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1 Landmark Chambers.2 See para.5 of the Explanatory Notes to the Act.3 Section 121(1) of the Act.4 See, e.g., the difficulties highlighted by Thames Water Utilities Ltd v Oxford City Council [1999] 1 E.G.L.R. 167.

The Planning and Compulsory Purchase Act2004Reform of the law of compulsory purchase:compulsory purchase for planning purposes,compensation and procedureDavid Elvin Q.C.1

Introduction

1. Since the Green Paper of December 20012 the Government’s proposals for reforming the currentplanning and compulsory purchase systems have undergone a number of transformations. Followingthe reintroduction into Parliament of the Planning and Compulsory Purchase Bill, carrying over fromthe 2002–03 session, the bill ended its long progress on May 13, 2004 when it received the Royal Assent(“the Act”). Part 8 of the Act introduces reforms to compulsory purchase law and will come into forceon a date to be appointed (expected to be October 2004). Consultation on new prescribed forms andwritten representations procedure regualtions and revised circular guidance (to replace ODPM 02/03)commenced on May 18, 2004. The draft circular provides, in a Memorandum, guidance on a newprovisions introduced by the Act and reissues revised general policy guidance.3

2. Despite the prolonged gestation of the Bill the Government has not taken the opportunity to carryout a comprehensive review of the compulsory purchase and compensation codes which are long duefor review, and which have been the subject of detailed consideration by the Law Commission.Unfortunately, the publication of the final reports appears to have been too late to be integrated to anygreat extent within the Bill. Two consultative reports were published by the Law Commission in 2002.The first (CP 165) dealt with Compensation; the second (CP 169) with Procedure. A “Final Report onCompensation” (Law Comm 286) was published in December 2003. It is also a pity that theopportunity has not been taken to resolve other common problems, such as issues over theextinguishment of third party rights and problems associated with s.237 of the Town and CountyPlanning Act 1990.4

A. Compulsory purchase for planning purposes

(1) The law prior to the Act

3. Where compulsory purchase is proposed for planning purposes, there are three major requirementsto be satisfied:

(1) The proposed exercise of the powers falls within s.226 of the Town and Country PlanningAct 1990;

(2) The decision maker must be satisfied that the powers should be exercised in favour ofconfirmation, having regard to current policy (see ODPM Circular 02/03, proposed to be

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5 R. v Secretary of State for Transport Ex p. de Rothschild [1989] 1 All E.R. 933 and Chesterfield Properties PLC v Secretary of State (1997) 76 P. & C.R.117.

6 James v United Kingdom (1986) 8 E.H.R.R. 123. See also Local Authorities & Human Rights, ed. Drabble, Maurici & Buley (OUP 2004), Ch.6.7 Tesco Stores Ltd v Secretary of State & Wycombe D.C. (2000) P. & C.R. 427 and Bexley LBC v Secretary of State (Unreported, April 11, 2004.).8 The draft circular to replace ODPM 02/03 does not propose any change to the requirements currently found in paras 13 to 16 of the Circular.9 s.13 of the Local Government (Miscellaneous Provisions) Act 1976 enables the Council to purchase new rights, apart from the existing rights

acquired under the other powers just mentioned. These are rights which would e.g. enable CPO scheme works to be completed and the schemebrought into beneficial use.

10 See also, dealing with the equivalent Scottish legislation, In the petition of Standard Commercial Property Securities Limited, Court of Session, August15, 2000.

11 Although on the question of alternatives to the scheme being proposed, see Bexley LBC v Secretary of State (Unreported, April 11, 2001) andJames v United Kingdom (1986) 8 E.H.R.R. 123.

replaced by a new circular published in draft on May 18, 2004) that there should be acompelling case in the public interest; and

(3) The decision must be consistent with the constitutional5 and human rights6 of the personswhose interests are sought to be acquired (principally rights under Art.8 and Art.1 of the FirstProtocol). There is a considerable degree of overlap between this legal requirement and thecurrent policy requirements applicable to compulsory acquisition7. See Circular 02/03 paras13–16.

