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London Borough Of Hillingdon v ARC Ltd [1998] EWCA Civ 657 (7 April 1998)
URL: http://www.bailii.org/ew/cases/EWCA/Civ/1998/657.html
Cite as:
[1998] RVR 242,
[1998] 3 WLR 754,
[1999] Ch 139,
[1998] 3 EGLR 18,
[1998] 39 EG 202,
[1998] EWCA Civ 657,
[1999] BLGR 282
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IN
THE SUPREME COURT OF JUDICATURE
CHANI
97/0974 CMS3
COURT
OF APPEAL (CIVIL DIVISION)
ON
APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY
DIVISION
(Mr
Stanley Burnton QC)
Royal
Courts of Justice
Strand,
London WC2
Tuesday,
7th April 1998
B
e f o r e :
LORD
JUSTICE NOURSE
LORD
JUSTICE POTTER and
LORD
JUSTICE MUMMERY
---------------
LONDON
BOROUGH OF HILLINGDON
Plaintiff
(Respondent)
-v-
ARC
LIMITED
Defendant
(Appellant)
---------------
Handed
Down Judgment prepared by
Smith
Bernal Reporting Limited
180
Fleet Street London EC4A 2HD
Tel:
0171 421 4040 Fax: 0171 831 8838
(Official
Shorthand Writers to the Court)
---------------
MR
N KING (MR R WARREN 7.4.98)
(instructed by Messrs Lawrence Tucketts, Bristol) appeared on behalf of the
Appellant Defendant.
MR
J HARPER QC
(instructed by the Environmental Law Practice, London Borough of Hillingdon)
appeared on behalf of the Respondent Plaintiff.
---------------
J
U D G M E N T
(As
Approved by the Court)
Crown
Copyright
Tuesday,
7th April 1998
LORD
JUSTICE POTTER:
INTRODUCTION
1. The
question which arises upon this appeal is whether a claim for compensation for
compulsory purchase resulting from entry by an acquiring authority onto land
pursuant to Section 11 of the Compulsory Purchase Act 1965 ("the 1965 Act") is
subject to the limitation period laid down in Section 9 of the Limitation Act
1980 ("the 1980 Act") notwithstanding that the amount of compensation payable
has not been agreed or determined by the Lands Tribunal.
THE
FACTS
2. There
are agreed facts in this case which can be shortly summarised in this way. In
1972 the defendants/appellants became the lessees of land bordering the Grand
Union Canal on which they operated their minerals, processing and distribution
depot, known as the West Drayton Aggregates Depot. The lease was for a period
of thirty-five years from 24th December 1970. In 1980 the
plaintiff/respondents, the London Borough of Hillingdon ("the Authority") made
the London Borough of Hillingdon Yiewsley By-pass (Cherry Lane Roundabout to
High Street Yiewsley) Compulsory Purchase Order (No.1) 1980. ("The CPO"). It
authorised compulsory purchase of land for the Yiewsley by-pass including parts
of the appellants' Depot which were required for the construction of a single
carriageway flyover. In December 1981, the Secretary of State confirmed the
CPO without amendment. On 22nd March 1982, the Authority served a Notice to
Treat in respect of the appellants' land, followed, on 7th April 1982, by a
Notice of Intention to Enter. On 19th April 1982 the appellants served a
Claimant's Claim in Answer to the Notice to Treat. The sum stated to be
claimed by way of compensation was £400,000 plus costs.
3. On
26th April 1982, the Authority entered to construct what were known as the
Phase 1 works which were completed by April 1984. The carriageway was
officially opened on 11th May 1984. However, for reasons which need not be
elaborated, no detailed claim was put forward by way of follow-up to the
appellants' original Claim in Answer to the Notice to Treat, until 2nd January
1992 when the Authority received the appellants' claim in respect of both the
Phase 1 works and certain further Phase 2 works carried out in the interim.
That claim, and a subsequent claim under Section 52 of the Land Compensation
Act 1973, were both rejected by the Authority for failing to provide sufficient
proof to justify the appellants' claims. A subsequent claim was made in
respect of the Phase 1 and Phase 2 works which was also rejected on 9th
November 1993.
4. By
Notice dated 6th September 1995, the appellants made a reference to the Lands
Tribunal under Section 1 of the Land Compensation Act 1961 in respect of both
the Phase 1 and Phase 2 works. It was the Authority's case that the claim in
respect of Phase 1 was so stale that it was not capable of precise
investigation so long after events to which it referred. On 29th November
1995, the Authority made an interlocutory application to the Lands Tribunal
pursuant to Rule 49 of the Lands Tribunal Rules 1975 for a preliminary hearing
on a Point of Law.
5. By
Order dated 12th December 1995, the Lands Tribunal identified one of the points
of law in issue as:
(1) Whether
any claim for compensation by ARC Ltd arising from the exercise by the ...
[Authority] ... of its powers under the .. [CPO} .. is now barred as a result
of the provisions of S.9 of the Limitation Act 1980.
By
a further Order made on 21st May 1996 the Lands Tribunal declined jurisdiction
to decide that Issue.
