David Miller & Anor v National Grid Electricity Distribution (East Midlands) Plc

On the grant of a “necessary wayleave” under paragraph 6 of Schedule 4 to the Electricity Act 1989 (the 1989 Act) authorising the installation and retention of an electricity line on, under or over land, does the landowner’s right to compensation in respect of the grant include the right to share in any saving achieved by the grantee because alternative routes for the line would have been more costly to construct? That is the main issue in this reference.

The reference is of a claim for compensation under paragraph 7 of Schedule 4 to the 1989 Act following the grant by the Secretary of State of a necessary wayleave over land belonging to the claimants, Mr David Miller and Mrs Rachael Frossell, at Wood Farm in Bedfordshire. The wayleave was granted on 18 July 2024 for a period of 15 years and authorises the retention of a high voltage 11kV overhead line supported on three poles. The high voltage line crosses Wood Farm and is clearly visible from the claimants’ home at Wood Farmhouse. The wayleave also authorises the retention of a second, low voltage line serving a neighbouring property known as Wood Cottage; the low voltage line follows the line of a field boundary and is less obtrusive.

The wayleave was granted in favour of National Grid Electricity Distribution (East Midlands) plc, the respondent to the reference and a licence holder for the purpose of the 1989 Act. It has always acknowledged the claimants’ entitlement to compensation but initially made no open offer in the reference; at the hearing its position was that the claimants were entitled to compensation equal to the diminution in the value of Wood Farm by reason of the grant. That figure is agreed between the parties’ valuation experts to have been £43,800 on the valuation date of 18 July 2024.

Mr Miller and Mrs Frossell do not accept that the figure agreed by the experts as representing the diminution in the value of Wood Farm is the limit of their entitlement to compensation for the grant. They maintain that they are entitled to £200,000 to reflect the loss of what has been called “commercial value”, together with additional compensation for disturbance which they say should include a sum to reflect the conduct of the respondent since the termination by notice given in January 2021 of previous wayleaves granted in 1989 by Mrs Frossell’s father and uncle.

At the hearing of the reference Mr Miller and Mrs Frossell represented themselves and called Mr Peter Roberts FRICS to give expert evidence on valuation. Ms Daisy Noble appeared on behalf of the respondent and called Mr Colin Cottage MRICS.

The divergence between the £43,800 agreed by the experts as the diminution in value of Wood Farm as a result of the grant of the wayleave and the sum of £200,000 sought as compensation by the claimants arises because the higher figure is the amount which Mr Roberts, their expert, considers would have been agreed for the retention of the lines in a commercial negotiation between a landowner and an electricity supplier lacking statutory powers, having regard to the fact that the cost to the supplier of providing new lines over an alternative route would have been in the order of £675,000. Mr Roberts expresses no view on whether that is an appropriate way of assessing compensation, but the claimants themselves advance argument in favour of that approach.

For the respondent, Ms Noble submitted that the claimants’ approach was wrong in principle and inconsistent with guidance given by the higher courts and by this Tribunal in other cases. The orthodox view which Ms Noble espoused is that the claimants are entitled to be fully compensated for their loss, but that the proper measure of that loss is the extent to which the value of their property had been diminished as a result of the grant of the wayleave. The respondent’s need for the wayleave and the extent to which it may benefit from the grant, including by avoiding the greater expense of an alternative route, are simply irrelevant considerations.

As the parties disagree fundamentally on an issue of law, it is convenient to determine that issue first.

The 1989 Act authorises the transmission, distribution and supply of electricity by the holders of licences granted for that purpose under section 6. By section 16, a licensed electricity distributor is under a duty to make a connection between its distribution system and any premises, when required to do so by the owner or occupier of the premises. To facilitate the performance of that duty the Secretary of State may, on the application of a licence holder, grant consent for the licence holder to install electric lines and keep them installed on, under or over any land, where it is necessary or expedient for the licence holder to obtain that right (paragraph 6 of Schedule 4, 1989 Act). Such a right is referred to as a “necessary wayleave”.

