Pictured above: Michael Orlik

A leading Midlands lawyer believes Parliament must now look closely at the issue of compulsory purchase orders and compensation following a landmark judgment in the House of Lords.

Michael Orlik, a consultant at Stratford-upon-Avon law firm Lodders and an expert in public law, has been at the heart of a contentious case in which the Lords overturned judgments by the Lands Tribunal and the Court of Appeal.

He said: "It may be that Parliament should consider whether the present system is fair to landowners or whether the law should be changed. The case will have important implications for compulsory purchase valuations."

The Spirerose case was the penultimate judgment by the Law Lords before the introduction of the new Supreme Court in October.

The case centred on an order obtained by Transport for London authorising it to acquire land compulsorily to build the East Londonunderground extension line.

This included an old industrial site in Shoreditch owned by Spirerose Ltd.

Mr Orlik represented the company, whose Administrator took the case to the Lands Tribunal to determine the level of compensation due to it.

Mr Orlik said: "The principal issue was whether land taken for compulsory purchase should have been assessed on the basis of its full value with planning permission - or a percentage only, known as its 'hope value'.

"The latter reflects the probability of the permission being granted, as perceived by the market.

"There was a probability that Spirerose could have obtained planning permission for a redevelopment scheme with replacement industrial units on the first two floors and residential units on two floors above. There were precedents for this in the area.

"The Lands Tribunal decided that the site should be valued on the basis that planning permission would have been granted and it awarded compensation of £608,000. The Court of Appeal agreed with the Tribunal.

"The House of Lords took a different view and decided that compensation could only be awarded on the basis that a purchaser would have paid more than the value of the site in its existing state - but would not have paid the full value with the benefit of actual planning permission.

"The existing value was £227,000 and the Lords awarded the Administrator £400,000 - the sum offered originally by Transport forLondon - to reflect the hope value of obtaining planning permission.

"The difficulty with this decision from the point of view of landowners facing a compulsory purchase is that once a Government body or local council has announced its decision to proceed with a new project by compulsory acquisition, the landowner will not be able to obtain planning permission for an alternative scheme because the land is required for a public purpose.

"He will therefore only be able to obtain hope value, not the full development value. I think this is something Parliament may need to look at."

Michael Orlik added: "A lot of work at Lodders went into preparing this case - and together with my colleague Maggie Smith we found it an interesting experience being closely involved with one of the the Law Lords' last ever judgments."

For centuries the House of Lords has been the nation's highest court for the United Kingdom in both civil and criminal cases. Since the 1880s the judicial work has been done by the 12 Law Lords who are professional judges.

The Supreme Court will sit in the former Middlesex Guildhall in Parliament Square.