4. Of these requirements, the Act only amends the first, namely s.226. The policy and general legalrequirements of demonstrating a compelling case in the public interest will remain unaltered8. Prior tothe Act, s.226 empowered a local authority (where authorised by the Secretary of State) to compulsorilyacquire land in its area which was:

(1) suitable for and required in order to secure the carrying out of development, re-developmentor improvement; or

(2) required for a purpose which it is necessary to achieve in the interests of the proper planningof an area in which the land is situated.

5. Where a local authority exercises its power under s.226(1), it is also allowed under s.226(3), ifauthorised by the Secretary of State, to acquire compulsorily9:

“(a) any land adjoining that land which is required for the purposes of executing works forfacilitating its development or use; or(b) where that land forms part of a common or open space or fuel or field garden allotment, anyland which is required for the purpose of being given in exchange for the land which is beingacquired.”

6. The statutory test that the land should be “required” for the stated purposes gave rise to somedifficulty: see R. v Secretary of State Ex p. Leicester CC (1987) 55 P. & C.R. 364, Sharkey v Secretary of State[1992] 2 P.L.R. 11, at 18/19, R. v Leeds CC, Ex p. Leeds Industrial Co-operative Society (1997) 73 P. &C.R. 70.10 The result was that it was held that the term “required” meant more than “desirable” andwas to be interpreted as meaning “necessary in the circumstances of the case” (see McCowan L.J. inSharkey at p.19). This was a rigorous test to meet, but not an impossibly high one. Before amendment,s.226 clearly required that the making of the order and the inclusion of the various interests within itmust be shown to be “required” and that all the relevant aspects of the requirement must be explored.11

The rigour of the s.226(1) test is modified by s.99 of the Act: see further below.

7. Section 226 also required (s.226(2)) the acquiring authority and the Secretary of State to have regardto:

(1) the provisions of the development plan, so far as material;(2) whether planning permission for any development on the land is in force; and

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12 Which appears in the same form (though differently numbered) in the draft replacement circular published on May 18, 2004.

(3) any other considerations which would be material for the purpose of determining anapplication for planning permission for development on the land.

8. The effect of this was generally to require the planning issues to be revisited to at least some extent,notwithstanding that a compulsory purchase order (“CPO”) may have been made following anunchallenged grant of planning permission. Whilst it did enable careful scrutiny of the public interest asrepresented by policy, it nonetheless created duplication especially where permission had been grantedand where there had been full opportunities for consultation and, where appropriate, call-in by the FirstSecretary of State.

9. A key provision of importance to those who wish to persuade local authorities to use the s.226powers to assist in the assembly of land to carry out a development, which is not changed by the Act, isfound in s.226(5) which provides:

“It is immaterial by whom the local authority propose that any activity or purpose mentioned insubs.(1) or (3)(a) should be undertaken or achieved (and in particular the local authority need notpropose to undertake an activity or to achieve that purpose themselves).”

10. S.226(7) applies the general provisions of the Acquisition of Land Act 1981 to any compulsorypurchase order made under s.226. This means that general restrictions on compulsory purchase applyalso to s.226 orders.

11. Even if the legal requirements of s.226 are met, the making/confirming authority must still besatisfied that the discretion to make the order should be exercised or, if it is to be exercised, whether theorder should be in the form sought or should be modified. The approach is clearly expressed in ODPMCircular 02/03 ss.13–1512:

“13. It is for the acquiring authority to determine how best to justify its proposals for thecompulsory acquisition of any land and to be ready to defend such proposals at any inquiry and, ifnecessary, in the courts. It is not the role of Government to interpret the law as it applies toacquiring authorities. The following guidance is offered to give an indication of the factors towhich a confirming Secretary of State may have regard in deciding whether or not to confirm anorder, and which acquiring authorities might therefore find it useful to take into account.14. A compulsory purchase order should only be made where there is a compelling case in thepublic interest. An acquiring authority should be sure that the purposes for which it is making acompulsory purchase order sufficiently justify interfering with the human rights of those with aninterest in the land affected, having regard, in particular, to the provisions of Art.1 of the FirstProtocol to the European Convention on Human Rights and, in the case of a dwelling, Art.8 ofthe Convention.15. The confirming Secretary of State has to be able to take a balanced view between theintentions of the acquiring authority and the concerns of those whose land is to be expropriated.The more comprehensive the justification which the acquiring authority can present, thestronger its case is likely to be. But each case has to be considered on its own merits and the advicein this Circular is not intended to imply that the confirming Secretary of State will require anyparticular degree of justification for any specific order. Nor will a confirming Secretary of Statemake any general presumption that, in order to show that there is a compelling case in the publicinterest, an acquiring authority must be able to demonstrate that the land is required immediatelyin order to secure the purpose for which it is to be acquired.”

