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Crichel Down Rules: new case law

Projects portrait1A High Court case has offered new judicial guidance on the Crichel Down Rules that is of importance to local authorities and landowners. Patrick Robinson and Alex Minhinick set out the key points.

The case of Charlesworth v Crossrail Ltd [2018] EWHC 915 (Admin) concerned the acquisition of land by Crossrail Ltd for the construction of the Crossrail project, and in particular the Crossrail Woolwich station box.

The claimant asserted that Crossrail applied the Crichel Down Rules incorrectly when disposing of the land in 2017. It was also claimed that Crossrail also failed to follow the specific guidance adopted by the Secretary of State supplementing those rules for the Crossrail project.

What are the Crichel Down Rules?

The Crichel Down Rules are rules that guide how public authorities should dispose of land previously acquired by compulsory acquisition, or land acquired under the threat of compulsory purchase. They are to be applied by any public body disposing of land that was acquired for a purpose for which the authority had compulsory purchase powers at the time of acquisition, whether or not those powers were relied on to acquire the land.

The Crichel Down Rules considered in this case were those set out in the Office of the Deputy Prime Minister Circular 06/2004. Those rules have since been updated twice in the Department for Communities and Local Government’s ‘Guidance on compulsory purchase process and the Crichel Down Rules’ published in October 2015, and more recently in the 2018 publication of the Ministry of Housing, Communities and Local Government with the same title. All versions of the Crichel Down Rules are materially identical for the present purposes.

In this case, when promoting the powers required for the Crossrail Project, the Secretary of State also published and adopted additional guidance to be applied in the disposal of land required for the project, which supplements the Crichel Down Rules for the project.

What was the claim?

The land that was the subject of the claim had been materially changed since it had been acquired for the Crossrail project. On the normal application of the Crichel Down Rules, that alone would be sufficient to remove obligation to offer the land back to its former owners. However in the present case, and due to the nature of the project, the application of the Crossrail-specific rules resulted in the land being offered back to former owners with qualifying interests.

The issue in the present case arose due to what happened if more than one former owner expressed an interest in re-acquiring land when it was offered back. The Crossrail-specific rules provided that in such circumstances land would be put up for sale on the open market. The claimant's position was that Crossrail Ltd had erred in considering a third (interested) party to a qualifying interest in part of the land parcel containing the claimant's former land as offered back to it. Due to the competing interests, Crossrail Ltd had thereafter disposed of the site on the open market.

The court considered the position and found that the third party was a former owner with a qualifying interest to whom the obligation to offer back applied. Crossrail Ltd had not therefore erred in the application of the Rules.

Why is the court’s guidance useful?

The court provides helpful guidance on how the Crichel Down Rules apply in cases where the acquisition of land was voluntary. In this case, the third party involved had disposed of their land to Crossrail Ltd on a voluntary basis in a complex set of commercial arrangements for a nominal value, and after having only acquired the land following it being identified for Crossrail. The court helpfully analyses such relationships, and concludes that nonetheless in these situations the third party qualifies as a former owner to whom the obligation to offer back applied. The Crichel Down Rules apply where the acquiring authority had the power to compulsorily acquire land, whether or not it did in fact exercise those powers.

Cases where the court has considered the Crichel Down Rules have typically related to schemes where land has been held for significant periods of time, and the disposing authority has struggled to identify a single person qualifying to be offered the land back. This case concerns a modern redevelopment scheme, with the land acquired (and disposed of) in the past decade. On these facts, it can be a shock to a long leaseholder (here of 999 years) to find under the Rules that their more valuable interest is treated as equal or subordinate to a freehold reversioner’s much less valuable interest. This is a state of affairs in no small part influenced by former owners being more readily identifiable.

Equally, this case is an excellent example of how under the Rules, small parcels of land can be swept into larger redevelopment schemes, and how the owners of those small parcels face a higher risk of losing their entitlement under the Rules, at a time when land will have enhanced value as being part of a larger scheme. This is all the more an excellent example because here the court upheld a qualifying interest that came into existence very late in the Compulsory Purchase Order (CPO) process as a result of a party holding a freehold reversion for just a few days.

There is a high standard required to show that all land is needed to justify CPO in the first place, so land being surplus only a few years after acquisition is uncommon. This is however more likely in large infrastructure projects where the ‘scheme‘ extends only to a railway for example, but not all the subsequent valuable development that is stimulated in and around it by its presence.

Undoubtedly, Crossrail and the developer were assisted by there being specific policy to apply, in addition to the Crichel Down Rules alone. CPO promoters should consider whether this policy is needed or whether the absence of it may cause increased objection from landowners when a CPO is initially sought.

How can Burges Salmon help?

In our experience, the application of the Crichel Down Rules can have highly significant implications for former landowners with qualifying interests, who are thereafter entitled to deal with the disposing authority on the sale of the land. This can often place landowners in a hugely beneficial situation where they hold an effective right of first refusal to land that often has significant development value. This case will be useful to inform discussions with disposing authorities on the interpretation of the Crichel Down Rules, especially those that can often be complicated by the passage of time and the disposal of land in parcels that are different (whether larger or smaller) than the pattern of land ownership at the time of acquisition by the disposing authority.

Patrick Robinson is a Partner and Alex Minhinick a Senior Associate at Burges Salmon. They are both in Burges Salmon's Planning and Compulsory Purchase team and have significant experience of advising former landowners and public bodies on the application of the Crichel Down Rules.

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