Paragraph 7 of Schedule 4 to the 1989 Act provides for the payment of compensation, as follows:

Although paragraph 7 does not specify the principles on which compensation is to be determined, the Court of Appeal confirmed in Welford v EDF Energy Networks (LPN) Ltd [2007] EWCA Civ 293, at [14], that “the compensation payable under the whole of paragraph 7 is to be assessed on the general principles applicable to the payment of compensation for compulsory acquisition which recognises these two separate heads as elements of the claim for compensation — injurious affection and disturbance.”

In passing, we note that Welford was an appeal from a decision of the Lands Tribunal (George Bartlett QC, President and Norman Rose FRICS) which is reported at [2006] 3 EGLR 165. The Tribunal, at [44], had explained that paragraph 7(1) extended to compensation both for the value of the wayleave itself and for any consequential reduction in the value of the claimant’s land, while disturbance was separately and specifically provided for in paragraph 7(2). Reference was made to the Tribunal’s earlier decision in Macleod v National Grid [1998] 2 EGLR 217, in which (at 230B) the loss flowing from the grant was divided into “direct loss due to the siting of the pylons and lines on the land and indirect loss due to the depreciation in value of the reference land that is not under the pylons and line”. Although the Tribunal has analysed paragraph 7(1) as covering distinct heads of loss it recognised in Welford that what was there referred to as “the value of the wayleave itself”, which had been referred to in Macleod as “direct loss” would be likely to be modest (as no land is taken and the presence of a pole or pylon or line will rarely have much impact on the existing use of the land). In this reference neither party has attributed any separate value to this aspect of the claimants’ loss. The potential for more substantial compensation arises under the second head, which has been termed “indirect” or “consequential” loss.

The entitlement of a licensed operator to obtain a necessary wayleave notwithstanding the unwillingness of the landowner to agree to it is obviously a form of compulsory acquisition. In National Grid Electricity Transmission plc v Arnold White Estates Ltd [2014] EWCA Civ 216, Briggs LJ explained, at [11], that the fact that no land of the grantor is taken when a wayleave is granted, nor any pre-existing right transferred, means that the statutory provisions applicable to compulsory purchase cannot simply be applied in their entirety, and that the “bespoke provision for compensation” in Schedule 4 had to be designed. But these bespoke provisions do not follow some radically different design from the approach which applies in other forms of compulsory acquisition.

As the Court of Appeal confirmed in Welford, and as was common ground in the Arnold White Estates case (at [14]), the general principles applicable to the assessment of compensation for compulsory acquisition are engaged on any reference under paragraph 7. The most fundamental of those principles is the principle of equivalence: “that the owner shall be paid neither less nor more than his loss” (Horn v Sunderland Corporation [1941] 2 KB 26, 49, per Scott LJ).

The principle of equivalence requires that compensation be assessed on the assumption that the person whose land is being acquired or who is bound by the grant of a wayleave is a willing seller or grantor; they are not assumed to be unwilling participants who must be persuaded to cooperate by a more generous measure of the value of their interest. It requires too that an assessment be made of the value of the land or interest to the owner, and that any special value it may have to the acquiring authority must be disregarded. Both the principle of equivalence and the relevance to it of the value to the owner were explained by Lord Nicholls in Director of Buildings and Lands v Shun Fung Ironworks Ltd [1995] 2 AC 111, at 125C, as follows:

“The purpose of these provisions, […], is to provide fair compensation for a claimant whose land has been compulsorily taken from him. This is sometimes described as the principle of equivalence. No allowance is to be made because the resumption or acquisition was compulsory, and land is to be valued at the price it might be expected to realise if sold by a willing seller, not an unwilling seller. But subject to these qualifications, a claimant is entitled to be compensated fairly and fully for his loss. Conversely, and built into the concept of fair compensation, is the corollary that a claimant is not entitled to receive more than fair compensation: a person is entitled to compensation for losses fairly attributable to the taking of his land, but not to any greater amount. It is ultimately by this touchstone, with its two facets, that all claims for compensation succeed or fail.