6. By
Originating Summons dated 9th July 1996, the Authority sought the determination
of the High Court, Chancery Division, upon the Issue, claiming a declaration
that the claim of the appellants for compensation was time-barred under S.9 of
the 1980 Act.
THE
JUDGE'S DECISION
7. On
12th June 1997 Stanley Burnton QC sitting as a Deputy Judge of the High Court
determined that the appellants' claim for compensation was indeed time-barred
under that Section. His decision is reported at [1998] 1 WLR 174.
8. Observing
that it had been widely assumed, on the basis of the decision of the Divisional
Court in Turner -v- Midland Railway Company [1911] KB 832, that no limitation
period is applicable until the amount of the compensation has been agreed or
determined, the judge held that such assumption was incorrect. He found that
the appellants' cause of action arose when the authority entered upon and took
possession of the land in accordance with the procedure laid down in Section 11
of the 1965 Act, that being the day when the defendant first had a right to
compensation and to interest upon the amount of such compensation. He held
that the compensation to which the appellants were entitled was "a sum
recoverable by virtue of any enactment" within the meaning of Section 9 of the
1980 Act, irrespective of whether the compensation had yet been quantified by
agreement or by the Lands Tribunal and that, upon that basis, the applicable,
6-year limitation period expired in 1988. While it was not essential to his
decision, he went on to hold that a reference to the Lands Tribunal is "an
action to recover" compensation for the purposes of Section 9(1) of the 1980 Act.
THE
RELEVANT STATUTORY PROVISIONS
9. The
appellants' right to compensation in respect of the Phase 1 works arose under
Section 1 the 1965 Act, which provides:
This
Act shall apply in relation to any compulsory purchase to which Part II of the
Acquisition of Land Act 1981 or Schedule 1 to that Act applies ...
Section
11 of the 1965 Act, so far as material, provides:
(1) If
the acquiring authority have served Notice to Treat in respect of any of the
land and have served on the owner, lessee and occupier of the land not less
than fourteen days' notice, the acquiring authority may enter on and take
possession of the land or of such part as is specified in the Notice; and then
any compensation agreed or awarded for the land of which possession is taken
shall carry interest .. from the time of entry until the time the compensation
is paid or it is paid into court in accordance with this Act ...
(2) The
acquiring authority may also enter on and take possession of any of the land by
following the procedure in Schedule 3 to this Act.
(3) ..
(4) Except
as provided by the foregoing provisions ..., the acquiring authority shall not,
except with the consent of the owners and occupiers, enter on any of the land
subject to compulsory purchase until the compensation payable for the
respective interests in that land has been agreed or awarded, and has been paid
..
Section
6 of the 1965 Act provides:
If
a person served with a Notice to Treat does not within 21 days from the service
of the notice state the particulars of his claim or treat with the acquiring
authority in respect of his claim, or if he and the acquiring authority do not
agree as to the amount of compensation to be paid by the acquiring authority
for the interest belonging to him or which he has the power to sell, or for any
damage which may be sustained by him by reason of the execution of the works,
the question of disputed compensation shall be referred to the Lands Tribunal.
Section
7 of the 1965 Act provides:
In
assessing the compensation to be paid by the acquiring authority under this
Act, regard shall be had not only to the value of the lands to be purchased by
the acquiring authority, but also to the damage, if any, to be sustained by the
owner of the land by reason of the severing of the land purchased from the
other land of the owner, or otherwise injuriously affecting that other land by
the exercise of the powers conferred by this or the special Act.
The
provision in Section 6 for the reference of the question of disputed
compensation to the Lands Tribunal is consistent with Section 1 of the Land
Compensation Act 1961 which provides:
Where
by or under any statute .. Land is authorised to be acquired compulsorily, any
question of disputed compensation .. shall be referred to the Lands Tribunal
and shall be determined by the Tribunal in accordance with the following
provisions of this Act.
It
is not in dispute between the parties that the provision of the Limitation Act
1980 applicable in this case is Section 9(1) which provides:
"An
action to recover any sum recoverable by virtue of any enactment shall not be
brought after the expiration of six years from the date on which the cause of
action accrued."
[It
is to be noted that the predecessor of this provision, S.2(1)(d) of the
Limitation Act 1939, was to similar effect, although it contained an exception
in respect of "a penalty or forfeiture or sum by way of penalty or forfeiture"].
By
Section 38 of the 1980 Act (Interpretation), previously S.31(1) of the 1939 Act:
"'action'
includes any proceeding in a court of law, including an ecclesiastical court"
10. The
1965 Act does not contain any provision concerned expressly with limitation of
actions. However it is of interest that Section 10 of the Compulsory Purchase
(Vesting Declarations) Act 1981 provides as follows:
10. Acquiring
authority's liability arising on vesting of land.
(1) Where
any of the land specified in a general vesting declaration has become vested in
an acquiring authority by virtue of Part III of this Act, the acquiring
authority shall be liable to pay the like compensation, and the like interest
on the compensation agreed or awarded as they would have been required to pay
if they had taken possession of the land under Section 11(1) of the Compulsory
Purchase Act 1965.
(2) ...
