An obscure wartime law has led to a south-west London council being forced to buy a small park for £1.6m when its true value is only £15,000.
Fred Wells Gardens in Battersea once housed a number of properties, all of which were bombed during World War II.
The law, which is still in force, states that homes damaged in wartime should be automatically rebuilt.
The park's owner won a legal battle to get the value of the land, as if it had homes on it, from Wandsworth Council.
'Tried to settle'
The authority had denied planning permission for Greenweb Ltd to build houses in the park, saying it was an open public space which could not be redeveloped.
Greenweb Ltd took the matter to the Land Tribunal, which concluded that the company should be compensated.
The council appealed against this decision, but the Court of Appeal ruled in favour of the developers.
Greenweb Ltd bought the site for £30,000 in 2001, although in court both sides agreed its current value was £15,000.
"It was sold with residential potential and we intended to redevelop it, but that possibility was blocked by the local authority," the company said in a statement.
"We tried to settle the matter amicably and to avoid legal action. Unfortunately, that wasn't possible.
"The local authority had the opportunity to buy the site when we did so. If they had, then this case would never have arisen."
'Paying the price'
The site was cleared of housing in 1948 and was designated as green space 31 years later.
But the Land Compensation Act states the value of the land destroyed in wartime must be based on the assumption that planning permission has been given for homes to be rebuilt.
"This could all have been avoided," said Maurice Heaster, the councillor who is Wandsworth's deputy leader.
"Civil servants and ministers have been warned on numerous occasions that this piece of legislation was a ticking timebomb that should be ditched.
"They have done nothing, and local residents will now have to pay the price for their inaction.
"We will now have to consider whether to take this case to the House of Lords to see if there is any chance whatsoever of having the tribunal's ruling overturned."
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