The Court of Appeal has provided some useful guidance on the interpretation of the Crichel Down Rules (the “CD Rules”) in Charlesworth v Crossrail Ltd  EWCA Civ 1118.
The CD Rules apply where land is acquired by, or under threat of, compulsory purchase, but subsequently transpires to be surplus to the acquiring authority’s requirements. Prior to making a disposal of the surplus land, the acquiring authority must offer it back to its former owners, their successors, or sitting tenants, at current market value, provided that the character of the land has not materially changed.
The CD Rules are non-statutory arrangements. However, compliance is mandatory for government departments and recommended for local authorities and other statutory bodies. The courts have further emphasised the importance of adherence to the Rules, finding that former landowners have a legitimate expectation that the they will apply.
The land in question in this case (the “Land”) was covered by the compulsory purchase powers in the Crossrail Act 2008, and was acquired by Crossrail (as a subsidiary of TfL) for the purpose of building an underground station and tunnels at Woolwich to serve the Elizabeth Line.
The Land was held by Mr Charlesworth under a long lease. It is a small parcel of a larger site, the freehold of which was acquired by a property development company, who subsequently transferred it to Crossrail under a voluntary sale agreement peppered with references to Crossrail’s compulsory purchase powers. Mr Charlesworth sought to argue that this transfer was not made under threat of compulsion.
According to the Crossrail Land Disposal Policy (the “Policy”), Mr Charlesworth had a Qualifying Interest in the land. If the transfer to Crossrail was made under threat of compulsion, then the property developer had a Qualifying Interest too, and Crossrail would be entitled, under the Policy, to dispose of the land without first making an offer to Mr Charlesworth.
Mr Charlesworth argued that the threat of compulsion “assumption” under Rule 7 could be displaced by evidence to the contrary. He sought to convince the Court that the transfer of the Land to Crossrail was not made under threat of compulsion - rather, it was part of a plan between the property developer and Crossrail to defeat what would otherwise have been Mr Charlesworth’s right of first refusal under the CD Rules.
The Court disagreed with Mr Charlesworth’s analysis. The Court held that the fact that Rule 7 is expressed as an assumption does not alter its effect.
Lord Justice Lewison found that there was “no doubt” that the literal terms of Rule 7 were satisfied: Crossrail as the acquiring authority had compulsory powers which, if exercised, would have entitled it to compulsorily acquire the land in question. The Court refused to look beyond the stated criteria of Rule 7, noting that the reason behind the assumption is to avoid the necessity of investigating the internal state of mind of an individual landowner. The idea that the assumption could be defeated by a factual investigation of the evidence would subvert the purpose of the assumption.
The Court also clarified the second element of Rule 7: the provision that the assumption does not apply where the land in question was offered for sale immediately prior to the negotiations can only be referring to an offer for sale to someone other than the acquiring authority.
Accordingly, the Court dismissed the appeal.
Conclusion and implications
While removing any scope for an investigation of the factual matrix behind a voluntary sale might increase the risk of a perceived ‘unfair’ result, the benefit is increased certainty regarding the application of the CD Rules. The Court emphasised the burden that would be placed on an acquiring authority if it were required to investigate the state of mind of each landowner with which it enters into a voluntary sale.
The CD Rules are likely to be utilised more in coming years given the continued uncertainty regarding the delivery of major infrastructure projects such as HS2. Understanding their use and application is an important consideration for landowners, and judicial guidance is welcome.