(3) The
time within which a question of disputed compensation arising out of an
acquisition of an interest in land in respect of which a notice to treat is
deemed to have been served by virtue of Part III of this Act may be referred to
the Lands Tribunal shall be six years from the date at which the person
claiming compensation, or a person under whom he derives title, first knew or
could reasonably be expected to have known of the vesting of the interest by
virtue of Part III of this Act. This subsection shall be construed as one with
Part I of the Limitation Act 1980.
11. Finally,
it is to be noted, that whereas Section 3(6)(a) of the Lands Tribunal Act 1949
provides that, subject to the provisions of that Act, rules may be made for
regulating proceedings before the Lands Tribunal and may in particular make
provision:
"as
to the time within which any proceedings before the Lands Tribunal are to be
instituted"
Neither
the Lands Tribunal Rules 1975 or 1996 make any such provision.
12. The
parties have treated the question to be determined under two separate heads for
the purposes of their submissions. First: at what time does the cause of
action accrue under Section 9, Limitation Act 1980? Second: does Section 9(1)
apply to references to the Lands Tribunal?
AT
WHAT DATE DOES THE CAUSE OF ACTION ACCRUE?
13. It
is not in issue between the parties that the compensation (if any) to which the
appellants may be entitled is a "sum recoverable by virtue of any enactment"
under S.9(1) of the 1980 Act
14. There
is also no dispute that, subject to the limitation point, the appellants are
entitled to be compensated for the taking of their land pursuant to the CPO,
Notice to Treat and Notice of Entry. Whilst none of the relevant statutory
provisions explicitly confers the right to compensation, that right is assumed,
or to be inferred from the terms of Sections 6, 7, 11(1) and 11(4) of the 1965
Act which refer variously to compensation being 'paid', 'agreed' or 'awarded'.
Finally it is not disputed that both the Authority and the appellants were
entitled, in the event that the amount of compensation was not agreed, to have
the disputed compensation referred to the Lands Tribunal for quantification
under S.1. of the Land Compensation Act and S.6 of the 1965 Act. The rival
submissions are directed to the question whether (as the Authority contends)
that right of the appellants itself amounts to a cause of action for the
purposes of the 1980 Act (reference by the appellants to the Lands Tribunal in
default of agreement in term amounting to "an action to recover a sum
recoverable by virtue of any enactment") or whether (as the appellants contend)
the cause of action does not arise unless or until the sum is quantified by
agreement or decision of the Lands Tribunal.
15. Mr
King for the appellants submits, rightly, that the answer to the question "when
does a cause of action to recover a sum recoverable by virtue of any enactment
accrue?" is to be found in the proper construction of the statute giving the
right to recover: see Swansea City Council -v- Glass [1992] 1 QB 844 per Taylor
LJ at 852 B-C. He goes on to submit that Turner -v- Midland Railway Company is
authority for the proposition that the cause of action to recover compensation
following the compulsory acquisition of land does not accrue until the amount
of compensation has been agreed or determined.
16. The
claim in Turner was for injurious affection under S.68 Land Clauses Act 1845
(now S.10 of the 1965 Act). Works carried out by the defendant under a special
Act of Parliament had been completed in April 1903, the plaintiff claiming
compensation for the first time in August 1909. Upon the defendant refusing to
pay, the matter went to arbitration. When the plaintiff brought an action on
the award of compensation in the County Court, the defendant relied on the
Statute of Limitations 1623. The County court judge held that the cause of
action arose upon presentation of the claim for compensation and the action had
therefore been brought in time. On appeal, it was conceded that the appeal
must fail. However, in the context of an argument about whether the
appropriate limitation period was six years under the Statute of Limitations,
as the judge had held, or twenty years under the Civil Procedure Act 1833,
Ridley J observed:
"..
even though the statute may incorporate S.68 of the Lands Clauses Act, that
will give no cause of action in respect of the damage. That section gives,
not a cause of action for a wrong, but compensation for damage by a lawful
act. At the date, therefore, of the execution of the work, and down to the
time of the arbitrator's award, there is no cause of action at all to which the
Statute of Limitations can apply. But on the making of the award a cause of
action, in my opinion, for the first time arises. The action is founded on the
award and on the award alone and it is from the date of the award that the
statute runs."(p.834-5)
Avery
J, to like effect, stated:
"All
that S.68 gave was right to compensation, which is a very different thing to a
cause of action. But until the amount of that compensation was ascertained by
the award no action could be brought .." (p.835)
17. Mr
King also relies upon the Scottish case of Royal Bank of Scotland -v- Clydebank
D.C. 1992 S.T. 356. That was a case under paragraph 36 of Schedule 24 to the
Town and Country Planning (Scotland) Act 1972 a provision equivalent to S.10 of
the Compulsory Purchase ((Vesting Declarations) Act 1981, ("the CP(VD)A") which
is applicable where land is acquired by means of a general vesting declaration
rather than (as in the present case) by means of a Compulsory Purchase Order
followed by entry onto the land. In such a case, S.10(3) of the CP(VD)A
provides for a six year time limit for the reference of questions of disputed
compensation to the Lands Tribunal. S.7(1) provides that Notice to Treat is
deemed to have been served on the date of the general vesting declaration and
S.10(1) provides that the compensation payable is the same as it would have
been if possession had been taken under S.11(1) of the 1965 Act. The relevant
Scottish legislation has similar provisions. In the course of holding that the
obligation to pay compensation following the compulsory acquisition of land
arose not out of common law but from statute, the Lord Justice Clerk stated (at
p.361F):
"I
do not read the legislation as imposing upon an acquiring authority an
obligation to assess the amount of a claim for compensation nor to make payment
of such an amount to the landowner; the obligation on the acquiring authority
is an obligation to pay compensation as provided for in the statute, that is,
an obligation to pay compensation where that has been agreed or assessed by the
Lands Tribunal."
