LORD JUSTICE RALPH GIBSON:
This is an appeal by Wrexham Maelor Borough Council ("the Council") under section 3(4) of the Lands Tribunal Act 1949 from the decision of 14th May 1992 given by Mr C.R. Mallett, FRICS, the member selected to deal with the case.
Appeal is allowed on points of law only. The case concerned the claims of Mr D.S Macdougall to compensation in respect of the compulsory acquisition by the Council of his leasehold interest in offices at Lambpit Street in Wrexham. In those offices there was conducted the business of Crest Insurance Services Ltd ("Crest") and of Crest (Life and Pensions) Ltd ("Crest Life") in which companies the larger. The value of the business of Crest to Mr and Mrs Macdougall consisted of the profits which would continue to be earned while the offices were occupied and the value of the goodwill which they intended to sell upon
Mr Macdougall's retirement. There was no formal arrangement of any sort with reference to the use of the premises by Crest. The rent was paid by Crest to the landlord out of the profits of the business. Crest was obviously and to the knowledge of the landlord in occupation of the office.
It is probable that Mr Macdougall's arrangements for the conduct of his business are typical of many businesses. The rules for compensation in such circumstances ought to be both clear and readily applicable to such common circumstances. Possible grounds of claim available to
Mr Macdougall must be stated in order to explain how the case came to be presented as it was.
Firstly, the owner of land which includes a lessee, is entitled to be paid by the acquiring authority the value of the land to him with compensation for disturbance, including all damage consequent upon the taking: see Halsbury's Laws 4th edition: 1974: para 322; Horn v. Sunderland Corporation [1941] 2 KB 26; Hughes v. Doncaster M.B.C [1991] 1 AC 382. Loss may be properly compensatable as disturbance "provided, first, that it is not too remote and, secondly, that it is the natural and reasonable consequence of the dispossession of the owner": per Romer LJ in Harvey v. Crawley D.C [1957] 1 QB 485.
Secondly, by section 20 of the Compulsory Purchase Act 1965 a person having no greater interest in the land than as tenant for a year or from year to year is entitled, upon being required to give up possession of any land so occupied before the expiration of his term or interest in the land, to compensation for the value of his unexpired term or interest in the land and for any loss or injury he may sustain.
Thirdly, where a leasehold interest is held by a tenant it may be that he holds that interest in trust for another party, for example a company carrying on business in the premises, and the trust may arise without any formal trust deed by way equitable estoppel or constructive trust. The beneficial interest would be an equitable leasehold capable of being compulsorily acquired.
Fourthly, by section 37 of the 1973 Act provision is made for disturbance payments for persons without compensatable interests. So far as is relevant to this case, the section provides that where a person is displaced from any land in consequence of the acquisition of the land compulsorily, he shall be entitled to receive a disturbance payment from the acquiring authority provided that (a) he is in lawful possession of the land from which he is displaced; and (b) he has no interest in the land for the acquisition of which he is entitled to compensation under any other enactment; and (c) he was in lawful possession of the land at the time when notice was first published of the making of the compulsory purchase order.
Fifthly, mention must be made of section 46 of the 1973 Act which makes special provision for compensation for disturbance where a trade or business is carried on by a person over 60 years of age. If such a person is required to give up possession of land in consequence of the compulsory acquisition of that land, the compensation payable to him in respect of the compulsory acquisition of his interest in the land or, as the case may be, under section 121 of the Lands Clauses Consolidation Act 1845 or section 20 of the Compulsory Purchase Act 1965 (tenants from year to year etc) shall, so far as attributable to disturbance, be assessed on the assumption that it is not reasonably practicable for that person to carry on the trade or business or, as the case maybe, the part thereof the goodwill of which he has retained, elsewhere than on that land. There are limits by reference to the annual value of the land which are not relevant. In addition it is required that the person has not disposed of the goodwill of the whole of the land or business, and that he must give to the acquiring authority an undertaking not to dispose of the goodwill of the business and an undertaking that he will not, within such area and for such time as the acquiring authority may require, directly or indirectly engage in any business of the same or substantially the same kind. This section does not provide a separate ground or basis of claim to compensation but enacts that an assumption shall be made for the purposes of assessment of compensation payable on the grounds stated. It is provided by sub-section 5 of section 37 that the section shall apply to a trade or business carried on by a company provided that each shareholder other than a minority shareholder be aged 60 and that each minority shareholder be aged 60 or the spouse of a shareholder who has attained that age.
Finally, section 37(5) provides for a discretionary payment. If a person is displaced from any land by reason of a compulsory purchase order but is not entitled, as against the acquiring authority, to a disturbance payment under section 37 or to compensation for disturbance under any other enactment, the authority may, if they think fit, make a payment to him determined in accordance with section 38(1)(2)(3). Section 38 provides that the amount of a disturbance payment shall be equal to (a) the reasonable expenses of the person entitled in removing from the land from which he is displaced and (b) if he was carrying on a business on that land, the loss he will sustain by reason of the disturbance of that business consequent upon his having to quit the land. In estimating the loss regard must be had to the period for which the land occupied by him may reasonably have been expected to be available for the purposes of the business and to the availability of other land suitable for that purpose. The claimants, of course, have never asked for a discretionary payment.
Mr Macdougall claimed an interim payment before the hearing. The Council paid £87,000 without prejudice to their contentions. If there was no legal right to disturbance payments, the Council would have treated the payment as a discretionary payment.
The claims advanced before the member, as appears from the interim decision, were:
(i) although the lease of the offices was vested in
Mr Macdougall, Crest was in law entitled to compensation pursuant to section 46(6) of the 1973 Act because (a)
Mr Macdougall held the property as constructive trustee for Crest; (b) Crest had an irrevocable licence from
Mr Macdougall to occupy; (c) estoppel prevented the landlord or Mr Macdougall or the acquiring authority from denying Crest's interest.
(ii) if section 46 did not apply then Crest had an equal claim for disturbance payments under section 37 of the 1973 Act;
(iii) no reliance was placed upon the concept of piercing the corporate veil: see D.H.N. Ltd v. Tower Hamlets [1976] 1 WLR 860;
(iv) the claim of Mr Macdougall was to the value of the lease, (on which there is no remaining issue) and to consequential loss under the 1961 Act caused by the compulsory acquisition of his leasehold interest which caused the loss of his service agreement.
The contentions for the Council before the member were recorded by him as follows:
(i) Mr Macdougall was not the occupier of the offices and he was not a person carrying on a trade or business on the land; nor was he the alter ego of Crest for the purpose, or vice versa;
(ii) Mr Macdougall's claim for loss of his service contract was too remote because the loss arose out of his position as an employee of Crest;
(iii) there was no evidence of such a contractual licence, or irrevocable licence, or estoppel, as could give rise to any equitable interest in Crest in respect of which compensation was payable: reliance was placed upon the decision in Ashburn Anstalt v. Arnold [1989] 1 Ch 1;
(iv) as to section 37, Crest was not "in lawful possession" of the premises because lawful possession did not include every possession which was not that of a trespasser, squatter or lodger, but was limited to possession recognised in the eyes of the law such as a tenant holding over.