Land may, of course, have a special value to a claimant over and above the price it would fetch if sold in the open market. Fair compensation requires that he should be paid for the value of the land to him, not its value generally or its value to the acquiring authority. As already noted, this is well established.”

The value to the owner principle requires that in valuing the land which has been taken or over which a wayleave has been acquired, the effect on value of the need of the acquiring authority for the land or rights and the authority’s purpose in acquiring them must be disregarded. That is sometimes referred to as the “no-scheme rule” or the Pointe Gourde principle (after the leading case, Pointe Gourde Quarrying and Transport Co. Ltd v Sub-Intendant of Crown Lands [1947] AC 565). In Director of Buildings and Lands v Shun Fung Ironworks Lord Nicholls expressed the principle in this way, at 136A:

“A landowner cannot claim compensation to the extent that the value of his land is increased by the very scheme of which the resumption forms an integral part.”

In their statement of case the claimants explained that the amount of their claim was based on a percentage of the diminution in value of their property, injurious affection, loss of rent from Vodafone and “commercial value” to the respondent. They invited us to have regard to the fact that by reason of the wayleave they had lost the ability to require the respondent to remove the masts and high voltage line. This deprived them of a “golden key” or “ransom” in respect of Wood Cottage and a telecommunications mast operated by Vodafone, both of which received electricity via the claimants’ land. There was no commercially viable alternative route by which electricity could be supplied to Wood Cottage or the Vodafone site. The only other route over which the Vodafone site could be reached would have involved engineering costs of £675,000.

In his witness statement in support of the reference Mr Miller asserted that “had the necessary wayleave not been granted, we would have been in a strong negotiating position with regard to Vodafone, for access, and with [the respondent] in saving them hundreds of thousands of pounds”. In his report Mr Roberts explained that in addition to expressing a view on the impact of the wayleave on the value of the claimants’ property, he had been instructed to value the wayleave on the assumption that open market terms would have been agreed on a voluntary basis had the respondent not benefitted from powers of compulsory acquisition. He posited that in order to install the cables, poles and equipment, the respondent would have had no choice but to negotiate with the claimants and reach voluntary agreement. The respondent stood to benefit from a new wayleave on account of the significant costs savings they would be able to secure in providing electricity to their customers over the claimants’ land instead of an alternative route. On the assumption that the saving to the respondent in avoiding the need to provide a connection over an alternative route would be £675,000 (a figure which originated from one of the respondent’s witnesses at the public enquiry which preceded the grant of the wayleave), Mr Roberts considered that the respondent or a hypothetical grantee would be prepared to pay £200,000 for the wayleave.

It will be immediately obvious that the higher figure spoken to by Mr Roberts does not represent the value of the wayleave to the owner, disregarding the particular need of the respondent. On the contrary, it assumes that before the grant of the wayleave the claimants’ interest had a value which depended on the respondent’s need to run its electricity lines across their land. That value is said to be quantifiable by reference to the cost which it is assumed the respondent would have to incur if it could not have the wayleave over the claimants’ land. Mr Roberts was instructed by his lay client to assume that compensation could be calculated on that basis and he scrupulously avoided expressing any opinion about whether the premise of his instructions was legally sustainable.

Mr Miller said that the claim followed principles illustrated by the decision of the Lands Tribunal for Scotland in Wyness v Scottish Hydro Electric Power Distribution Plc [2020] 4 WLUK 364.

Wyness concerned a claim for compensation under paragraph 7 of Schedule 4 to the 1989 Act. Two wind turbines had been erected on adjoining land, one on land belonging to the applicant, Mr Wyness, and the other on land belonging to his neighbour. Both turbines were connected to the electricity grid by an 11kV cable which had been provided by the applicant. The applicant granted the respondent a voluntary wayleave to export electricity from both turbines over his land, but he later chose to terminate that arrangement when negotiations between the applicant and his neighbour over permanent rights failed. The power company then sought and obtained a necessary wayleave. The applicant brought his claim for statutory compensation to the Lands Tribunal for Scotland and based his claim on the ransom position which his land enjoyed in respect of the turbine on his neighbour’s land. He had been prevented by the necessary wayleave from negotiating with his neighbour to grant rights to his neighbour to export electricity from his neighbour’s turbine to the grid.

