[2025] EWHC 2751 (Admin)

We return to the central issue in [31] above, the striking of a fair balance and the adequacy of the compensation which landlords will receive when the three measures come into force. Ms. Carss-Frisk submitted that the requirement for the compensation to be “reasonably related” to the value of the property taken “means, certainly in the present case,” as good as “full compensation” or “full market value”. She relied on two decisions to support this proposition.

First, she relied upon a short extract from Urbárska where at [115] the Chamber court said that in many cases of lawful expropriation only full compensation can be regarded as reasonably related to the value of the property. But the Court went on to add that legitimate objectives in the “public interest”, such as those pursued in measures of economic reform or measures designed to achieve greater social justice, may call for less than reimbursement of full market value. The reason for the Court’s brevity was given in footnote 16: it was content to rely upon the “exhaustive outline” of its case law on this subject in Scordino v Italy (No.1) at [95]-[98], to which we have referred. We also note that in this context the ECtHR at [113] also relied upon James.

Moreover, Urbárska was a case where self-evidently, the compensation for the deprivation bore no real relationship at all to the value of the property taken. It was based upon historic land values which substantially pre-dated large increases in property values resulting from the establishment of a market-oriented economy. Those historic land values amounted to less than 3% of market value at the time of the deprivation [124]. In addition, substitute land provided for the applicant was worth only a third of the market value of the land expropriated [125]. The Court referred to a balance between the scope and degree of importance of the public interest and the nature and amount of compensation provided to the persons concerned [126]. It found that the public interest relied upon was not sufficiently broad and compelling to justify the large difference in value imposed on landowners in that case ([132]-[133]). The claimants in our case have not attempted to argue that the LFRA 2024 adjustments to market value or the Costs Recovery Reform would be remotely comparable to the level of disparity in Urbárska or any other case cited in which there was a violation of A1P1. Nor would we have accepted such an argument.

The second authority cited by the claimants, R (SRM Global Master Fund LP) v Treasury Commissioners [2009] EWCA Civ 788; [2010] B.C.C. 558, contains the following important passage in the judgment of Laws LJ at [56]:

“For the purpose of A1P1 this process takes concrete form as follows. The paradigm case of a reasonable relationship between compensation and the property’s value arises, no doubt, where full market value is paid. In that case the relationship between the two is one of identity. That or something not far off is likely to apply in what may be called a “micro-economic” setting, where for example a single property is taken to achieve a specific and limited local objective. In such a case proportionality is likely to require market value or something close to it, and the margin of appreciation may offer little or no scope to justify the deprivation of property for less. But there will be other cases in which the objective of the deprivation is much broader: perhaps a matter of high politics. In such instances the policy aim of the measure in question may be diminished or undermined or even contradicted by a requirement of full market value. The measure’s intention may be to re-distribute wealth, or to achieve a necessary social reform, goals which are or may be perceived to be inconsistent with full compensation payable to the previous owner. In these cases, the margin of appreciation allows a flexible approach to the right protected by A1P1 which may give place to those aspects of the policy which override the case for payment of full value.”

This analysis accords with Scardino (No.1) at [95]-[98] and Urbárska at [126].