Before stating the facts found by the member upon the remaining issues it is necessary to list the grounds of appeal put forward by the Council in their notice dated 29th October. Ground (1) was that the words "lawful possession" were misconstued by the member: "lawful possession" is possession "recognised by and protected by the law".
Ground (2) was that the member failed to address any of the "complexities" of section 46 of the 1973 Act notwithstanding his treatment of the claim as being for the extinguishment of the business in question; and the member failed to state in the decision the alternative amount or value which have awarded within section 46 of the 1973 Act notwithstanding that the claimants had maintained since June 1989 that Crest was entitled to compensation under section 46.
Ground (3) was that the award of compensation for loss of a service contract was wrong in law; alternatively, that it constituted double counting within the awards.
Ground (4) was directed to the award of interest. That is no longer relevant, part having been conceded and the other part abandoned.
Ground (5) which was directed to alleged misapprehension by the member of the scheme underlying the compulsory purpose, has also been abandoned.
Ground (6) attacked the validity of the award on the ground that the member failed to give affect to the evidence before him, on the resumed hearing on 12th May 1992, with reference to the continued trading of Crest.
The amended respondent's notice contains a number of points of which only the following need be mentioned. Firstly, it is asserted that, if the member was wrong in law to award compensation to Mr Macdougall for loss of his service contract, then an equivalent sum is payable to Crest as due from Crest to Mr Macdougall by way of damages for breach of contract. Secondly, if necessary to support the award to Crest, it would be asserted that Crest had an interest in land as the sub-tenant of Mr Macdougall on the grounds that Crest held exclusive possession of the land in question, and paid the rent and outgoings etc.;
Mr Macdougall at all material times knew of such possession and payments; and the freehold owners knew of and acquiesced in such possession and received payment of the rent due.
The hearing of the appeal
We heard the submissions of the parties on 22nd February 1993. In preparing our judgments it appeared to us that we were not confident that we had understood properly the way in which the case had been conducted before the member or the submissions of the parties on the issue as to the loss of the service agreement. Counsel were invited to assist the court with reference to certain questions. Further submissions were made on 26th March 1993. We are grateful for that further assistance and repeat the regret then expressed at having found it necessary to ask for that assistance and thereby to put the parties to further expense.
The decision as to the extinction of the business of Crest
I will deal first with ground (6). The finding of fact by the member that the business of Crest was finally extinguished by Chirk in October 1991 was, as Miss Appleby observed, at the heart of the decision upon which the awards were based. The finding rested upon the evidence of
Mr Macdougall. The ground of appeal asserts that "the decision cannot be sustained in the light of the evidence adduced" after the interim decision of 11th February 1992. The circumstances in which the member was invited at the resumed hearing on 12th May 1992 to reconsider his decision are set out in paragraph (ix) above.
The relevant passages from the decision is as follows:
"In my interim decision I found that the Crest business was finally extinguished at Chirk in October 1991. The acquiring authority now submit evidence which shows that on 13th April 1992 Crest Insurance Services wrote to a Mr. W. Edwards inviting him to renew his householders' insurance policy which expired on 26th April 1992.
This evidence, presented after an interim decision was made, is, in my view, too late to alter that decision. If I am wrong, I find that the evidence of this single invitation to renew a householders' insurance policy is, on its own, de minimis and would not upset my interim award".
Miss Appleby submitted (i) that the evidence was not too late in that the member had made only an interim award; and (ii) that the evidence was such that it could not be de minimis. Such a finding was unreasonable, it was said, in the sense of the Wednesbury principle. A business is either extinguished or it is not. The member should not have persisted with his finding or he should have dismissed Crest's claim. The response for the claimants was simply that there was no appeal on fact.
I have been much troubled by this part of the case.
Mr Macdougall's claims were from the outset grossly inflated and, as I have said, no explanation based upon explicable error for the making of such inflated claims has appeared in the papers. The facts suggest that Mr Macdougall's claims were in preparation over many years. Crest Life was brought into existence some two years after the redevelopment scheme was published. The claims were first advanced not on the basis that extinction of the business of Crest was in fact caused by the acquisition but that under section 46 such extinction should be deemed and Mr Macdougall resisted the giving of undertakings which would prevent the carrying on of the business in Chirk. As I explain later in this judgment, to one who has not heard or seen all the evidence, the conclusion that displacement from Lambpit Street in fact caused the extinguishment of the business of Crest appears surprising and improbable. The simple point that a business is either extinguished or not, and, if extinguished in October 1991, cannot be proceeding in April 1992, is formidable.
Regrettably, however, the preparation for the resumed hearing appears to have been less than complete as I have described above. It is not surprising that Mr Macdougall was not present to explain in what circumstances the letter of 26th April was written, or by whom, no doubt because no notice had been given of the Council's intention to raise the matter. The Council had not applied for further specific discovery. There was no application for an adjournment for such steps to be taken and the Council thereby appeared to be asking the member to reverse his finding upon the existence of the one letter as contrasted with asking the member to adjourn for further investigation upon the basis that the one letter showed the need for that investigation.
In the circumstances I can see no basis upon which this court could properly disturb the decision of the member to whom Parliament has entrusted the obligation to determine the facts. I think that Mr Macdougall may have been fortunate at more than one turn in this case but I cannot hold, on this material, that the member is shown to have acted irrationally or in breach of any principle of law in refusing to alter his decision.
Section 46 of the 1973 Act.
Next I will deal with section 46. The member in his decision said:
"The claimants have always maintained, since June 1989, that Crest were entitled to compensation for disturbance pursuant to section 46 of the 1973 Act. From August 1989 the acquiring authority has agreed to proceed with discussions on a claim under that section. Since the beginning the claimants have asked the acquiring authority to specify the undertakings that the claimants would be required to give under sub-section 3(b) of that Act. These undertakings were not produced officially until sometime during the hearing although the claimants had earlier been informed unofficially. As a result the claimants objected to the undertakings during the course of the hearing mainly on the grounds that as the Crest business had for many years been based on customers in Wrexham it was reasonable to confine the area of restriction to the borough, but if that did not find favour with the tribunal the area should not be so enlarged as to include the Crest premises at Chirk. I declined to give a ruling on this issue as in my view it is not within the power of the tribunal to decide whether or not the acquiring authority have exercised their power within sub-section 3(b) reasonably".
Later in his decision, in concluding that Crest had a right to claim under section 37 of the 1973 Act, the member added:
"It is unnecessary for me to consider the complexities of section 46 in a case where no undertakings under section 46 sub-section 3 had been stated by the acquiring authority at the date of taking possession and where the undertakings were first formally introduced and objected to at the hearing".
