compensation code.
There will be some cases in which the valuer will have no difficulty in deciding whether or not a request to take the whole of a property is within the scope of the statutory provisions and is also reasonable bearing in mind the foregoing. For example, where the proposal relates to the purchase of a substantial part of a house which cannot physically be reinstated and the character of it which is of importance to the occupying owner will be quite different, there would be a very slender chance of successfully resisting a claim.
Inevitably there will be many cases calling for a delicate sense of judgement and every effort should be made to ensure a defensible degree of uniformity in dealing with individual cases so as to avoid criticism. On these grounds alone consultation with the valuer’s Sector Leader would be prudent where there were any doubt on the merits of the case. Further consultation should be arranged with the PS Professional Guidance Team where it is thought to be desirable and guidance on all aspects of these problems should be sought in the usual way.
A material detriment claim should not be accepted too readily where there is doubt. Authorities are unlikely to want to be saddled with too much surplus land and buildings or to have to go into the market to sell surplus property.
In early cases the Courts were inclined to the view that since the provisions were designed to relieve promoters from the oppressive effect of section 92 LCCA 1845 where only a trivial part was being taken they should be construed so as to be applied effectively wherever it could be seen to be reasonable to do so. Generally the determination of disputed cases was made by an arbitrator as a matter of fact and the Court would rarely interfere except on questions of law. The analogy for today needs no emphasis but there is no evidence that the Upper Tribunal would accept a claim too easily although the Ravenseft and Randell cases are pointers.
The effect of the severance and the authority’s proposals on the value of the retained land is not conclusive but it is not an immaterial guide. For instance, if the depreciation in value to a reasonable owner/occupier would be less than 10%, it might be thought that the detriment could be neither material nor serious. At 20% there might be some doubts (and so on). However, if in any case the valuer were satisfied that it was to be expected that a reasonable occupier would move at the occupier’s own expense rather than tolerate the qualitative reduction in the truncated property the percentages referred to above would be of no significance and normally there would be little point in resisting the claim.
The question of reasonableness will be judged in the general run of cases by the attitude adopted by other owners in similar circumstances. The effect of the loss of a forecourt, car parking space, garage or loading space on a property cannot be expected to be the same in all circumstances but if the generality of owners are known to accept the severance with compensation in similar circumstances there is a fair inference that the imposition of the severance is reasonable. There may be exceptions, for example where the occupier is a disabled person and would no longer be able to park a vehicle at a convenient place after severance.
The considerations applicable to a claim by an occupier would not necessarily apply where the claimant holds the land solely as an investment. It is suggested that the question then should be whether the nature of the investment is changed by the severance and the reasonableness of a claimant’s demand merits examination from a different viewpoint. This does not appear to have been argued in the Ravenseft case.
Any advantage that might accrue by way of compensation if the claimant’s counter notice were successful eg by way of disturbance compensation or a Home/Basic/Occupier’s Loss Payment should not be taken into account.