Rooff wins crucial Olympics compensation appeal

There has been a significant development for all landowners who feel they did not get enough compensation for moving to make way for the Olympics Park and Stratford City.

A legal case that calls for a substantial increase in the government’s compensation bill for businesses relocated to make way for the 2012 Olympics Games has at last been accepted by the Court of Appeal.

Richard Asher, national director at Jones Lang LaSalle, and all round compulsory purchase order expert, has been advising Rooff and other potential claimants and he tells me: “This is a helpful decision but there is still a long way to go before we can be sure of the outcome.”

Essentially this means that Newham council and the Secretary of State could still challenge the decision, and there is still no agreement on what the decision means for the ultimate valuation of the site.

Anyway I will try to explain it all as best I can as it has major implications for the ultimate bill for the Games.

I have written in some depth about this case before, but the gist is that building company Rooff’s success yesterday could lead to many other landowners following suit.

Rooff wanted the Court of Appeal to quash a secretary of state for communities and local government decision that it claims means the London Development Agency underpaid for its land at Carpenter’s Estate in Stratford, east London.

Rooff claimed that because of the regeneration being brought about by the development of the 500-acre Olympic Park in Stratford its land is suitable for a lucrative “landmark” development of mixed residential and business uses, as a key part of the regeneration of the area that was likely to take place.

Basically Rooff wanted to receive a Section 17 award for residential development.

But Newham council refused Rooff a certificate for appropriate alternative development of the site.

Then, in July 2009, the secretary of state rejected Rooff’s appeal against that decision under the Land Compensation Act 1961, on the basis of his inspector’s conclusion that, when the compulsory purchase order was launched on 16 November 2005, the only alternative development use for which planning consent would have been granted was B1 (business) and B2 (general industrial).

Challenging that decision in the High Court last year, Rooff claimed that the inspector’s reasoning was “unintelligible”, “inadequate” and gave rise to a “substantial doubt as to whether the inspector erred in law in many respects”.

Rejecting Rooff’s challenge last July, Mr Justice Blake found that while the inspector’s report lacked the sufficient clarity, it could not be challenged as irrational, illogical or insufficiently reasoned.

This week Rooff claimed that the judge erred in failing to quash the decision after coming to a finding that the inspector’s reasoning was not sufficiently clear.

Rooff said the inspector’s reasoning was “elliptical”.

Lord Justice Carnwath has now backed that and essentially agreed that the site should go back to the Secretary of State to decide whether to reconsider the entire case, potentially leading to a further enquiry.

He said that this decision however revealed “little about the actual level of compensation” Rooff is entitled to and that this was now to be decided by valuers and at tribunal.

I know of at least two other significant landowners waiting in the wings to see what the outcome of this case is. Experts tell me it is certain that one outcome will be that Newham is likely to accept that other sites coming forward in the area now should receive a Section 17 award enabling resi development.

I will now quote in full the final part of the Judge’s decision. Partly because it underlines how far from resolved the case is and secondly because it raises important concerns about how effective the Section 17 regulation is:

  1. “I conclude that the appeal succeeds on ground 1, and that, in accordance with section 21, the Secretary of State’s decision must be quashed. That is the limit of our powers. It will be for the Secretary of State, in consultation with the parties, to decide how then to proceed. It is to be hoped that a further inquiry can be avoided, bearing in mind that this is still only one step in the process of the determining of compensation for an acquisition of land which took place some four years ago. Even if the Secretary of State decides following reconsideration that a residential element would have been acceptable as part of a mixed-use development on the site, that may reveal little about the ultimate level of compensation. That will depend on judgements yet to be made by the valuers (or ultimately the tribunal) about the relative proportions of the various uses in a likely scheme, and the market response.
  2. These features are the inevitable consequences of the section 17 regime, which requires the planning status of the land to be determined in the abstract, isolated from the market considerations which in the end will determine value for compensation purposes. Whether that is a satisfactory regime is open to debate. We were told that, in response to proposals for reform put forward in the context of the Localism Bill, the Minister has undertaken to conduct a review. Meanwhile our decision must be made on the law as it stands, whether or not it will ultimately assist the appellants.
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About Paul Norman's Olympics blog

News Editor of CoStar News, a commercial property news service. Regular blogger on the London 2012 Olympics and what it means for property and the the regeneration of East London
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