It is common ground that section 46 is not now directly relevant to the decision of this case. The member did not base any part of his decision upon it. The respondents do not seek to rely upon it. It is not clear to me why the Council referred to it in their notice of appeal. There seems to have been some mutual confusion. Mr Macdougall was relying upon section 46 at the hearing in order to take advantage of the statutory assumption that, Crest having decided to extinguish the business of Crest, it was not reasonably practicable for Crest to carry on the business elsewhere. The member was right, in my judgment, to refuse to determine the complaints of Mr Macdougall that the undertakings required were unreasonable.
No question arose, or could have been raised, as to the Council having required undertakings which were so unreasonable that the requirement was outside the power of the Council. The remedy for breach of such an undertaking is provided by section 46(4) to be recovery by the acquiring authority for an amount equal to the difference between the compensation paid and the compensation that would have been payable if it had been assessed without regard to the provision of this section. If the member was right in law in holding that the business of Crest had been extinguished in consequence of the acquisition of the land, and if he held that in fact it was not practicable for the business to have been carried on elsewhere, there is no need for any assumption to that effect based upon the age of Mr and Mrs Macdougall. His references to no undertaking having been stated by the Council at the date of taking possession and to being first formally introduced at the hearing were, I think, misconceived.
Section 46(1) does not, in my judgment require that the undertakings be stated or given at the date of taking possession and Mr Macdougall knew perfectly well what undertakings he was being asked to give and his lawyers were contesting the reasonableness of them.
"Lawful possession" under section 37.
After setting out the relevant parts of the section the member in his decision said;
"The essential qualification to come within this section therefore is that a person must be in lawful possession of the land from which he is displaced. If so, he is entitled to a payment not previously existing in the world of compensation and called a 'disturbance payment'. Section 38 of the 1973 Act provides for the amount of that payment.
The authorities to which I was referred were concerned with whether or not the claimants have an interest, or legal interest which entitled them to compensation, within the ambit of the Land Compensation Act 1961 or of the Land Compensation (Scotland) Act 1963. So far as I am aware there is no authority to guide me as to the meaning of lawful possession in the 1973 Act. In my view lawful possession is distinct from legal interest.
In the present case Crest and Crest Life have together been in exclusive occupation of the subject premises for many years and they continued in that occupation at the will of Mr Macdougall who was the managing director and controlling shareholder in each company.
It is not necessary to decide whether that occupation amounted to an interest which entitled them to compensation. The exclusive occupation could be brought to an end at any time by Mr Macdougall but by no other person and I found it amounted to possession. That possession was not criminal or tortious, it was plainly lawful.
Therefore in my view Crest have a right to claim under section 37 of the 1973 Act and it is unnecessary for me to consider the complexities of section 46..."
I have stated the ground of appeal directed to this finding. In summary, the submissions for the Council by Miss Appleby proceeded as follows:
(i) "Lawful possession" is not defined in the 1973 Act, nor is it an expression defined elsewhere in the corpus of law relating to the compulsory acquisition of land or elsewhere in our law.
(ii) The Council referred to the decision of the House of Lords in Pepper v. Hart (1992) 3 WLR 1032 and invited the court to examine the record of certain Parliamentary proceedings on 27th November 1972 as an aid to the construction of section 37 on the ground that the section is ambiguous in that the category of persons who would newly qualify for compensation is not clearly defined.
(iii) The statement of the Minister promoting the provision (then clause 30 of the bill), during its second reading in the House of Commons, showed, it was said, that the intention of Parliament was to provide that disturbance payments would be payable to "all statutory tenants, tenants of unfit houses and shop properties, service tenants and tenants holding over after their legal terms have expired" and that licensees of any type would not qualify.
(iv) The only claim open to Crest was for a discretionary payment under section 37(5) of the 1973 Act.
It is to be noted that it is not open to the Council to attack the findings of fact of the member unless they can point to a relevant error of law. There is no attack upon the principles by reference to which the amount of the award to Crest was calculated. Next, as to the business of Crest, for my part, it appears surprising that, without the assumption provided by section 46, it should have appeared to the member that displacement from Lambpit Street, where personal visits to the office were made by clients in the motor insurance business, should have caused the extinguishment of the business even upon the short notice finally given. The member appears implicitly to have accepted that it was not practical to relocate the business in Chirk. I realise, of course, that I have not seen the evidence which led the member to his conclusion.
Before considering the submissions for the respondents put forward by Mr Barnes QC. It is to be noted that
Miss Appleby advanced detailed arguments in her written submissions designed to show that if Crest's claim under section 37 should fail, there is no alternative ground of claim open to Crest. Thus it was contended that having regard to the decision of this court in Ashburn Anstalt [1989] 1 Ch 1, the facts found could not support a conclusion in law that Mr Macdougall held his lease on a constructive trust for Crest. Next, on the facts, any licence, if it existed, was revocable at any time by Mr Macdougall; and even if an irrevocable licence were held to be proved it could not create any proprietary right in the law; see King v. David Allen [1916] 2 AC 54; Clore v. Theatrical Properties Ltd [1936] 3 AER 483; and Ashburn Anstalt. Finally, the facts found do not, as it was said, support any estoppel of any relevant kind.
Mr Barnes, for the respondents, did not appear at the hearing in the tribunal. He submitted that Mr and Mrs Macdougall were running a family business by means of Crest and Crest Life and that the simple and straight forward basis of claim would have been by Mr Macdougall as tenant claiming the value of the leasehold interest and the consequential loss to him suffered by the extinction of the business of Crest. The member found that the business of Crest was extinguished by the compulsory acquisition and yet the Council contends that no compensation for disturbance is payable as a matter of law either to Mr Macdougall or to Crest. Mr Barnes' submission was that the award to Crest was rightly made under section 37. The member found that Crest was in possession: and, in this context, "lawful" means no more than that the possession must not be unlawful by reason of crime, or trespass, or breach of contract. On the evidence, the presence was clearly lawful.
For my part, on the main point which was argued before the member and this court, namely that lawful possession in section 37 means possession of a sort "recognised in the eyes of the law", such as a tenant holding over, and was not merely any possession which was not unlawful, it seemed to me on first considering the arguments that the member was clearly right. I could see nothing in the words of the section, considered in their statutory context, to show that the word "lawful" imported anything more than that the possession should not be unlawful. The contention of
Miss Appleby that the possession must be such "as to be recognised in the eyes of the law" was not wholly clear to me. Any possession will be recognised by the law for some purposes. If the contention is that the word "possession" must in the context mean legal possession based on an interest in the land then I do not accept the submission.
