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Recent Case Law Affecting Developers

Gateley Hamer

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Arnold White Estates Ltd -v- National Grid Electricity Transmission Plc.

Disputes relating to wayleaves are rarely seen in the national press.  Even when a payment is made to a landowner for a span of wires in excess of £5 million even then it does not create a major stir.  Added to that is the dispute being appealed by National Grid; in part due to their concerns at the knock-on effect this may have for other similar claims.

The essence of the dispute related to a strip of land that the landowner agreed to sell to two developers at market value if the overhead line could be removed.  The statutory process was followed by National Grid in applying for a necessary (statutory) wayleave to retain the line with the right reviewable after 15 years.

Whilst there are comparables to compulsory purchase legislation (which in itself is an even less exciting subject than electricity lines) the rules were followed though distinctions drawn by the Court of Appeal to the advantage of the landowner.  Fairness was seen to prevail in that, in common with the vast majority of rights for overhead lines, the rights for this line were capable of being terminated and the landowner followed due process in seeking to have the line removed to enable their land to be  fully development.  The fact that full loss was allowed in assessing the claim for compensation obviously caused concerns for National Grid and no doubt the remainder of the electricity industry.  The Court of Appeal took the view that the loss in not being able to sell to developers at that time, and as was clearly evidenced that planning permission was unlikely to be obtained at any time in the future if the line remained, made it clear that the loss was real and could not be artificially reduced by a theoretical right of appeal in 15 years time.

There is no doubt that the electricity industry will be concerned at the ramifications of this decision.  However their ability to change the situation is remote as the existing rights for electricity lines can only be changed by agreement with each landowner.  If therefore an offer should be made to a landowner to change the rights in order to crystallise compensation at pre-development value the offer should be considered with great caution.

Whether further claims will flow from the particular circumstances of this decision remain to be seen.  However it does move the goalposts away from the last major decision made in 1981 which was also intended to relate to the particular facts of that situation.  However the electricity industry have chosen for over 30 years to use that decision as a precedent for all cases of development land underneath overhead lines to their advantage.

The layman’s summary of this is if you cannot build under an overhead line then the full development value of that land can be claimed.  The previous artificial assessment of taking a proportion, or worse still developers being forced to pay the exorbitant costs of undergrounding such lines, is now more evenly balanced.  Charles Hamer FRICS

Gateley Hamer is regulated by RICS (Royal Institution of Chartered Surveyors)