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Powering through: High Speed Railway 2

About The Author

Holly Abel (Former Writer)

Holly is currently in her third year at the University of Birmingham, studying Law with Business. All being well, she starts her training contract with a magic circle firm in 2015. Holly's interests lie in Land, Human Rights, Tort and Company Law. Outside of her studies, Holly enjoys writing and participating in Bro Bono work.

Compulsory acquisition by the State, meaning the authorised loss of the proprietary interest in your ‘home’ for justified reasons, is a subject which touches at the essence of what it means to ‘own’ property. This is an example of asserting ‘eminent domain’; the overriding power of the state to control or take property for public use, by either public bodies or corporations authorised under state power to exercise public function. In this article I will explore the decision of the Supreme Court in R (HS2 Action Alliance Ltd) v The Secretary of State for Transport & Anor & linked cases and the impact of High Speed Railway 2 (HS2), to demonstrate that our present compensation procedure for compulsory acquisition is inadequate in mitigating the loss to landowners, “since few things are more central to the enjoyment of human life than having somewhere to live” (Lord Bingham, London Borough of Harrow (Appellants) v. Qazi).

High-speed railway is a technological phenomenon, with possibilities of transforming the speed of transportation throughout Britain. Britain’s first high speed rail line HS1, fully launched in 2009, connected St. Pancras International station in London with Kent, the Channel Tunnel, and Europe. Colin Buchanan and Volterra reported HS1 led to a regeneration of areas such as Stratford and Kings Cross worth £10 billion and wider economic benefits of £3.8 billion. If HS2 benefits from the experience of HS1, there should surely be a similar level of national economic benefit. HS2 involves two phases of development. The first phase will aim to reduce congestion on the West Coast mainline and connect London (Euston) to Birmingham reducing the journey time by 35 minutes. The second phase will tackle the East Coast and Midland main lines from Birmingham to Manchester and Leeds with journey reductions of between 45-60 minutes. Deputy Prime Minister Nick Clegg says the government is "healing the north-south divide".

The High Speed Rail (Preparation) Bill is a hybrid bill being considered by Parliament to speed up the process of implementing HS2 before Royal Assent is granted, which could be early this year. As a hybrid bill suggests, it deals not only with the administrative and infrastructural impacts of the railway, but it seeks to authorise the compulsory purchase of all land the present plan will be built over. Finally, it sets out how to calculate compensation to landowners affected. The hybrid bill has been used as HS2 affects public as well as private interests. Hybrid bills are used when proposing works of national importance but in specific areas of the UK, as with HS2. Many landowners, individuals, businesses and organisations will be directly affected.

The government has proposed a discretionary compensation scheme, which suggests compensation for compulsory acquisition above our legal system’s normal compensation procedure. The Department for Transport, Property Compensation Consultation 2013 For the London-West Midlands HS2 routelooks atfive options for discretionary compensation; an express purchase procedure for qualifying owner-occupiers, a long term hardship scheme, a sale and rent back scheme, a voluntary purchase scheme and a property bond scheme. However, these discretionary compensation suggestions will not be available to commercial premises. The discretionary procedure consultation is an interesting document, attempting to balance the practical, the realistic and the emotive areas of compensation quantification.

The well-publicised judicial review of the decision of the Secretary of State for Transport to allow HS2 to trample our countryside and homes came to a head on 22 January 2014 in a unanimous Supreme Court judgment in the government’s favour. It is the final instalment related to the first stage of HS2 development, but it may be that new legal proceedings are brought in relation to the second phase of the infrastructure (from Birmingham to Manchester and Leeds). The Supreme Court refused referral of a preliminary reference to the European Court of Justice in relation to the first phase.

The Supreme Court judgment is insightful for a variety of reasons. There are debates related to the constitutional issues surrounding the decision-making procedure of parliament’s consideration of HS2 in relation to EU law. But this is not the focus of this article. I hope to show that HS2 and the discretionary scheme demonstratea need for more compensation for homeowners to represent the sentimental value of property, and the value of history, neighbourhood and memories.

Compulsory Purchase Orders (CPOs) are the mechanism the government uses for compulsory acquisition. The Department for Communities and Local Government explains that compulsory purchase powers are provided to enable acquiring authorities to compulsorily purchase land to carry out a function which Parliament has decided is in the public interest. In its most basic form our present CPO procedure is lengthy and bureaucratic, and requires compensation based on ‘market value’ mitigated by considerations such as injury to retained land, consequential loss and equivalent reinstatement. Our compensation procedure is bolstered by Article 1, Protocol 1 of the European Convention on Human Rights (A1P1), which although does not have an express compensation requirement, has been judicially interpreted to require a ‘fair balance’ test between the interests of the state and the injured party; or in other words ‘just compensation’:

Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.

The preceding provisions shall not, however, in any way impair the right of a state to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.

Other commonwealth countries, such as Australia, operate ‘just terms’ compensation, which accounts for the value of the land to the homeowner and special value due to ownership or use of the land taken. Neither our domestic law nor A1P1 consider this. Although this difference in wording is slight, it is practically significant to Australia’s constitution; s. 51(xxxi) of Australia’s constitution gives compensation on the ‘value to owner’ principle. This is more consistent with the fundamentals of the definition of ‘property’: that there are collective, moral and economic dimensions, which need to be balanced to ensure the fairness of compulsory acquisition and compensation for proprietary loss. HS2 epitomises this, and it seems one reason for the discretionary scheme is to aid this balance.

The HS2 discretionary report suggestions do go some way to mitigating Britain’s present rules. The options perhaps demonstrate that the granting of discretionary compensation is justified due to the timescale, public concern and impact of the infrastructure itself, and surely these justifications could be utilised for general compensation considerations in a CPO context. Australia’s ‘just terms’ compensation principle and the HS2 discretionary scheme demonstrate that some modifications to our compensation rules are desirable. Changes in line with the Australia model and the discretionary scheme would improve certainty and mean that HS2 and other CPO compensation costs could be calculated on a clearer basis, therefore benefitting both homeowners and the government.

Derogations from property rights cannot be justified when they ignore the basic principles of property rights, such as priority of resource and right of exclusion. It may be argued the right of eminent domain is an inherent risk to the right of property. This may be so, but this risk can be mitigated by the availability of sufficient and adequate compensation in the face of deprivation.

Further Reading

For further details on HS2 and the hybrid bill see http://www.hs2.org.uk.

And for arguments for and against HS2 see Tom de Castella, HS2: 12 arguments for and against (24 September 2013).

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Tagged: European Union, Justice, Property Law

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