Fry LJ, giving the judgment of the court of appeal in Lyell v. Kennedy [1887] 18 QBD 796 at 813 said that there is "perhaps no legal conception more open to a variety of meanings than 'possession'"; but the court had no doubt as to the meaning of the word in the context of section 8 of the then Statute of Limitations. In Halsbury's Laws, 4th edition 1981 volume 35 at paragraph 1111, it is said that "possession" is a word of ambiguous meaning, and its legal senses do not coincide with the popular sense. A list is there given of the cases in which the meaning of the word has been determined for the purposes of various enactments. In Heath v. Drown [1973] AC 498, the meaning of the phrase "obtaining possession of the holding" in section 30(1)(f) of the Landlord and Tenant Act 1954 was examined by the House of Lords. It was held by Lord Kilbrandon, with whose speech Lord Diplock and Lord Simon agreed, that in that Act, where the word possession was used it meant the legal right to possession of the land as contrasted with physical possession. Lord Reid, who on this point agreed with the majority, held that "possession" in that context meant legal possession and not merely physical occupation.
In the context of a statutory provision which (subject to certain limitations) secures to a person who is displaced from any land, in consequence of the compulsory acquisition of the land, payment of a disturbance payment provided (i) that he was in lawful possession of the land at the relevant time and (ii) he has, in brief, no compensatable interest under any other enactment, it seems clear to me that "possession" means physical occupation with the intention to exclude unauthorised intruders. It is expressly required to be lawful. If it meant the legal or equitable right to possession there would be few significant cases in which the person would not be entitled to compensation under other enactments, namely section 20 of the Compulsory Purchase Act 1965 or section 5 of the Land Compensation Act 1961.
To have lawful possession without a legal interest in the land, whether freehold or leasehold, requires that the person in possession has the permission of the owner who does have the legal right to possession. If he is given exclusive possession by the owner for a term at a rent, he will be a tenant (Street v. Mountford [1985 1 AC 809] and thereby acquire a legal estate in the land which is normally a compensatable interest. The case of Ashburn Anstalt shows that exclusive possession for a term without reservation of rent will create a tenancy. The member held that Crest and Crest Life had from Mr Macdougall exclusive occupation which in his view was possession. He did not conclude that they had exclusive possession and, in my view, he was right.
If the person is not given exclusive possession he may still, in my judgment, have possession of the land within the meaning of section 37. He will then be a licensee. Any fragility in his right to continue as a licensee in possession of the land, because of the power of the owner to terminate it, will be relevant to the amount of any disturbance payment which must be determined with regard to the period for which the land might reasonably have been expected to be available for the purposes of his business: see section 38(2). The fact that a licensee may be in lawful possession does not, of course, mean that all licensees will be entitled to disturbance payments. Most licensees on land, i.e. persons who are permitted by the owner to enter and to remain or to do acts on the land, do not have physical possession of the land.
For these reasons, I was not persuaded that we were entitled under Pepper v. Hart to use the Parliamentary proceedings as a tool of construction.
Lord Browne-Wilkinson at page 1061 said:
"... the exclusionary rule should be relaxed so as to permit reference to Parliamentary materials where (a) legislation is ambiguous or obscure, or leads to an absurdity; (b) the material relied upon consists of one or more statements by a Minister of other promoter of the bill together if necessary with such other Parliamentary material as is necessary to understand such statements and their effects; (c) the statements relied upon are clear."
For the reasons which I have given I do not accept that the words of section 37 are ambiguous or obscure. Further, if I am wrong about that, I do not accept that the words of the Minister are so clear as to require this court to give any other meaning to the words. In particular, with reference to the exclusion of licensees, the Minister said on 27th November 1972 at column 35:
"The object of the bill is to give effect to those proposals in last month's White Paper... cmnd 5124 which require legislation..."
Later, at column 46, he said:
"Under clause 30, for the first time disturbance payments will be made as of right to those residential and business occupiers who have no compensatable interest in the land in question. This means they will no longer have to depend on the goodwill of the acquiring authorities for the payment of the expenses involved in removal costs and in the losses sustained through disturbance to trade or business. Those who qualify will be all statutory tenants, tenants of unfit houses and house and shop properties, service tenants, and tenants holding on after their legal terms have expired.
I ought perhaps to mention that we said in the White Paper that licensees would be among those entitled to this payment. However, when it came to drafting the bill we found there were considerable difficulties in that, and it was not possible to distinguish between the various types of licensees. So we have been obliged to leave them out but local authorities will have a discretionary power to make payments in these cases."
It is not necessary to consider whether it was an accurate summary of the effect of the clause to say that all statutory tenants etc. would qualify. As to licensees, the Minister was explaining that it had proved impossible to include a provision that licensees would be entitled because of the difficulty of distinguishing between the various types of licensees; but I do not accept that he was telling Parliament that a licensee would be excluded, because of his status in law as a licensee, even if he was in lawful possession of the land. I would therefore reject this ground of appeal.
Before leaving the section 37 point, however, it is necessary to refer to the words used by the member in reaching his conclusion as set out above. He said that:
"It is not necessary to decide whether that occupation amounted to an interest which entitled them to compensation".
In that he was wrong because it is a requirement under section 37 that the person displaced from lawful possession of the land must have no compensatable interest under any other enactment. The member was well aware of that requirement because he had just read out the section. His comment was, I think, clearly directed to the authorities, which he mentioned, which were concerned with whether the claimants had an interest or legal interest which entitled them to compensation; and was in substance no more than an accurate statement that a person can be in lawful possession without having any interest which would entitle him to compensation. The Council had not argued before the member that if Crest and Crest Life had lawful possession of the land it must be such as to amount to a compensatable interest, e.g. under section 20 of the 1965 Act, which would disqualify Crest from claiming under section 37 but enable Crest to claim under section 20. No such argument was made for the Council in this court. As I understood her submissions, Miss Appleby did not place any reliance upon the misdirection to which I have referred. The apparent misdirection should, in my judgment, therefore be ignored and I would uphold the award under section 37 to Crest.
The award to Mr Macdougall for loss of service agreement.
With reference to this award the relevant findings of the member were as follows:
(i) the business of Crest, insofar as private motor insurance was concerned, covered a relatively large number of clients living in the immediate locality of Wrexham. In the region of 80 per cent of these clients visited the Wrexham offices for the purposes of taking out or annually renewing their motor policies. A small amount of the motor insurance business was concerned with commercial clients not all of whom were based in Wrexham. (Page 3).
(ii) Crest and Crest Life moved to alternative premises at Chirk, a village 10 miles south of Wrexham. There the business of Crest was wound down and finally extinguished in October 1991. During this period as and when motor policies became due for renewal, the customers were advised to place their insurance with Boncaster a firm of insurance brokers based in Solihull and with no office within the Wrexham locality. Also during that period Crest continued to service any claims for customers whose policies had not yet expired. (Page 4).
(iii) The service agreement made in November 1987, replacing an earlier agreement, was determinable by Crest only on conviction of Mr Macdougall for an indictable offence". (Page 5).
