Compulsory Purchase – Strict Approach Necessary

Councils that use compulsory purchase orders must adhere strictly to the relevant planning law, as a recent decision of the Supreme Court makes clear. The dispute pitted Wolverhampton City Council against supermarket giant Sainsbury’s.

The Council had a site that it wanted to see redeveloped and Tesco wanted to build a store on another site in the city. The Council and Tesco agreed a deal allowing Tesco to develop its target site on the condition that it also developed the other site.

The only problem was that the majority of the site that Tesco wanted to develop was owned by arch-rival Sainsbury’s. The Council therefore applied for a compulsory purchase order (CPO) over this land. Sainsbury’s opposed the order and the dispute went all the way to the Supreme Court.

The Court had to consider what constituted a ‘lawful consideration’ when making such an order. In this case, the Council proposed to purchase the land in question because it wanted the second site developed, not because of the improvements that would result from the development of the site targeted by Tesco. The development of the second site was ruled not to be a lawful consideration in applying for the CPO. Lord Collins stated that the terms of the Town and Country Planning Act 1990 meant that the Council could not ‘take into account a commitment by the developer of a site part of which was subject to a CPO to secure the development, redevelopment or improvement of another site’.

The judgment in favour of Sainsbury’s has several implications. Clearly, the courts will not uphold an attempt to deprive someone of their property unless the decision to do so has been taken in strict compliance with the law. In practical terms, it is common for planning permission for development schemes to be agreed on the basis of some ancillary development or other benefit to the community being part of the deal. Clearly, where such schemes involve the use of CPOs, there may well be difficulties.

For advice on any planning matter, contact Clare Magill or Cindy Rai.