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Court of Appeal Dismisses HS2 Compulsory Purchase Appeal

Richard Honey QC
Merrow Golden

The Court of Appeal (Lewison, McCombe and Dingemans LJJ) has handed down judgment in Anixter Ltd v Secretary of State for Transport [2020] EWCA Civ 43, dismissing the appeal against the decision of the Deputy President of the Upper Tribunal (Lands Chamber), Martin Rodger QC.

The case concerned material detriment counter-notices under the Compulsory Purchase (Vesting Declarations) Act 1981 and the Compulsory Purchase Act 1965.  Such counter-notices can be given where an acquiring authority is proposing to acquire compulsorily part only of a landowner’s land holding and the landowner wants the authority either to take the whole of his land or to withdraw completely from the proposed acquisition.  Material detriment will arise where, when compared to the property as it previously existed, the retained portion of land is less useful or less valuable in some significant degree.  Generally speaking, when it receives a counter-notice, the acquiring authority has the choice whether to withdraw from the acquisition, take the whole of the land, or contest whether material detriment arises.

Under s6 of the 1981 Act, notice of making of a general vesting declaration (GVD) is to be served on every occupier of any of the land specified in the GVD, apart from land in which there subsists a minor tenancy or a long tenancy which is about to expire.  Under s7 of the 1981 Act, the constructive notice to treat which arises on vesting under a GVD does not apply in relation to “any person entitled to a minor tenancy or a long tenancy which is about to expire”. 

The first issue in the appeal concerned the meaning of “long tenancy which is about to expire” when applied to a business tenancy which was protected under Part II of the Landlord and Tenant Act 1954.  The phrase “long tenancy which is about to expire” is defined in s2(2) of the 1981 Act, which provides:

“(2) In this Act “long tenancy which is about to expire”, in relation to a general vesting declaration, means a tenancy granted for an interest greater than a minor tenancy, but having on the vesting date a period still to run which is not more than the specified period (that is to say, such period, longer than one year, as may for the purposes of this definition be specified in the declaration in relation to the land in which the tenancy subsists).

In determining for the purposes of this subsection what period a tenancy still has to run on the vesting date it shall be assumed—

(a) that the tenant will exercise any option to renew the tenancy, and will not exercise any option to terminate the tenancy, then or thereafter available to him,

(b) that the landlord will exercise any option to terminate the tenancy then or thereafter available to him.”

It was argued by the appellant that the 1954 Act effects a statutory continuation of a protected business tenancy indefinitely, so that it is not a long tenancy which is about to expire, regardless of the contractual term left to run.  The Court of Appeal did not accept this argument.

The Court of Appeal (Lewison LJ) said at [52]: “I agree with Mr Honey that the ordinary and grammatical meaning of the words used in section 2(2) refers to how long the tenancy which was granted still has to run contractually”.  The reasons for this included:

  • the definition contemplates a tenancy which will expire at some point and the date of expiry of a tenancy is its contractual term date;
  • what is to be defined is a species of tenancy and the common law does not recognise a tenancy granted for a term of uncertain duration;
  • the focus is on what is granted and what is granted is what is contained in the lease or tenancy agreement, not what happens to it afterwards;
  • s2(2) is, at least in part, designed to eliminate uncertainties and its utility would be seriously diminished if the tenant’s continuing right to remain in occupation was allowed to cut across the clear statutory position;
  • it would impose an unacceptable burden on acquiring authorities were they compelled to undertake an evaluation of whether (and if so for how long) a tenant might expect to remain in occupation simply in order to decide whether a tenancy was about to expire.

The Court of Appeal also commented, in relation to the appellant’s reference to assumptions to be made when assessing compensation, that the assessment of compensation is a very different exercise to the determination whether a particular interest in land is or is not a long tenancy about to expire. 

The Court concluded on the first issue, in agreement with the Lands Chamber, that the appellant’s interest was a long tenancy which was about to expire within the meaning of s2(2), so that it was excepted from the GVD.  This meant that the relevant notice was the notice to treat served under the 1965 Act. 

The second issue in the appeal was whether the phrase in paragraph 5(a) of Schedule 2A to the 1965 Act which set time running for the service of a counter-notice – namely “beginning with the day on which the notice to treat was served” – should be read to require knowledge of the notice on the part of the recipient.  The argument was advanced as both one of statutory construction and also on the basis that, if necessary, the provision should be read down pursuant to the Human Rights Act 1998.  The appellant relied on the background to the changes to the provisions introduced by the Housing and Planning Act 2016, following the Law Commission’s report on compulsory purchase procedure. 

The Court rejected the appellant’s arguments on this second ground, holding at [71]-[72] that service meant delivery.  Lewison LJ said at [74]: “where Parliament chooses a word in a statute which has a clear and consistent meaning in law, it must be taken to have adopted that meaning”.  He concluded at [78] that paragraph 5 could not be read as requiring any element of knowledge on the part of a person who has actually received a notice properly delivered to them.  The Court also concluded that it was not necessary to read down the 28 day time limit for the service of a counter-notice under paragraph 5 as it was not so short as to impair the right. 

Richard Honey and Merrow Golden appeared for the Secretary of State at the hearing, instructed by Michelle Moss and Hayley Gore of Eversheds Sutherland LLP.  Daisy Noble assisted Richard with the skeleton argument for the Court of Appeal.