(iv) As to extinguishment of the business of Crest:
(a) The claimant's case was that without suitable alternative premises available in Wrexham it was impossible to continue the business of motorcar insurance elsewhere, and that no suitable premises were found. Although
Mr Macdougall knew in November 1985 that he would one day have to move, he was given 14 days notice to quit extended later by a few days. This fact alone ensured, in the member's view, that the business was unlikely to survive.
(b) It was suggested by the Council that in fact the business had not been extinguished and that Crest was continuing to trade at the premises at Chirk. It was also suggested that the recommendation to customers to transfer their business to Boncaster must have attracted some payment or benefit. (Page 10).
(c) As to the first point the evidence showed that the code of practice laid down by the Insurance Brokers' Registration Council and the policy of Professional Indemnity Insurers would require a broker who has discontinued trading to continue in being in order to service clients' policies till the policies expire. In the case of motor insurance the policy would normally be for a period of not more than 12 months but the settlement of a claim might continue after a policy had expired. (Page 10).
(d) As to the second point, Mr Macdougall considered it his duty to see that Crest's clients were not abandoned when their policies expired and that it was proper to recommend the transfer of the work to another broker. In his view by that time, he had no marketable package to sell and as a matter of fact the transfer was arranged without any consideration. (Page 11).
(e) The member found a lack of any proof to support the two suggestions made by the Council. He found that the Crest business started to be extinguished on the date that the acquiring authority took possession and was finally extinguished at Chirk in October 1991.
(v) In considering Crest's claim in respect of goodwill the member said that the effect of the Council's scheme of development on the Crest business was twofold. The environs of Lambpit Street became less attractive by reason of premises becoming empty and being boarded up, demolished and redeveloped. Therefore Lambpit Street became less frequented by potential customers.
(vi) The member awarded the sum of £11,100 as the costs of removal to Chirk. When Mr Macdougall decided that the extinguishment of the Crest business was his only option, he was unable to find alternative premises save those at Chirk. He was then in a desperate state with little power to bargain and had to take a long lease of 25 years with a premium and with the condition that he pay for the work of altering the premises. Mr Macdougall was unlucky in his negotiations to seek suitable alternative premises. He was put into a position of weakness not by the compulsory purchase but by the time scale imposed by the local authority.
(vii) Under running down expenses, the member awarded the sum of £50,000 as the costs incurred in excess of receipts in conducting the business while it was run down until October 1991.
(vii) Lastly, the member said:
"Mr Macdougall has no claim under section 37 or section 46 of the 1973 Act if only because he has an interest in land that has been compulsorily acquired and is entitled to compensation for the loss of that interest and any consequential loss arising therefrom under the Land Compensation Act 1961.
Termination of service agreement.
For many years Mr Macdougall has had a service agreement with Crest. In November 1983 a new service agreement was entered into. This provided inter alia that Mr Macdougall would continue in the company's employ until the age of 70 years. The previous agreement was until the age of 65. The other details of the agreement have already been stated.
The acquiring authority submit that Mr Macdougall's loss of the service contract was too remote to be considered as a consequential loss due to the compulsory acquisition of his leasehold interest.
Looking at the situation before the threat of compulsory acquisition, Mr Macdougall was in a position to sell a package, including the Crest business together with his lease of the premises, to a national or regional insurance broker company, subject to his continuing to manage the business. There is evidence to show that that was not an unusual arrangement. There is also evidence to show that without the premises and without the continuity of management the value of the business on the market would have been considerably depreciated. One of Mr Macdougall's reasons for arranging an employment contract was in anticipation of selling such a package.
Now that Mr Macdougall has been dispossessed of his lease he can no longer offer the best package on the market.
Therefore I do not accept the acquiring authority's submission that the loss of the service contract was too remote.
Mr Morris values the residue of the service agreement as at the valuation date in the sum of £207,640.
Mr Lemar is of the view that there is some overlap with the claim for loss of good will and his figure is £100,000.
Mr Morris starts with the figure of Mr Macdougall's average annual remuneration, which includes a pension scheme and health insurance and benefits in kind which he calculates in the sum of £25,955. He then multiplies this figure by 8 as this is the remaining term of years to run before Mr Macdougall reaches the age of 70.
Mr Lemar starts with a figure of £25,000 and uses a multiplier of 4. He does not indicate from where this multiplier of 4 is derived except on his general experience. The multiplier used is on the assumption that the contract would expire at age 65, not 70.
Mr Morris agrees that his figure should be adjusted to take account of the present value of the right to receive an income over 8 years, to take account of the risk involved in the security of that income and to take account of the fact that the income is payable to the age of 70 or death whichever is the earlier. He offers no evidence as to how the adjustment should be made.
It seems to me that the multiplier should properly be derived from actuarial tables but in the absence of any alternative I accept Mr Lemar's figure of £100, 000.
As to double counting, it seems to me that a service contract terminating at age 65 would normally have been an acceptable condition on the sale of the package. If
Mr Macdougall had insisted on a contract terminating at age 70 this might well have affected the amount of the bid for the package. In accepting Mr Lemar's figure based upon an age limit of 65 I am satisfied that there is no double counting.
There remains the fact that Mr Macdougall has continued as manager of Crest from the 2nd April 1990 to the 15th October 1991. There is no record of payments made during that period but presumably he would be entitled under his contract to receive benefits to the value of £25,955 per annum. In the absence of any detailed evidence I calculate the value of that payment to be £25,955 x 1.5= £38,932. Deducting this sum from £100,000 I arrive at £61,068 which is the amount of my award".
At the first hearing in this court it was the primary submission of Miss Appleby that the award was wrong in law because the loss of the service contract was not consequential upon the acquisition of Mr Macdougall's leasehold interest. That was the substance of the submission as noted by the member in the passage set out in paragraph (viii) above. The submission continued to the effect that the compulsory acquisition did not cause
Mr Macdougall to lose his service contract. That loss arose from the extinguishment of Crest's business and
Mr Macdougall had no claim in respect of that extinguishment. Further, in reliance upon Harvey v. Crawley Development Corporation it was submitted that the loss of the service contract was too remote and was not shown to be the natural and reasonable consequence of the dispossession of the owner.
The answer for Mr Macdougall by Mr Barnes was that the member was right for the reasons which he gave and, further, he relied upon the contention that, if Mr Macdougall was not entitled to compensation for loss of the service contract, an equivalent amount of compensation was payable to Crest on the grounds set out in the amended respondent's notice mentioned above.
If Mr Macdougall could prove that there was loss to him consequential upon the taking of his lease which was not too remote, it was not, as I understood it, argued for the Council that the fact that the award for loss of goodwill had been made to Crest under section 37 would by itself disentitle Mr Macdougall from receiving compensation for his loss, but it was argued that, if the assessment of the loss of goodwill had included any part of Mr Macdougall's loss of earnings, any additional award would be wrong as duplication.