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12. The courts will generally only interfere with the exercise of the discretion on limited grounds e.g. ifit is shown that the confirming authority acted unreasonably (which may require a more intensive formof review if fundamental human rights are in issue), took account of irrelevant matters, failed to takeaccount of relevant matters, or acted unfairly. See, for example, R. v Secretary of State for Transport Ex p.de Rothschild [1989] 1 All E.R. 933 and Chesterfield Properties Plc v Secretary of State (1997) 76 P. & C.R.117.

(2) Compulsory purchase for planning purposes after the Act

13. Section 226 as amended by s.99 of the Act reads:

“226. Compulsory acquisition of land for development and other planning purposes(1) A local authority to whom this section applies shall, on being authorised to do so by theSecretary of State, have power to acquire compulsorily any land in their area –(a) if the authority think that the acquisition will facilitate the carrying out of development,

re-development or improvement on or in relation to the land, or(b) which is required for a purpose which it is necessary to achieve in the interests of the proper

planning of an area in which the land is situated.(1A) But a local authority must not exercise the power under paragraph (a) of subs.(1) unless theythink that the development, redevelopment or improvement is likely to contribute to theachievement of any one or more of the following objects —(a) the promotion or improvement of the economic well-being of their area;(b) the promotion or improvement of the social well-being of their area;(c) the promotion or improvement of the environmental well-being of their area.(3) Where a local authority exercise their power under subs.(1) in relation to any land, they shall,on being authorised to do so by the Secretary of State, have power to acquire compulsorily –(a) any land adjoining that land which is required for the purpose of executing works for

facilitating its development or use; or(b) where that land forms part of a common or open space or fuel or field garden allotment, any

land which is required for the purpose of being given in exchange for the land which is beingacquired.

(4) It is immaterial by whom the local authority propose that any activity or purpose mentionedin subs.(1) or (3)(a) should be undertaken or achieved (and in particular the local authority neednot propose to undertake an activity or to achieve that purpose themselves).(5) Where under subs.(1) the Secretary of State has power to authorise a local authority to whomthis section applies to acquire any land compulsorily he may, after the requisite consultation,authorise the land to be so acquired by another authority, being a local authority within themeaning of this Act.(6) Before giving an authorisation under subs.(5), the Secretary of State shall –(a) if the land is in a non-metropolitan county [in England], consult with the councils of the

county and the district;(b) if the land is in a metropolitan district, consult with the council of the district;(bb)if the land is in Wales, consult with the council of the county or county borough; and(c) if the land is in a London borough, consult with the council of the borough.(7) The Acquisition of Land Act 1981 shall apply to the compulsory acquisition of land under thissection.(8) The local authorities to whom this section applies are the councils of counties, countyboroughs districts and London boroughs.”

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13 See also s.1 of the Local Government Act 2000.14 See above, the second and third requirements stated.

14. Accordingly, s.226 has been amended as follows:

(1) The pre-Act s.226(1)(a) will be replaced by a power which appears to be intended to be easierto satisfy in that it does not provide that the land should be required in order to carry outdevelopment etc but that the authority thinks the land would facilitate development,re-development or improvement on or in relation to the land.

(2) However, in exercising the new s.226(1)(a) power, the authority must also be satisfied thatthat the development, redevelopment or improvement is likely to contribute to theachievement of the promotion or improvement of the economic, social or environmentalwell-being of their area.13

(3) The planning considerations of s.226(2) are “omitted”: s.99(4).

15. The reason for the changes was explained in the Government’s Regulatory Impact Assessment ofthe original Bill as follows:

“By clarifying the basis for justifying the compulsory acquisition of land, the proposals in the Billare intended to encourage authorities to make greater use of their powers and to reduce the timetaken in following through the necessary statutory procedures. In this way they should make landassembly simpler and quicker and will mark a major step towards facilitating land assembly forregeneration.”

