Compensation Arising From A Compulsory Purchase Order

The use of compulsory purchase powers by public bodies is so

Draconian that it can be expected that the law provides that anyone

whose interests are adversely affected by a compulsory purchase

order (CPO) should be entitled to adequate compensation.

The suite of legislation which governs compulsory purchase

generally does indeed provide for payment of compensation. In

addition, not only do the courts apply a presumption that a body

will not be entitled to acquire property compulsorily without

paying compensation, the European Convention on Human Rights has

been interpreted as requiring sufficient compensation where

relevant interests are lost by compulsory purchase.

The devil, of course, is in the detail. Whether a particular

person's loss of property rights attributable to a CPO creates

an entitlement to compensation will depend on the precise

provisions of the relevant legislation. This article is intended to

provide a very brief overview of some of the rules which govern the

payment of compensation in Scotland.

The entitlement to compensation in respect of special matters

such as injurious affection, severance and blight is not discussed

in this article.

Compensatable rights

The most obvious right affected by a CPO is that of ownership of

land or buildings which is appropriated by the authority making the

CPO. Compensation will be due where either the whole or part of the

property is taken in terms of the CPO.

Occasionally, the acquiring authority does not need to become

the owner of property for the purposes of its scheme and may only

require a limited right, such as a servitude right of access, to

use the property instead. Compensation is thus due in respect of

the acquisition of such rights falling short of ownership.

A tenant under a lease has a compensatable interest and,

although the acquiring authority is not obliged to serve a notice

of the making of a CPO on a tenant whose lease is for less than a

year or from year to year, such a tenant is nonetheless entitled to

compensation if the authority terminates the tenancy early and

takes possession.

It is not only the owner and tenant of property subject to a CPO

that may be entitled to compensation: any other person with a legal

right to use the property , such as a person who has a servitude

right over that property which will be extinguished by the CPO, and

persons who are entitled to enforce title conditions affecting the

property which will similarly be extinguished, may also be entitled

to compensation.

Claiming compensation

Although the law requires the acquiring authority to pay

compensation, it is up to the person whose interests are affected

to make a claim for compensation. The confirmation of the CPO

itself does not trigger entitlement to compensation since

confirmation merely entitles the acquiring authority to take

further steps to appropriate all or any part of the land described

in the CPO. The authority makes its intention to take the required

property known by serving a notice on all affected persons of its

intention to vest in specific property in terms of a General

Vesting Declaration (GVD), the notice inviting claims for

compensation. This notice specifies the date of vesting of the GVD

and it is this date of vesting which crystallizes the point at

which the rights to be acquired are to be valued.

Once a claim is made, there normally follows negotiations

between the authority and the affected persons but if no agreement

can be reached as to the amount or basis of the valuation, the

claimant has the right to refer the dispute to the Lands Tribunal

for Scotland whose decision is binding unless either party has the

right to...

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