The fact that the consequential loss is suffered by
Mr Macdougall in the shape of earnings from his own company did not, as it seemed to me, by itself render such a loss too remote; see Lee v. Sheard [1956] 1 QB 192. In that case, the plaintiff, a shareholder in and director of a company, was prevented from working by reason of personal injury. He was awarded damages for his loss of earnings represented by his share of the reduced earnings of the company. The argument that the loss was too remote was rejected by this court. Other cases are cited in paragraph 1460b of McGregor on Damages 15th edition.
Mr Macdougall, however, in my judgment, had no claim for loss of the service agreement as consequential upon the acquisition of the lease merely because the business of Crest was extinguished by reason of the displacement of Crest from lawful possession of the land. The loss of the service agreement was caused by the decision of Crest that it must extinguish its business for the reasons found by the member: but that decision, and the loss of the service agreement, do not alone demonstrate compensatable loss to
Mr Macdougall. The service agreement was not acquired by the Council and Mr Macdougall had no direct claim in respect of it. Mr Macdougall's claim, if any, was in respect of consequential loss caused by the acquisition of his lease. If it be supposed that, by reason of the extinction of Crest's business, he was without gainful employment for one year and then took up employment or self employed work at the same earnings, he would be entitled to the loss over one year and could get nothing more for the loss of the service agreement unless he proves that he would in probability have earned both sets of earnings. If, after one year, he could by ordinary reasonable endeavour have found gainful work at the same earnings his loss would be again limited to one year. If he was likely in probability after a period of time to restore his earnings to what they would have been under the service agreement his loss could not extend beyond that period of time. He could have no greater claim for breach of contract against Crest.
It seemed clear to me from the findings and reasoning of the member that he regarded the service agreement as an asset in respect of which Mr Macdougall was entitled to receive as compensation a sum which represented the value of that asset. But Mr Macdougall was not so entitled.
Mr Macdougall is not recorded as contending that as a result of the acquisition of his leasehold he was prevented from working again in the insurance broking business with reference to motor insurance or any other type of business and there is no finding that he was so prevented. In fact, he continued in the insurance business at least in Crest Life. He actively resisted on behalf of Crest giving, and was not required to give, and never gave, any undertaking not to engage in a similar business in Chirk or anywhere else. He was, thereafter, at least engaged in the business of Crest Life in Chirk and there is no finding that he has engaged in no other insurance business.
It was also to be noted that the member did not make any express finding that, upon Crest being displaced, it was impossible for Mr Macdougall to continue in motor car insurance business from other premises. That was recorded as the claimant's case with reference to Crest. It seemed that the member was accepting that part of his case with reference to Crest although the member did expressly find that it was not proved that Crest's motor insurance business with commercial clients was extinguished. On the resumed hearing he treated the commission received in such business for the year ending October 1991 to have been £5,500.
The member did not expressly consider whether, and made no finding as to what extent, the extinguishment of the business of Crest, which was one of the companies in which Mr Macdougall earned his living, and the extinguishment of which had been caused by the acquisition of the land, caused actual loss to him by reduction of earnings and, if so, for how long, and whether such reduction was likely to continue on the basis that Mr Macdougall made reasonable and proper efforts to mitigate his loss.
No doubt, in some circumstances, it may be a proper approach, in order to assess the loss of earnings of a claimant consequential upon the compulsory acquisition of his land, to assess the future loss by reference to the assessed value of his service agreement if it is clear that the consequential loss includes loss of earnings to that extent over the period covered by the service agreement. The member, however, had made no finding which appeared to justify that approach to assessment of Mr Macdougall's claim in respect of loss of earnings. It was therefore necessary to consider whether this part of the award should be set aside and remitted to the Lands Tribunal for further consideration of the assessment of any claim by
Mr Macdougall to loss of earnings consequential upon the acquisition of his leasehold interest.
It was impossible, however, to be confident that such a course would be just without a better understanding than we had of why the member took the course he did in not expressly addressing the difference between the loss of a service contract as an asset and loss of earnings having regard to the obligation of Mr Macdougall to mitigate his loss. That was one of the matters upon which the further assistance of Counsel was required. On 26th March 1993, it became clear that the Council had accepted at the hearing that there was no issue as to mitigation of loss of earnings by Mr Macdougall and that the member was, in effect, invited to assess any claim to which Mr Macdougall might be entitled, in respect of loss of earnings caused by the acquisition of his leasehold interest, by reference to the assessment of the value of the contract of service. It was, however, made clear to the member that the Council disputed Mr Macdougall's right to any such award on grounds of causation, remoteness and, most importantly as I shall explain in more detail, on the ground that, not having been in occupation of the premises acquired, he had no right in law to such an award.
On this part of the case Miss Appleby's submissions in summary were as follows: (i) Mr Macdougall's claim is based upon rule 6 in section 5 of the 1961 Act. Rules (2) and (6) provide:
"(2) The value of land shall, subject as hereinafter provided, be taken to be the amount which the land if sold in the open market by a willing seller might be expected to realise:
(6) The provisions of rule (2) shall not affect the assessment compensation for disturbance or any other matter not directly based on the value of land"
(ii) The claim to compensation for loss of earnings caused by the compulsory acquisition of Mr Macdougall's leasehold can only be made as compensation for disturbance; (iii) there can be no claim for disturbance by an owner not in occupation; and, since Mr Macdougall was held by the member not to have been in occupation, he can have no such claim. This bar, it was said, precludes the claim even if, contrary to the submissions for the Council, the loss of the service agreement was caused in law by the compulsory acquisition.
Mr Barnes conceded, rightly in my view, that there can be no claim to compensation for disturbance by an owner not in occupation; but he contended that Mr Macdougall's claim was not to compensation for disturbance but to "compensation for any other matter not directly based on the value of land". He acknowledged that there is no reported case in which a claim to loss of earnings, or to loss of business profits, has been awarded to an owner who was not in occupation; but he submitted that none of the authorities excludes such a claim which falls within the words of the section and within the general principle as stated in Harvey v Crawley Development Corporation.
Examination of the authorities has demonstrated, I think, that, as Mr Barnes has submitted, no decision expressly limits the extent of rule 6 in section 5 of the 1961 Act so as to confine the words "compensation for any other matter" to items of costs only.
In Horn v Sunderland Corpn 1941 2KB 26, the question was whether the owner of agricultural land could recover compensation for the value of the land on the basis that it was ripe for building and, in addition, compensation for disturbance. It was held that the statutory compensation must never exceed the owners actual loss. In reaching that conclusion Sir Wilfred Greene MR said of the rules enacted in the Acquisition of Land (Assessment of Compensation) Act 1919, which are now in section 5 of the 1961 Act:
"These rules in a number of respects alter the principles governing the assessment of compensation which had been established by judicial interpretation under the Lands Clauses Acts. The principal rule to be considered in the present case is rule 2... it will be seen at once that this principle of valuation differs from that adopted under the Lands Clauses Acts since the test adopted is that of a willing seller in the open market. Had the matter stood there, it would appear that the price or compensation to be paid for the land would have had to be ascertained without giving any consideration to loss suffered by the owner through disturbance. But rule 6 provides...