16. Draft PPS6 para.2.44 also indicates the increasing role which Government expects compulsorypowers to play in promoting growth in town centres:

“In planning for growth in their town centres, local planning authorities should allocatesufficient sites to meet anticipated demand for the next five years. An apparent lack of sites of theright size and in the right location should not be construed as an obstacle to site allocation anddevelopment to meet this need. Local planning authorities should consider the scope foreffective site assembly using their compulsory purchase (CPO) powers, to ensure that suitablesites within or on the edge of centres are brought forward for development.”

17. Although “required” in s.226(1) is now replaced by “thinks”, this does not confer an unfettereddiscretion on an acquiring authority and will still require an appropriate justification in terms of the newobjectives specified, which appear to be easier to meet than the current test that the land is “required”.Doubtless, “thinks” should be interpreted as “reasonably thinks”.

18. There remains, in any event, the rigorous requirement to demonstrate a compelling case in thepublic interest to justify compulsion and the proposed relaxation of the s.226 test does not represent anoverall weakening of the protection of private property rights which might be subject to compulsoryorders. It would be incorrect for acquiring authorities and developers to adopt a less rigorous approachto justifying the public interest in making compulsory purchase orders because of the change in s.226.Indeed, there is no change in the fundamental requirement that acquisition will still need to be justifiedin the public interest--namely a compelling public interest will need to be shown which is sufficient tooverride the impact on the private interests sought to be acquired. This is a matter of basic constitutionalprinciple and human rights as well as a requirement of national policy.14

19. There is also no reason to believe that the Act will change the fundamental issues concerning therelevance of compensation (subject to the revised procedures in Pt 8), alternatives and implementationto the consideration of whether the public interest in compulsory acquisition is sufficiently compelling.

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15 See s.100(5) and the new s.12(2), (2A) and 2(B) of the ALA.16 Section 100(4), adding a new s.11(3) and (4) to the ALA.17 Section 100(6).18 Section 13(2).19 Section 13(7).

B. Other amendments

(1) Procedure

20. A number of useful amendments are proposed to CPO procedure including:(1) Amendments by s.100 of the Act to the provisions of ss.6, 7, 11 and 12 of the Acquisition of

Land Act 1981 (“ALA”) for the giving of notice of making of a CPO which(a) extends the categories of persons with interests in land who are entitled to be served with

notice of the making of the order and who have a right to have any objections heard at apublic inquiry. Essentially, the category of persons entitled to be treated as statutoryobjectors will now include a broad range of “qualifying persons”15 who are all thoseeligible to claim compensation for compulsory acquisition. This will ensure thateveryone with an interest in affected property has a right to be heard;

(b) requires the fixing of notices of the making of an order “to a conspicuous object orobjects” on or near the order land.16

(2) Revised and new confirmation procedures are introduced through new ss.13–13C of theALA17 –(a) The new s.13 will enable confirmation of an order (with or without modification) where

no relevant objection is made to an order or one is withdrawn or “disregarded”.18 A“disregarded” objection is one which the confirming authority is satisfied exclusivelyraises matters which can be dealt with by the Lands Tribunal or disregarded under theenactment providing for the compulsory purchase.19

(b) Section 13A of the ALA will enable the confirming authority to proceed by writtenrepresentations where an objection is not withdrawn or disregarded and (some minorexceptions apart) where “every person who has made a remaining objection consents inthe prescribed manner”. In the absence of such consent, an inquiry must still be held andall objectors afforded an opportunity of being heard. Written representations procedurewill permit representations by not only the objector and authority but also any otherperson the confirming authority considers appropriate.