See
also per Lord McCluskey at (p.363L) and Lord Clyde (at p.367C).
18. Mr
King also relies on the decision of the Court of Appeal in Halstead -v-
Manchester City Council [1998] I All E.R.33 in which it was held that the
statutory right to recover interest on compensation under S.11(1) of the 1965
Act did not arise until the amount on which interest was due was agreed or
awarded.
19. On
the basis of the above authorities, Mr King submits that the position is clear
and that the judge was wrong to conclude that the appellant's cause of action
accrued at the time of the authority's entry on the land pursuant to S.11 of
the 1965 Act.
20. Mr
Harper QC for the Authority, on the other hand, supports the reasoning of the
judge, which was to concentrate upon the wording of S.9 of the 1980 Act, which
(as already noted) is in all relevant respects in the same terms as S.2(1)(d)
of the Limitation Act 1939. He submits that various decisions in that context
(see further below) make clear that the term "cause of action" is to be widely
construed; and that it is apt to cover, and should be construed so as to cover,
the right to compensation which arises following entry upon land by an
acquiring authority pursuant to a Notice to Treat. He distinguishes the
observations of the Divisional Court in Turner on the grounds that there was no
equivalent to S.9 of the 1980 Act at the time of that decision, so that the
only way in which compensation could be enforced in the courts (if it could not
be regarded as damages payable for some wrong) was by an action in debt (as
made clear in the argument of counsel on p.834). Since an action for debt
could not be maintained otherwise than for a liquidated amount, the court did
no more than decide that no cause of action arose in debt until the
arbitrator's award. Thus, he submits, the deputy judge in this case was right
to conclude (at p.182D) that:
"..
a right to compensation may be a right to a "sum recoverable by virtue of
..[any enactment}.. within the meaning of section 9 of the Limitation Act 1980
and, if it is, there is a cause of action for the purposes of S.9 of the Act of
1980. Turner's case cannot be authority on this question, since there was no
such provision when it was decided."
21. As
to the Clydebank case, Mr Harper submits that it was principally concerned with
whether or not there existed a common law right to compensation which, in
circumstances where the limitation period had expired, could be relied on to
"outflank" the statutory scheme (including the limitation provision). He
relies upon the finding that the statutory time limit for reference to the
Lands Tribunal in a vesting case was a procedural bar which did not extinguish
the original right to compensation (per Lord Clyde at p.367 C-D) and emphasises
that the decision did not determine when the petitioner's substantive right to
compensation first accrued, a point which does not appear to have been argued.
22. As
to the decision in Halstead, Mr Harper points out that the court simply held
that the statutory right to interest under S.11 of the 1965 Act arose when the
compensation was awarded or agreed and that it then became payable
retrospectively in respect of the period from the date when entry had occurred;
the court did not purport to answer the question of when the right to
compensation itself first arose or accrued. Indeed, in Halstead, the Court of
Appeal stated that the decision of the deputy judge in the present case was
irrelevant (see p.41 e-g).
23. Mr
Harper submits that the judge was correct in approaching the question before
him on the basis of the following propositions (see p.187):
(1) The
expression "action" in Section 9 of the 1980 Act is extremely wide and
encompasses all proceedings in a court of law.
(2) The
expression "cause of action" in Section 9 is correspondingly wide: see China
-v- Harrow Urban District Council [1954] 1 QB 178. [In that case the
expression "action" was held to include an application for a distress warrant
in respect of local rates, and the "cause of action" was held to arise at the
time demand was made for payment.]
(3) What
may not have amounted to a cause of action for the purposes of the Statute of
Limitations 1623 (see Turner) may nonetheless be a cause of action for the
purposes of S.9 of the 1980 Act, and indeed its predecessor S.2(1)(d) of the
1939 Act: ibid.
(4) The
policy of the Limitation Acts, i.e. to prevent the litigation of stale claims,
is equally applicable to claims against public authorities for sums payable by
them pursuant to statute: Central Electricity Board -v- Halifax Corporation
[1963] AC 785 ("the CEB case") and West Riding County Council -v- Huddersfield
Corporation [1957] 1 QB 540.
(5) A
cause of action may accrue for the purposes of Section 9 of the 1980 Act even
though a constituent element of the cause of action, if disputed, may have to
be determined by someone other than a court of law; see the CEB case.
(6) An
action may be for "a sum recoverable by virtue of an enactment" even though the
liability in question is not, and cannot be, quantified when the action is
commenced: see Re Farmizer (Products) Ltd, Moore and another-v- Gadd and
another {1997] 1 BCLC 589.
