Compensation following the compulsory purchase of land seeks to put the original landowner in the same position as they were in prior to the acquisition (insofar as money can do so).
A compensation claim will generally seek market value for the land or property that has been acquired. An assessment of market value can include development or hope value that may have been achieved on the land but for the compulsory acquisition. This assessment requires parties to undertake a valuation exercise in what is known as 'the no-scheme world'. It may be helpful to think of the no-scheme world as a parallel universe which, whilst usually the domain of theoretical physicists and science fiction writers, finds an unlikely home in planning law. In the no-scheme world, the compulsory acquisition and the scheme for which the land was compulsorily acquired do not exist.
A Certificate of Appropriate Alternative Development ('CAAD') is a tool provided by the Land Compensation (Scotland) Act 1963 that can assist parties in assessing the market value of land in the no-scheme world. It essentially provides a process whereby parties can ask the planning authority what classes of development (if any) would have been permitted on the land being acquired in the no-scheme world.
A CAAD application can be made to the planning authority by the landowner having their interest acquired or by the acquiring authority promoting the compulsory purchase order. It can be made at any time once the acquiring authority has committed to acquiring the land. However, if a disputed compensation claim is before the Lands Tribunal for Scotland, neither party will be able to make a CAAD application unless both parties agree or the leave of the Tribunal is obtained.
A CAAD application is decided by the planning authority. The planning authority must issue a CAAD Certificate setting out what development (if any) would be permitted on the land as at the relevant date.
It is important to note that the relevant date for the assessment of the CAAD may be different from the relevant date for the assessment of compensation. For example, in circumstances where a compulsory purchase order is being promoted by the Scottish Ministers, the relevant date for the assessment of a CAAD will be the date the draft CPO is published and served. This can be a number of years before the relevant date for the assessment of compensation following acquisition which will likely be the date on which the land was actually acquired. We recently successfully appealed a number of CAAD Certificates which were granted on the basis of the incorrect relevant date having been used for the assessments.
Unless otherwise agreed between the applicant and the planning authority, the planning authority must issue their CAAD Certificate within two months of the application. Once the Certificate has been issued, either party may appeal the planning authority's decision to the Scottish Ministers. Any appeal must be made within one month of the certificate being issued.
The DPEA will appoint a Reporter who will hear parties and prepare a report to the Scottish Ministers who will decide the appeal. The Scottish Ministers are essentially entitled to consider the CAAD application afresh on appeal.
The Scottish Ministers decision on the CAAD can itself be challenged in the Court of Session but only on a point of law.
A CAAD can bring welcome clarity to the planning position in compensation claims but it can also be a complex, costly and time-consuming process. Given the complexities involved and as CAAD applications are relatively uncommon in Scotland, it is important to seek professional advice to avoid the potential pitfalls which can await applicants, objectors and planning authorities.
The content of this webpage is for information only and is not intended to be construed as legal advice and should not be treated as a substitute for specific advice. Morton Fraser LLP accepts no responsibility for the content of any third party website to which this webpage refers. Morton Fraser LLP is authorised and regulated by the Financial Conduct Authority.