The decision of the Lands Tribunal for Scotland in Wyness was not a final determination of the claim for compensation. Rather, it was a preliminary hearing to determine whether the application should be struck out because it was bound to fail (paragraph [39]). The Tribunal decided only that the claim could proceed to trial. The applicant’s suggested loss was of the value of the opportunity to negotiate with his neighbour if no cables had been present on the land; that was a case which the Tribunal was satisfied merited further enquiry. The Tribunal acknowledged that the Pointe Gourde principle would apply and that the value of Mr Wyness’ land could not be increased by the electricity undertaker’s scheme to supply a connection to his neighbour, but the Tribunal considered that on the facts of Wyness it was debatable how the scheme which should be disregarded was to be identified. The extent of the scheme was a question of fact or at least depended on a detailed appreciation of the facts. It was the applicant’s case that there was no relevant scheme to be disregarded, or alternatively that the circumstances which gave rise to the ransom value all predated or were independent of the scheme. We assume the applicant intended to argue that the two turbines and their proximity to the grid should not be disregarded as they predated the exercise of statutory powers and reflected the natural advantages of the applicant’s land. The Tribunal was not prepared to embark on consideration of the arguments without first having the full background established in evidence.

In our judgment Wyness is not analogous to the circumstances of this case and provides no support for the claimants’ position. The negotiation which Mr Wyness was prevented from having was with his neighbour for the grant of rights to his neighbour to export to the grid, as had occurred before the necessary wayleave. That is to be contrasted with the claimants’ circumstances. They are not in a position to negotiate with Vodafone and have never done so. Had the line not originally been available across the claimants’ land to serve Vodafone’s apparatus located elsewhere, Vodafone would have been entitled to insist on it being provided by the respondent. It would have been for the respondent to make the required arrangement. There is no suggestion that an alternative route is not possible, and the claimants showed on a plan where it could be provided over land which did not belong to them. Unlike the facts assumed in Wyness, they were not in a ransom position as against Vodafone.

Nor are the claimants entitled to rely on the additional cost to the respondent of providing a line by a different route. In this case there can be no doubt that the scheme which must be disregarded involves the supply of electricity to Vodafone and to any other customers served by the 11kV line across the claimants’ land. The cost of an alternative line to the same customers, and the sum which might be paid by the respondent to avoid the higher cost of that line, are therefore irrelevant; they exist only because of the need to satisfy the respondent’s customers. They can only be used to measure the value of the claimants’ land to the respondent, not its value to the claimants. Without the respondent’s distribution network and the needs of its customers the claimants’ land has no additional commercial value for the transmission of electricity.

We are satisfied that the claimants’ approach to determining the “commercial value” of the wayleave over their land is designed to secure for them the increase in the value of their land which has been created by the respondent’s need to supply electricity to their neighbours through the lines for which the wayleave was acquired. As Lord Nicholls explained in Director of Buildings and Lands v Shun Fung Ironworks, that is not a permissible measure of compensation.

For these reasons we answer the question of law posed at the start of this decision in the negative. The claimants are not entitled to share in the saving created by the fact that alternative routes would be more expensive and less convenient than the route across their land. The claim for commercial value (or “market value”, as it was described by Mr Roberts), is not available in principle. The proper measure of the loss to the claimants for which they are entitled to compensation is the aggregate of any disturbance they can prove plus the diminution in the value of their land as a result of the presence of the lines and poles.

The valuers agreed the extent to which the value of the claimants’ property had been diminished, which was £43,800. The claimants did not question the experts’ view of the market value of their home but they challenged their consensus on how diminution in value should be assessed.