24. Mr
King does not dispute any of those six propositions, but says that neither
individually nor collectively, do they overcome the difficulty that the
obligation of the authority is only to pay compensation once agreed or assessed
by the Lands Tribunal (see the Clydebank case) and hence the cause of action or
right to sue cannot arise before such agreement or assessment has taken place.
25. It
seems to me that a number of authorities make clear that, for the purposes of
limitation, a cause of action may accrue for "any sum recoverable by virtue of
any enactment" although that sum has yet to be quantified by some process of
agreement or adjudication.
26. In
Pegler -v- Railway Executive [1948] AC 332, the plaintiff claimed compensation
on the ground that he had suffered loss as a result of the postponement of his
promotion as a railway employee because there had been a change in his
conditions of employment, which was alleged to be contrary to the provisions of
schedule III of the Railways Act 1921. That Schedule created a right to
compensation for his loss and provided that any question as to whether there
had been a breach of the statute should be referred to statutory arbitration,
the arbitrator having power to award such sum as was sufficient to compensate
the plaintiff for his loss. His loss began in 1933 when another man was
promoted over him, the plaintiff not being promoted until 1936. The House of
Lords held that the claim was time-barred. On the basis that the claim was
required to be determined by arbitration, the reference to "cause of action" in
the Limitation Act 1939 was read as "cause of arbitration". It thus followed
that the plaintiff's cause of action accrued at the time of the change in his
conditions of employment notwithstanding the difficulties of quantifying the
loss.
27. In
China -v- Harrow Urban District Council, to which I have already referred, Lord
Goddard stated in relation to the 1939 Act (at p.186):
"But
when I find reference both to ecclesiastical courts and all classes of
arbitration in the present Act it leads me to think that the legislature meant
to bring every class of litigation, before whatever tribunal it might come,
within the ambit of the statute."
Sellers
LJ said (at p.187):
"The
definition in the Act was obviously intended to enlarge the more normal meaning
of action and I do not think the context of Section 2 does require that the
definition of "action" should not be applied to it. If the definition is
applied, then the section should be read to provide that the following
proceedings in a court of law shall not be brought after the expiration of six
years from the date on which the cause of proceedings in a court of law
accrued, that is to say, (b) proceedings in a court of law to recover any sum
recoverable by virtue of any enactment. That interpretation seems to me to be
in harmony with the context, not repugnant to it."
See
also per Havers J at pp 190-191.
28. The
effect of Section 2(1)(d) of the 1939 Act was further considered by Lord
Goddard CJ in West Riding County Council -v- Huddersfield Corporation [1957] 1
QB 540. In that case the plaintiff's counsel sent to the defendant Corporation
for agreement claims in respect of two orders, being the proposed adjustments
called for by Section 151 of the
Local Government Act 1933 which, in default of
agreement as to any matter requiring adjustment, provided that the adjustment
should be referred to arbitration. An arbitrator was appointed, before whom
the corporation took the point that the claims were statute barred as having
arisen over six years before the claim was made. Lord Goddard stated (at p.546):
"In
my opinion this is a money claim and the arbitration is one to recover a sum
recoverable by virtue of an enactment .. [It has been] submitted that the cause
of the arbitration, which would be equivalent for this purpose of a cause of
action, did not arise until the parties failed to agree. I cannot think in the
circumstances that that it right. There is no obligation on the parties to
come to an agreement. The money was demanded by the County council more than
six years after the transfer had taken place and more than six years,
therefore, after the time by which they might have demanded or have required
the money ... In my opinion this is really, when the realities of the
transaction are looked at and the documents to which I have referred are
considered, simply an action to recover a sum of money by virtue of the
provision of section 151 of the
Local Government Act 1933. Therefore, in my
judgement, the answer to the arbitrator's question is that the claim is barred
by the statute, and I so declare". (emphasis added)
29. In
Central Electricity Generating Board -v- Halifax Corporation [1963] AC 785, a
dispute arose between the plaintiffs and the defendants as to whether or not
certain assets and liabilities of the defendants held in their capacity of
electricity undertakers prior to the Electricity Act 1947 coming into effect
vested in the plaintiffs on the "vesting date" of 1st April 1948. The
defendants' retention of a fund of £34,500.00 out of the revenues of their
undertaking came to the knowledge of the plaintiffs, who allowed three years to
elapse before making a claim that the fund had vested in them by virtue of the
Act. Upon the denial of the claim by the defendants, no further action was
taken until 1957 when the dispute was referred to the Minister under S.15(3) of
the Act which provided for questions arising in such matters to be determined
by the Minister in default of agreement. By that time more than six years had
elapsed since the vesting date and, upon the Minister determining the question
in favour of the plaintiffs, the respondents nonetheless refused to pay over
the sum. When sued, they pleaded that the claim was barred under Section
2(1)(d) of the Limitation Act 1939.