Now, rule 6 does not confer a right to claim compensation for disturbance. It merely leaves unaffected the right which the owner would before the Act of 1919 have had in a proper case to claim that compensation to be paid for the land should be increased on the ground that he had been disturbed."
In the same case at page 40 Scott L.J said:
"It was argued before us... that whatever the law had been before, the effect of rule 6 was to create a general right to compensation for "disturbance", and such other matters as are covered by the general words of that rule, over and above the price of the land taken, and that it was the statutory duty of the Assessing Tribunal, whatever the basis of valuation on which the price had been calculated, to add this figure to the valuation of the land to ascertain the total compensation. I do not accept that contention, for I agree with the opinion of Lord Alness ... in Venables, 1932 SC573, that rule 6 "confers no new rights although it manifestly purports to save existing rights". The rule deals with other matters besides "disturbance" but that topic will serve as typical. The rule appears to me to have been inserted for two purposes, one general and the other particular - general, to prevent misconception as to the scope of the alteration affected by rule 2 in the previous judicial basis for ascertaining the market value to the owner of the land sold, and in particular to forestall the argument that a willing seller must in law be presumed to have moved out voluntarily to give vacant possession to the buyer. If these be the operative effects of the rule, the legal right to compensation for disturbance stands today where it did before the Act of 1919. In those cases where it was formerly payable, it is still payable; in those where it was not payable, it is not payable today".
Nothing in the judgments in that case suggests to me that the provisions of the 1919 Act (which followed the report in 1918 of the Committee of which Scott L.J., as
Mr Leslie Scott KC MP was Chairman) were understood to limit compensation under rule 6 to claims for disturbance and, under the remaining words, to costs.
In Harvey's case, the claimant was the owner occupier of a house which was compulsorily purchased at an agreed price. Included in that price were the legal costs at purchase and expenses incurred in moving her furniture and in having curtains and carpets adjusted to fit a new house. She claimed in addition as "compensation for disturbance" under rule 6 of section 2 of the 1919 Act surveyors' fees, legal costs and travelling expenses incurred, first, in an abortive proposed purchase of a new house and, secondly, in the purchase of a new house. This court held that the claimant was entitled to the additional costs. Since the claimant was an owner in occupation, the court did not have to consider the question raised in this case. After reference to the abolition by rule (1) of the "added sop which was ... given in these cases to soften the blow of compulsory acquisition", Denning L.J said that "it leaves untouched the rule that everything which is a direct consequence of the compulsory acquisition can be recovered under the head of "compensation for disturbance". He continued:
"I would therefore say that this money which has been expended .. which is the direct consequence of Mrs Harvey being turned out of her house, is properly to be regarded as compensation for disturbance. But I would not like this to be taken too far. Cases were put in the course of the argument. Supposing a man did not occupy a house himself but simply owned it as an investment. His compensation would be the value of the house. If he chose to put the money into stocks and shares, he could not claim the brokerage as compensation. That would be much too remote. It would not be the consequence of the compulsory acquisition but the result of his own choice in putting the money into stocks and shares instead of putting it on deposit at the bank. .... These illustrations show that the owner only recovers costs of the present kind in a case where the house is occupied by an owner living there who is forced out and reasonably finds a house elsewhere in which to live".
As Mr Barnes pointed out, Lord Justice Denning did not reject the claim of the non occupying owner to the costs of brokerage on the ground that, since he was not in occupation, he could have no claim under the rule, but on the ground of remoteness.
In that case at page 494 Romer L.J said:
"It seems to me that the authorities ... established that any loss sustained by a dispossessed owner (at all events one that occupies his house) which flows from a compulsory acquisition may properly be regarded as the subject of compensation for disturbance, provided, first, that it is not too remote and secondly, that it is the natural and reasonable consequence of the dispossession of the owner."
Finally, Sellers L.J at page 496 said:
"Romer L.J has stated the principles to be derived from the cases .. and on those principles .. it becomes in any given case a question of fact for the tribunal whether any particular item of expenditure does come within their terms".
In Lee -v- Minister of Transport, 1966 1QB 111, the issue as to compensation arose, after the giving of a purchase notice under section 143 (1) of the Town and Country Planning Act 1962 which provided that compensation "shall not include any amount attributable to disturbance". The claimant, who had agreed the price for the property, claimed in addition a sum in respect of the surveyor's fees incurred in the formulation and agreeing of the claim. It was argued for the acquiring authority that, since "disturbance" had been judicially interpreted as meaning all personal loss, including surveyors fees, caused by compulsory acquisition, the exclusion of "disturbance" involved exclusion of surveyors fees. Reliance was placed upon the judgments in Harvey's case. The argument was rejected. Lord Denning MR at page 119 said:
"In 1919 Parliament laid down the rules on which compensation was to be assessed for compulsory acquisition ... these rules were reenacted in 1961 ... by these provisions Parliament modified the system which had stood since 1845. It took away the ten per cent which used to be allowed for the fact of the acquisition being compulsory. It left untouched the compensation for injurious affection and severance. Then it preserved these three heads of compensation: (1) "the value of the land". The owner is to receive the value of the land as in the open market between a willing vendor and a willing purchaser. ... (2) Compensation for "disturbance". The owner is to receive the personal loss sustained by him by reason of being disturbed in his possession. That is, by reason of having to vacate the premises. This includes such items as the cost of moving his furniture ... and fees on getting another house: see Harvey. (3) Compensation for "any other matter not directly based on the value of land". This includes, I think, the fees which the owner has to pay to his surveyor, valuer or agent to prepare his claim. Such fees and commission have always been allowed on a compulsory acquisition. ... It cannot properly be said to be due to "disturbance". It must come, therefore, under "any other matter".
Russell L.J at page 123 said:
"Rule (6) .... is a precautionary rule, but it undoubtedly envisages the rule (2) might be thought to exclude compensation for some matter not directly based on the value of land which is not disturbance. A provision to that effect remained current when the equivalent of section 143 was first introduced in 1959; and indeed the provision was reenacted by section 5 of the ... 1961 Act. No one could suggest any meaning that could be given to the words "any other matter not directly based on the value of land" unless it were a reference to the established practice of including in the value of land an allowance for the expenses to which the owner was put in establishing the value of the land, as something which was not already embraced in the word "disturbance". So the owner contended that "disturbance" in section 143 ... did not include this "other matter". This would seem to me to be a sound argument: The draftsman of section 143 .. had ready to hand a phrase which would clearly have embraced and excluded the expenses in question and markedly failed to use it".