(c) Section 13B of the ALA sets out further provisions as to written representationsincluding the power to make costs orders and provides for the making of rules includingthe giving of reasons where the written procedure is used.Draft new written representations procedures regulations were issued for consultationon May 18, 2004. This includes a prescribed form for consenting to the procedure andpower to appoint an inspector to consider the written representation;

(d) Section 13C confirms the position that confirmation of a CPO may be made in stages(see Sharkey, above). If part of the confirmation is to be deferred, there is a requirementfor a formal direction to that effect which specifies the period of postponement. Noticesof confirmation must also give notice of the direction to postpone. The stages ofconfirmation must be treated as separate orders (s.13C(5)(b))

(3) A new s.14A of the ALA is introduced by s.102 of the Act which will permit confirmation bythe acquiring authority if the confirming authority notifies it to that effect and the notice hasnot been revoked (although there is no power to modify or confirm in stages). The Act’sExplanatory Notes state at para.132 that “This is intended to help to speed up the confirmation of

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20 Section 5A(8)(a).21 The statutory definition of the RVD follows recommendations by the Law Commission’s “Towards a Compulsory Purchase Code: (1)

Compensation (Final Report)” at p.61, paras 6.1 and 6.2. See also the “Framework for a Compulsory Purchase Compensation Code” at p.145,para.10(1).

22 Section 5A(2).23 Section 5A(3).24 Section 5A(4).25 Section 5A(5).26 Section 5A(7).

unopposed compulsory purchase orders, and should be particularly helpful in situations where, as part of awider land assembly exercise, an acquiring authority needs to exercise its compulsory purchase powers inorder to acquire title to land in unknown ownership”. The power may be exercised if:(a) the notice requirements have been complied with,(b) no objection has been made in relation to the proposed confirmation or that all

objections have been withdrawn, and(c) that the order is capable of being confirmed without modification.

(4) Section 15 and the giving of notice of confirmation are substantially revised by s.100(7) of theAct.

(5) Section 101 amends the procedure for ministerial authorisation under Sch.1 to the ALA in asimilar manner to the amendments for the making and confirmation of non-ministerialcompulsory purchase orders, other than provision for awards of costs.

21. A new power to require information in s.5A of the ALA is introduced by s.103 of the Act. Thepower may only be exercised for the purpose of enabling the authority to acquire the land. As theExplanatory Notes state, “such a power will enable an acquiring authority to ascertain ownership and occupationof land for the purpose of early negotiations for purchase by agreement and for service of notices on the appropriatepersons set out in clauses 95 and 96 in any subsequent exercise of compulsory purchase powers”. Notices may begiven to owners/occupiers/persons (direct or indirectly) in receipt of rent/authorised managers of theland requiring the provision of information as to the name and address of those believed to be owners,tenants, occupiers or holders of any interest in the land. Failure to comply without reasonable excuse, orthe giving of false information, will be offences punishable by a fine on level 5 (up to £5,000 peroffence).

(2) Compensation

22. With regard to compensation, a number of changes are made.

23. A new s.5A is introduced into the Land Compensation Act 1961, specifying the “relevant valuationdate”, by s.103 of the Act which (unless there are express statutory provisions to the contrary20):

(1) requires than any the assessment of value under s.5(2) (rule 2) must be made as at the “relevantvaluation date” (“RVD”)21 and that “no adjustment is to be made to the valuation in respect ofanything which happens after the relevant valuation date”22.

(2) The RVD will be –(a) in notice to treat cases, the earlier of the date the acquiring authority enters or the date

when the assessment is made;23

(b) in general vesting declaration cases, the earlier of the vesting date or the date when theassessment is made.24

(3) Entry of part of land specified in a notice of entry (or the subject of a payment into court) isdeemed to be entry on, and possession of, the whole of the land on that date.25

(4) The Lands Tribunal is treated as having made an assessment as at the last hearing date before itmakes its determination or the last date for written submissions (whichever applies).26 This is

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27 Section 52ZA(2).28 Section 52ZB(3).29 Section 33A(1)(a) and (4).30 Section 33A(2).31 Section 33A(7).32 Section 106(2) of the Act.33 This is additional to any entitlement to a basic loss payment.34 Sections 33B(2), 33C(2).35 Sections 33B(8), 33C(8) & (9).

presumably to avoid arguments about adopting a later date if the decision is delayed after theevidence and submissions have been completed.