30. The
House of Lords upheld the limitation defence, holding that the requirement of
the Minister's decision was procedural rather than substantive. Lord Reid
stated (at p.801):
"No
new right or liability came into existence at ..... [the date of the Minister's
decision] .. the effect of the Minister's decision was merely to prove that the
sum in question had belonged to the appellants ever since the vesting date. It
created no new right of property or chose in action: it merely enabled a
pre-existing right to be enforced ... If the appellants had begun an action
within six years of the vesting date, and had applied to the Minister for his
decision when the respondents traversed their allegations that the sums sued
for had been held or used by the respondents in their capacity of electricity
undertakers, proceeding in the action could, if necessary, have been stayed to
await the Minister's decision. But they did not do that and, in my judgment,
this action is barred by Section 2(1)(d) of the Limitation Act."
Thus
it seems clear that a cause of action may accrue in respect of a right to
payment of a sum pursuant to a statutory obligation even though one of the
elements of the claim or cause of action may, if disputed, have to be
determined by someone other than a court of law.
31. Finally,
a striking example of the width of the court's approach to the definition of
"proceedings to recover any sum recoverable by virtue of any enactment" is
afforded by the recent decision of the Court of Appeal in Re Farmizer
(Products) Ltd, Moore -v- Gadd. In that case the court held that S.9 of the
1980 Act applied to proceedings under S.214 of the Insolvency Act 1986 for a
declaration that a director was liable to make a contribution to the assets of
the company on the grounds that the director knew or ought to have concluded
that there was no reasonable prospect that the company could avoid going into
liquidation. A time bar of six years from the date of liquidation was held to
be applicable. In the course of his judgment, Gibson LJ said:
"If
one asks, 'By virtue of what is the sum of £1.25m recoverable?', the
answer would surely be; 'By virtue of S.214'. It is of course only capable of
being recovered if the court chooses to make the declaration after the
statutory conditions are shown to be satisfied, but I have no difficulty in
holding that S.9 of the 1980 Act applies to such a case."
32. When
considering the provisions of S.11 of the 1965 Act in the light of the
authorities above cited, it does not seem to me that there is good reason to
construe S.11 as giving rise to a cause of action within the meaning of S.9 of
the 1980 Act only upon the agreement of the parties or the award of the Lands
Tribunal. In my view, the requirement of S.6 of the 1965 Act that "the
question of disputed compensation shall be referred to the Lands Tribunal" is
properly to be regarded as a procedural provision whereby the right to
compensation is referred for quantification, rather than as an essential step
without which the cause of action in respect of such compensation is inchoate
or incomplete.
33. I
would adopt the approach of Lord Goddard in the West Riding case. I consider
that, when the realities of the position are looked at in a case of this kind,
the right to compensation which arises as at the date of entry of the acquiring
authority is an immediate right which, in the absence of agreement (as to which
there is no obligation upon the parties) can only be enforced at the suit of
the claimant by initiating proceedings to quantify the sum due; that, in turn,
can only be done by the Lands Tribunal, just as it must be done by an
arbitrator in other statutory contexts. While the exercise may be simply one
of quantification, it is in reality an action to recover a sum of money, namely
the amount of the compensation due as assessed by the Lands Tribunal.
34. In
substance and effect the proceedings do not differ in any essential manner from
any other kind of proceedings in which a claim is made on the party liable,
liability is admitted or otherwise established, and proceedings follow when
quantum cannot be agreed. Thus, the right or cause of action which arises on
entry by the authority may properly be characterised as a right to be paid such
compensation as may be agreed or assessed by the Lands Tribunal. To treat the
date of agreement or assessment as definitive of the point at which the
claimant's cause of action arises, seems to me to revive by the back door a
distinction between debt, damages and other causes of action for statutory sums
which S.2 of the Limitation Act 1939 and S.9 of the 1980 Act were intended to
eliminate for the purposes of the law of limitation.
35. The
trend and weight of the authority to which I have referred are to be preferred
to the observations of the Divisional Court in Turner, so far as those
observations appear to lead to an opposite conclusion. It seems to me that the
judge was right to treat the passages from the judgments in that case cited by
Mr King as being limited to the context in which they arose, namely a situation
where under the Statute of Limitation of 1623, there was no equivalent to S.9
of the 1980 Act. The question before the court in Turner was expressly argued,
and implicitly decided, on the basis that any action brought could only be an
action of debt, the question being whether the debt was to be treated as an
ordinary debt to which the Statute of Limitations of 1623 applied, under which
the limitation period was one of six years, or whether it was a debt upon a
speciality, for which the limitation period was twenty years. Thus the court
held that there was no cause of action in debt until the arbitrator's award. I
agree with the judge that the case of Turner cannot be authority on the
question of what amounts to a cause of action for purposes of S.9 of the 1980
Act.
36. As
to the Clydebank case, the observation of the Lord-Justice Clerk to which Mr
King attaches so much weight was, as submitted by Mr Harper, made in a
different context, in which the mind of the court was not focused upon the
question of when the claimant's cause of action first arose for limitation
purposes; rather was it concerned with the position where a specific limitation
period had admittedly expired and the question was whether some common law
right to compensation could be said to survive outside the statutory regime.
Reference to the relevant passage shows that the words relied on were framed so
as to contrast the nature of the authority's obligation to pay following
agreement or determination with the argument that the authority had an
obligation itself to assess the amount of the claim and make payment
independently of the machinery provided in the statute. Mr King argues that
the right of the claimant, and hence his cause of action, is one framed as a
Hohfeldian correlative of the obligation defined by the Lord-Justice Clerk.