We were not provided with any calculation to support the agreed diminution in market value, but we know from the expert reports that each valuer had adopted the same approach to assess an appropriate figure. They first determined the unaffected market value of the property at the valuation date, assuming no lines or poles were present. They then considered the loss of that value, expressed as a percentage, which had been caused by the presence of the lines and poles. Since a loss of market value effectively represents a loss in perpetuity, the amount was decapitalised to an annual figure, using a years purchase at a chosen yield, and the annual figure was then recapitalised for the 15 year period of the necessary wayleave.

The claimants challenged the approach for three reasons. First, if they chose to sell their property now, their loss would be the whole loss of value, not a reduced amount because the wayleave was only for 15 years; a purchaser would assume that the wayleave would be renewed indefinitely and would not expect the lines and poles to be removed at the end of that period. Secondly, the loss in value would increase over the period of the wayleave in line with increases in house prices and the claimants considered that the capital value should be indexed. Finally, based on their recent experience, if a new wayleave were to be sought by the respondent at the end of the period there could be a delay of some years before a decision was received from the Secretary of State, and those years of delay would not fall to be compensated in either wayleave period.

We have some sympathy with the claimants in their first point of challenge. The approach taken by the valuers begins by assessing a loss of market value in perpetuity, which is then reduced to reflect the limited period of the wayleave. But the result of this theoretical calculation is heavily dependent on the yield used in decapitalisation and recapitalisation. The lower the yield, the greater the proportion of the loss deferred to future years beyond the wayleave period. Both experts made reference to the recent decision of the Tribunal (Peter McCrea OBE FRICS FCIArb) in Nelson v Southern Electric Power Distribution [2025] UKUT 213 (LC) in which the experts had agreed that a yield of 5% was appropriate. The agreed yield was used in the Tribunal’s assessment of compensation in that case because it was agreed by the parties, but it does not reflect a considered view of the Tribunal and should not be treated as guidance provided by the Tribunal. Whilst the Tribunal will respect agreements reached between experts, the choice of yield and its impact on compensation should be considered carefully in every case. In this case the experts have reached agreement only on a figure representing the diminution in value of the claimants’ property, they have not agreed a capital value which we could use to assess a diminution figure for ourselves if we were inclined to do so. In cross examination there was no exploration of the experts’ views on capital value and no alternative valuation figure was put to the respondent’s expert for his comment. In those circumstances we do not feel entitled to award compensation based on a calculation of our own which neither party has had an opportunity to consider.

The second point of challenge touches on a basic principle of valuation, which is that a market value assessed at a given valuation date assumes that the market has taken into account the potential risks and benefits of future movements in that property sector. However, market movements can be upwards or downwards and the claimants’ assumption that prices will only increase is not a sound one.

The third point has some merit in this case because the period between the expiry of the previous voluntary wayleave and the commencement of the new necessary wayleave was in the order of three years during which the respondent was not obliged to vacate and for which no payment is said to have been made. It would have been open to the claimants to invite the Secretary of State to include a term requiring payment to be made for the period since the expiry of the previous wayleave. We would also be surprised if the respondent felt entitled to enjoy that continuation period without paying anything for it.

Paragraph 7(2) of Schedule 4 to the 1989 Act provides that “…where in consequence of the exercise of such a right [conferred by a wayleave] a person is disturbed in his enjoyment of any land or moveables he may recover from the licence holder compensation in respect of that disturbance.” The requirements for a valid claim for disturbance loss were set out by Lord Nicholls in Shun Fung. First, there must be a causal connection between the acquisition [of the right] and the loss in question. Secondly, the loss must not be too remote from the acquisition. Thirdly, the claimant must have taken reasonable steps to mitigate their loss.

The claimants submitted that they should be compensated for a number of matters under the heading of disturbance: unpaid annual wayleave payments since they took ownership of the property in October 2017; the cost of fencing off their garden, for safety reasons, from the field where the pole supporting the high voltage line is sited; the value of the hundreds of hours of their time spent dealing with the necessary wayleave hearing and these proceedings. Moreover, they submitted that the very poor conduct and attitude of the respondent failed to meet the professional standards set out in Rights over land for electricity infrastructure, the non-statutory Code of Practice agreed between the Energy Networks Association and the CAAV, RICS and other professional bodies and published in May 2025, causing unnecessary additional stress to them both and adding to the time spent on the matter.