(a) Advance payments for land subject to mortgages

24. These are dealt with by s.104 of the Act which introduces amendments to s.52 of the LandCompensation Act 1973 and inserts new ss.52ZA-52ZC. Advance payments made to the claimantmust be reduced by the amount the acquiring authority considers will be required by them to secure therelease of the interest of the mortgagee (or all the mortgages if there is more than one).27 If the land issubject to a mortgage the principal of which exceeds 90 per cent of the relevant amount then noadvance payment is to be made to the claimant. However, the acquiring authority must pay to themortgagee the amount (the lesser of 90 per cent of the value of the land and the principal of themortgagee’s mortgage) if the claimant so requests and the mortgagee consents to the making of thepayment.28

(b) Basic loss payments

25. Basic loss payments are introduced by s.106 of the Act which inserts s.33A into the LandCompensation Act 1961. Section 33A provides that an owner or tenant of property that is compulsorilyacquired (who has held that interest for no less than a year29) is entitled to a “basic loss payment”. Such apayment is additional to any compensation paid for the value of the property interest and disturbance.The amount is to be assessed at the rate of 7.5 per cent of the value of the person’s interest, subject to amaximum of £75,000.30 If the claimant is also entitled to a home loss payment in respect of any part ofthe property which is a dwelling, the value of that interest in the dwelling part of the property must bededucted from the value of the interest in the whole.31

26. Basic loss payments will not be available in respect of acquisitions made before the Act is broughtinto force.32

(c) Occupiers’ loss payments

27. Payments for occupier’s loss agricultural and other land are introduced by s.107 of the Act whichinserts a new ss.33B and 33C into the Land Compensation Act 1973:

● section 33B applies to occupiers of agricultural land compulsorily acquired; and● section 33C applies to occupiers of non-agricultural land (“other land”) compulsorily

acquired.

28. Both sections provide for the making of an “occupier’s loss payment”33 to any person who satisfiesthe conditions for the basic loss payment and who has also occupied the land being acquired for a periodof not less than a year. The amount of the payment is subject to a maximum of £25,000 but is otherwisethe greater of the following:34

● 2.5 per cent of the value of the occupier’s interest;● “the land amount” (which refers to a formula based on the area of the land);35 or

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36 Sections 33B(9) and 33C(10).37 Ss. 107(2) of the Act.38 Ss. 33D(1),(2), (4).39 See para.143 of the Explanatory Notes to the Act.40 s.109 of the Act and new s.33E of the 1973 Act.41 Ss. 33F and 33G.42 S.33H.43 S.33I.44 S.33K.45 S.33K(4) to (6).

● “the buildings amount” (which refers to a formula based on the floor space of the buildingacquired).36

29. As with basic loss payments:

● if part of the property is a dwelling in respect of which the person could claim a home losspayment, the value of that interest in the dwelling will be deducted from the value of theinterest in the whole; and

● occupiers’ loss payments will not be available in respect of acquisitions made before the Act isbrought into force37.

30. Ss. 108 and 109 of the Act insert ss.33D-K into the Land Compensation Act 1973, which makeprovision for:

(1) the exclusion from the entitlement to loss payments under ss.33A-33C of persons who haveneglected their property and one of a variety of statutory notices has been served.38 Thisexclusion is to prevent those whose neglect has led to the making of a CPO from benefitingfrom that neglect;39

(2) the arrangements for making a claim;40

(3) who can make a claim if the person who is entitled to do so is insolvent or dies;41

(4) cases of dual entitlement to both an occupier’s loss payment in respect of agricultural land anda payment by virtue of the Agriculture (Miscellaneous Provisions) Act 1968 (which dealswith additional payments consequent on compulsory acquisition of agricultural holding);42

(5) dates of payment by acquiring authorities, advance payments and interest and acquisitions byagreement between an authority and a person entitled to a loss payment;43 and

(6) the making of regulations44. Regulations may amend any of the figures or percentagesspecified in the new ss.33A to 33I of the 1973 Act. Any changes to percentages or amountsnot based on changes in the value of money (“the change in value condition”) or land, aresubject to the affirmative resolution procedure in Parliament.45

(3) The Crown

31. In contrast with the general removal of Crown Immunity from planning control by Pt 7, the Actdoes not modify the position of the Crown with respect to compulsory purchase: see s.111 and s.79(4)and Schedule 3, paras 3 and 4 to the Act.


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