For the reasons already given, I do not agree. In this respect it is
noteworthy that Lord McCluskey, at p.363, framed the obligation of the
authority somewhat differently, namely:
"to
pay as compensation such sum as might be agreed between the owner and that
authority or, failing agreement, such sum as might be determined by the Lands
Tribunal .."
I
see no difficulty in adopting the correlative of that formulation as an
appropriate definition of the claimant's right i.e. a right to compensation in
such sum as might be agreed ... etc" (cp para 34 above). In short, I do not
consider that the Clydebank case assists Mr King's submission. Equally, in my
view, the case of Halstead does not assist him, for the reasons advanced in
argument by Mr Harper (see para 22 above).
37. In
the course of his judgment (at p.188D), the judge stated that he was fortified
in his view that the cause of action accrued on entry by the wording of S.10 of
the CP(VD)A, which treats the cause of action for compensation under that
section as accruing when the land in question vests in the acquiring authority.
He pointed out that such a provision is inconsistent with the limitation period
for compensation starting to run only when the compensation is agreed or
awarded. He stated that the express reference to S.11 of the 1965 Act
suggested an assumption by Parliament that there was no material difference
between the right to compensation under S.11 of the 1965 Act and S.10 of the
CP(VD)A. Mr King criticises that reasoning, pointing out that, since
sub-section 10(3) makes provision for the time within which a question of
disputed compensation must be referred to the Lands Tribunal, (six years from
the date which the claimant first knew or could reasonably be expected to have
known, of the vesting of the interest), that would be equally consistent with a
conclusion that no cause of action to recover the compensation was intended to
accrue until the amount of compensation had been the subject of an award by the
Lands Tribunal.
38. It
does not seem to me that valuable assistance is to be derived from S.10 of the
CP(VD)A when seeking to construe the 1965 Act. The Vesting Declaration regime
embodied in the CP(VD)A is of comparatively recent origin, essentially deriving
from the setting up of the Land Commission in 1967, the Vesting Declaration
procedure being made generally applicable by S.30 of the Town and Country
Planning Act 1968, under which the six year time limit was incorporated by
reference: see Schedule 3, Para.9. The statutory law relating to Compulsory
Acquisition, on the other hand, has much earlier origins in the Lands Clauses
Consolidation Act 1845 which was passed to provide a set of provisions which
could be incorporated with or without specified modifications in subsequent
legislation. Under that Act, there were elaborate provisions for compensation
to be set by Justices or by arbitration or by jury prior to possession being
taken by the acquiring authority. Thus, there was no need for the provision of
a limitation period in respect of the right to recover such compensation. It
was not until the Acquisition of Land (Authorisation Procedure) Act 1946 that
the acquiring authority was able to enter on and take possession of land
notwithstanding that the purchase had not been completed. That legislation
made no provision in respect of time limits. However, it was passed against
the background of the provisions of the Limitation Act 1939 and in particular
S.2(1)(d) relating to sums recoverable by virtue of statute. Against that
background it does not seem to me that the provisions of S.10 of the CP(VD)A,
passed subsequently, can assist on the proper construction of the 1965 Act.
DOES
SECTION 9(1) APPLY TO REFERENCES TO THE LANDS TRIBUNAL?
39. On
this appeal it is strictly unnecessary for the court to decide whether it is
sufficient for a claimant to refer the question of compensation to the Lands
Tribunal within six years of his claim arising in order to prevent his claim
becoming statute barred, or whether he must, within that time, issue a writ in
the High Court. That is because, in the present case, the appellants took
neither step. However, I consider that for the purposes of future guidance, it
is appropriate to deal with the matter.
40. Like
the judge, I consider that the Lands Tribunal is a "court of law" within the
meaning of S.38 of the 1980 Act. In Attorney-General -v- BBC [1981] AC 303,
the House of Lords considered the question what is a court of law, when dealing
with the law of Contempt of Court. The House held that a local valuation
court, despite its name, did not satisfy that description in the sense that it
was essentially performing an administrative, as opposed to a judicial,
function. However, those of their Lordships who referred in passing to the
Lands Tribunal did not doubt that it was a court (see Lord Dilhorne at 339F and
Lord Edmund-Davies at 350F). Lord Scarman stated:
"I
would identify a Court in (or "of" Law), i.e. a Court of judicature, as a body
established by law to exercise, either generally or subject to defined limits,
the judicial arm of the State. In this context its judicial power is to be
contrasted with legislative and executive (i.e. administrative) power. If the
body under review is established for a purely legislative or administrative
purpose, it is part of the legislative or administrative system of the state,
even though it has to perform duties which are judicial in character."
In
relation to a local valuation court, he said:
"The
fact that it is a court (Parliament's description) with an administrative
purpose does not make it part of the judicial system of the Kingdom. The
limits of its jurisdiction, as explored by Lord Radcliffe in Hope's case,
[1960] A.C. 551, reinforce the administrative nature of the purpose it serves.