As submitted for the respondent, the matter of outstanding annual wayleave payments pre-dates the granting of the necessary wayleave and so does not fall to be compensated under paragraph 7. However, we consider it unhelpful of the respondent, and indicative of their problematic attitude, simply to have stated that their assessment of the amount due is nil. The claimants would appear to have an obvious claim for arrears of annual wayleave payments from the respondent, and it should be a straightforward matter for that to be rectified. We understood from the evidence of Mr Roberts that there are standard annual payments made to owners and occupiers of fields where poles are sited so the amounts due should not be a matter for dispute.

The claimants provided evidence that the cost of materials for the new fence between their garden and the field was £2,755.12, inclusive of VAT. Work to erect the fence was done by a local farmer who carries out work for the claimants in return for keeping sheep on their land free of charge. There was therefore no monetary transaction to be evidenced for his work but the claimants put a total value of £5,000 on their claim.

It was submitted for the respondent that the claim for a new fence was unreasonable because, although there was no fence in place at the date of grant of the necessary wayleave, an earlier fence had been removed during the wayleave proceedings and the claimants had created their own loss. We note that only the cost of materials can be substantiated by receipts, and that the balance of the claim is supported by Mrs Frossell’s own estimate of the value of the labour which would otherwise have been available to the claimants for a different project. Looked at in that way the total figure does not seem an unrealistic one. The erection of the fence has a causal connection with the grant of the necessary wayleave and is not too remote. As for mitigation, the house was previously occupied by a farm worker, and at that time no fence separated it from the field crossed by the line. Nevertheless, we do not consider it is unreasonable for private individuals, who have tried unsuccessfully to have the high voltage line removed, then to wish to create a boundary between their home and the respondent’s infrastructure. We are satisfied that the claimants are entitled to the sum of £5,000 claimed as disturbance compensation.

We have no doubt that the claimants have spent many hours dealing with the respondent, both in the lead up to the grant of the necessary wayleave and in establishing the compensation due to them. The claimants’ time spent in defending the necessary wayleave application has not been quantified and we were provided with no information which would enable us to put a monetary value on it. However, that time pre-dated the grant of the wayleave, and was not caused by the grant, so in principle it would not be eligible for compensation. In contrast, the claimants’ pre-reference time spent in establishing their compensation claim following the grant of the necessary wayleave does have a causal connection to the grant and the claim is not too remote. But again the time was not quantified and we have no means of placing a monetary value on it.

The claimants chose to mitigate their costs in these proceedings by representing themselves. At their request a costs protection order was made by the Tribunal on 4 December 2025 stipulating that no order for costs would be made against either party in respect of costs incurred after that date. That order was made because of the disparity in resources between the parties and the risk that the claim would be stifled by the respondent’s estimate that it would require a four day hearing (in the event the hearing lasted less than one and a half days).

Finally, the claimants asked that compensation should be awarded to reflect the respondent’s conduct. It is clear to us that the claimants are deeply aggrieved by their experience of dealing with the respondents, both in relation to the public enquiry which led to the wayleave being granted and in relation to these proceedings. The claimants focussed their presentation at the hearing of the reference on their financial claim, and very little was said about these wider grievances. From what little we were told about them we are satisfied that they do not give rise to a claim for compensation under Schedule 4 of the 1989 Act.

The compensation to which the claimants are entitled comprises the figure agreed between the experts as representing the diminution in value of their property by reason of the grant of the wayleave, which is £43,800, plus an additional £5,000 in compensation for disturbance, totalling £48,800. The claimants are entitled to interest on that sum at the statutory rate from 18 July 2024, the date of grant. The respondent’s solicitors should prepare a calculation and provide it to the claimants for their confirmation before this decision is formally handed down.