Although, as recorded by Russell L.J., no one could think of any meaning to be given to the words "any other matter", other than an allowance for expenses, it was not suggested that the only sort of claim which could arise as "any other matter" was necessarily limited to items of cost.
The only reported case is in which the present issue has been directly considered is Kovacs v City of Birmingham 1984 272 EG 437, a decision of Mr Mallett, FRICS, sitting as the selected member of the Lands Tribunal. He is, of course, the same member who decided this case. The property acquired was a dwelling house in respect of which a control order had been made under the Housing Act 1964. The questions included (1) whether a claimant not in occupation of the land is entitled to receive a disturbance payment under section 5(6) of the 1961 Act; and (2) whether a claimant is entitled to receive compensation for loss of the business of the management of the dwelling. The claimant was not represented. After reference to the judgments in Harvey's case, Mr Mallett, as to the first question, held that a claimant who is not in occupation of the land acquired is not entitled to a disturbance payment under section 5(6). As to the second question, he did not rule it out as a matter of law but held that it was a question of fact which could not be decided before the substantive hearing.
It is, I think, surprising that this point has not previously been considered in this court. The rule has been in place since 1919. It must, I think, be uncommon for the owner of an interest which is compulsorily acquired, and who is not in occupation, to be able to point to some significant damage consequent upon the taking of his interest, other than costs and expenses, which is the natural and reasonable consequence of the taking of his interest and not too remote. It appeared at first to me that the origin of the statutory provision, which was intended to preserve the principles established by judicial decision, supported the contention that the provision itself could not extend beyond the cases in which recovery of consequential loss had been allowed; and that extension of such categories would require legislation as was effected by section 37 of the Land Compensation Act 1993.
Miss Appleby relied upon the decision in Woolfson v Strathclyde RC 1979 38P and CR 521, in which the facts are markedly similar to those of this case. The first claimant owned shop premises. Adjoining shop premises were owned by the second claimant, a company in which the first claimant and his wife owned the shares. All the premises were occupied, for the purposes of its business, under an informal arrangement with the first claimant, by C. Ltd which was managed and controlled by the first claimant. The first claimant was paid a salary by C. Ltd. The claims advanced were for the value of the shop premises and, in addition, £95,000 in respect of disturbance under section 12(6) of the Land Compensation (Scotland) Act 1963 which is in the same terms as rule 6 of section 5 of the 1961 Act. A claim based upon treating the company structure as unreal, upon the authority of DHN Food Distributors v Tower Hamlets LBC 1976 1 WLR 852, was rejected. Under the rules then enforced no claim could be advanced by C. Ltd. In the House of Lords, a further line of argument, to the effect that compensation for disturbance is merely one aspect of the value of the land to the person whose interest in it is compulsorily acquired, was also rejected. Lord Keith at page 527 said:
"It must ... kept in mind that any right to compensation for disturbance presupposes that the owner of the relevant interest has in fact suffered disturbance. Then it was submitted that the land had special value for the first claimant, the owner of it, in respect that by reason of his control of the right of occupation he was in a position to put into and maintain in occupation a company for all practicable purposes completely owned by him and had done so. The carrying on by the company of its business conferred substantial benefits on him. If the company were put out of the land through compulsory purchase he would have to incur expense in connection with the obtaining of other premises for it to occupy and would suffer loss. Compensation for the compulsory purchase, as payable to the first claimant, ought to reflect this element of special value to him, and the claim in respect of disturbance was the appropriate way to secure that result. .....
This line of argument was unsupported by authority and in my opinion it also lacks any foundation in principle. The fact of the matter is C. Ltd was the occupier of the land and the owner of the business carried on there. Any direct loss consequent on disturbance would fall upon C. Ltd, not the first claimant. Insofar as the first claimant would suffer any loss, that loss would be suffered by virtue of his position as principal shareholder in C. Ltd, not by virtue of his position as owner of the land. His interest in the loss is at best an indirect one, no different in kind from that of his wife, whose interest as a shareholder, cannot be completely ignored, or that of creditors of C. Ltd. The argument is in my opinion, unsound, and must be rejected."
Mr Barnes submitted that the court there was considering only a claim based upon disturbance. The claim was dismissed because the loss suffered by the first claimant upon the taking of the land was regarded as not consequential upon the taking but as indirect only. The question whether the loss of earnings suffered by
Mr Macdougall in this case was caused by the compulsory acquisition and was not too remote, was, said Mr Barnes, a question of fact for the member and had been decided by him in favour of Mr Macdougall. That decision should stand unless it could be said that the decision was one which, upon the facts, was not open to him in law.
Miss Appleby did not submit that any discernable legislative policy or purpose supported her submission. For my part, I agree that no such policy can be discerned either from the language of the statute or from the legislative history. Let it be supposed that the claimant holds the lease of office premises and that he has permitted occupation by a company in which he owns one quarter of the shares, and by which he is employed. Upon acquisition of the premises compulsorily, the company, if I am right upon the construction of section 37 of the 1973 Act, becomes entitled to compensation for disturbance under section 37 and the claimant, through the company, would recover his share of that compensation. If the claimant, having done all that he can to mitigate his losses, suffers loss of earnings over a period of one year as the result of the acquisition of his leasehold interest before regaining employment, upon the submissions for the Council, he has no claim. If such a claimant, however, has retained occupation and has carried on the same work while self-employed, he would have been entitled to compensation for the consequential loss of earnings. The denial of compensation where the claimant is employed by an occupying company, if it cannot be explained in terms of remoteness, appears arbitrary.
I have reached the conclusion that the Council has failed to identify any error of law by the member in holding that Mr Macdougall was entitled to claim in respect of the loss of the service agreement. Such a claim is not excluded merely because Mr Macdougall was not in occupation. Further, in my judgment, upon the facts before the member and as found by him, it was, I think, open to the member to conclude that such a claim was not excluded as too remote in law.
Double counting.
The last question is whether, by awarding the sum of £263,000 to Crest for the destruction of the goodwill of the business and £61,068,000 to Mr Macdougall for loss of the service agreement, the member duplicated to some extent the awards of compensation. The submission for the Council, as I understood it, was that the award to Crest must include the loss of future profits. Those profits could not have been realised by sale of the goodwill, on the basis that
Mr Macdougall would have continued to receive out of the earnings of the company the salary and other benefits on which the award to him was based. I understand and have sympathy for the Council's concern over these awards. The answer, however, is that, on the facts found by the member, there is no double counting. The award to the company was based upon the assumption, which the member accepted to be well founded, that the value of the goodwill could have been realised with the service agreement of Mr Macdougall continuing to age 65.
For these reasons I would dismiss the appeal of the Council.
LORD JUSTICE MANN: I agree.
LORD JUSTICE NOLAN: I also agree.