At the end of the day its one power is to correct a valuation list. It imposes
no tax, no liability upon the citizen to pay any money or do any act. It has
an important role in the machinery for determining a rate, and must act
judicially: but it does not determine the amount of the rate or impose a
liability to pay it. Its work is strictly comparable with the judicial
responsibility of its predecessor, the Assessment Committee." (emphasis added)
41. It
seems clear to me that the Lands Tribunal has judicial rather than essentially
administrative characteristics. As the judge observed, it has judicial powers
and functions within a specialised and defined jurisdiction for the purpose of
resolving disputes involving the valuation of interests in land. It also has
procedural rules appropriate to a court of law. Further, in this context, it
determines the amount of the liability of an acquiring authority. Because it
is designated as a Tribunal under the supervision of the Council on Tribunals
by the Tribunals and Enquiries Act 1992, Schedule 1, it can hardly be regarded
as one of the "ordinary Courts of Law" referred to in Section 1(1)(b) of the
1980 Act. However, because of the width of the definition of "action" in S.38
of the 1980 Act, in which the qualification "ordinary" is not applied to "court
of law", I too consider that the Lands Tribunal is a Court of Law for the
purposes of the 1980 Act.
42. That
being so, it seems to me that it is appropriate to regard a reference to the
Lands Tribunal by a claimant for the purposes of resolving a question of
disputed compensation as "an action to recover" that compensation within the
meaning of Section 9(1). The alternative is to regard it as no more than a
procedural step required in order to quantify the sum to be recovered by an
action before an "ordinary" court of law. That seems to me both cumbersome and
unnecessary. Nor, in my view does any contrary argument arise on consideration
of the procedure and powers of the Lands Tribunal as set out in its procedural
Rules.
43. I
do not propose to move to a detailed consideration of those rules as the judge
most helpfully did at pp 189-190. I would simply mention a point taken by Mr
King in relation to the Lands Tribunal Rules 1996. The judge placed reliance
upon the provision in Rule 38 of the Lands Tribunal Rules 1975 which were in
force at the time the reference was made to the Lands Tribunal in this case.
That rule applied S.26 of the Arbitration Act 1950 to all proceedings in the
Lands Tribunal as the section applied to an arbitration. Thus, an award of
compensation was enabled to be enforced by leave of the High Court in the same
manner as a judgment to the same effect and, where leave was given, judgment
might be entered in terms of the award. Rule 38 also made applicable S.20 of
the Arbitration Act 1950 which provides for an award to carry interest as from
its date unless otherwise directed. As the judge noted, for reasons which he
dubbed obscure, the Lands Tribunal Rules 1996 did not contain an equivalent of
that part of the earlier Rule 38 which applied the enforcement provisions of
S.26 of the Arbitration Act 1950, although by Rule 32(b) of the 1996 Rules
provision was made for the award of compensation to carry interest. Mr King
commented that it would be extraordinary if a reference to the Lands Tribunal
to have compensation assessed were to be treated as an action to recover a sum
within S.9 of the 1980 Act until 1st May 1996 (when the 1996 Rules came into
force) but not thereafter.
44. Mr
Harper's riposte to this point was that the omission from the 1996 Rules of a
provision as to enforcement of an award appears to have been due to a simple
oversight arising when the Rules were redrafted to refer to the relevant
sections of the
Arbitration Act 1996, which sections were themselves redrafted
and differently numbered in that Act. That seems to me a likely explanation.
In any event, the omission has since been rectified by the Lands Tribunal
(Amendment) Rules 1998 in which Rule 4, by insertion of an additional paragraph
(d) into Rule 32 of the 1996 Rules, provides that
section 66 of the 1996 Act
(enforcement of the award) shall apply to all proceedings in the Lands Tribunal
as they apply to an arbitration. Thus, I do not consider that the point made
by Mr King detracts from the reasoning of the judge or the decision which he
reached. In my view a reference to the Lands Tribunal is "an action to
recover" compensation for compulsory purchase for the purposes of
S.9 of the
1980 Act.
I
would therefore dismiss this appeal.
LORD
JUSTICE MUMMERY:
I
agree
LORD
JUSTICE NOURSE:
I
also agree that this appeal must be dismissed for the reasons given by Lord
Justice Potter.
If
you were to come fresh to section 9(1) of the Limitation Act 1980 and ask the
question suggested by Peter Gibson LJ in Re Farmizer Products Ltd [1997] 1 BCLC
589, 599, sc. ″By virtue of what is the compensation resulting from entry
by an acquiring authority onto land recoverable″, the answer would surely
be ″By virtue of section 11 of the Compulsory Purchase Act 1965″.
Moreover, as Lord Justice Potter has demonstrated, it is established by
authority that a cause of action for a sum recoverable by virtue of an
enactment ″accrues″ notwithstanding that it remains to be
quantified and, further, that the quantification may have to be made by a
tribunal other than a court of law. It is therefore clear that, for the
purposes of section 9(1) of the 1980 Act, the cause of action for compensation
resulting from entry pursuant to section 11 of the 1965 Act accrues on the date
of entry.
Order: appeal
dismissed with costs; leave to appeal to the House of Lords refused.