QUEEN'S BENCH DIVISION
Strand, London, WC2A 2LL
B e f o r e :
| DURHAM COUNTY COUNCIL
|- and -
|DARLINGTON BOROUGH COUNCIL
Richard Drabble QC and Daniel Kolinsky (instructed by Mayer Brown Rowe and Maw) for the Respondent
Hearing dates: 22, 23 October 2003
Crown Copyright ©
Mr Justice Stanley Burnton: Introduction
"The functions of (Durham) County Council in relation to Darlington shall, subject to the following provisions of this Part and to any other relevant provision, be transferred to (DBC)."
The Spence arbitration
(a) The facts
"16. With effect from 30 October 1978 DCC leased part of Creebeck site under a lease dated 1 May 1979. The lease was initially for 18 months; it was expressed to be for the purpose of tipping waste and it contained provision for re-instatement prior to its termination and for indemnities. Over time the period of the lease and the area of land it covered were extended such that substantially the whole of the present site (10 hectares) was leased by DCC as at June 1984 when tipping ceased.
17. On 24 November 1978 a waste disposal licence was issued in respect of the site. The licence application stated that the principal organisations delivering to the site would be DCC and DBC. The licence permitted both domestic and building/commercial waste to be deposited, predominately the latter. In due course the licence was extended to substantially the whole of the present site.
18. Tipping began on 27 November 1978 and ceased on 29 June 1984. The sources of all of the waste deposited are not known for certain. In view of its location DBC accepts that the site is likely to have been the main site used for tipping domestic waste collected from residents in the area of DBC during this period. The parties are in dispute as to the correct inference to be drawn from the evidence as to the amount and source of the balance of the waste deposited.
19. After tipping ceased, DCC remained in occupation of the land and work was carried out which was intended to ensure that there were no adverse effects from gas or leachate discharges (in particular DCC carried out clay capping works in 1984, 1991, 1994/5 and May 1995 and gas extraction plant and monitoring boreholes were installed) but DCC did not restore the site to the condition required by the lease.
20. On 16 March 1993 DCC's Director of Environment recommended that DCC purchase the site "so that the land may be restored" and it was proposed that once restored "the County will have the option to manage the land or sell the land for agricultural purposes". The report stated that restoration should have been completed in 1984 but had not been because of "gas and groundwater and non-availability of soils". On 1 November 1993 DCC purchased the freehold of substantially the whole of the present site for £20,000.
21. At some time prior to 24 June 1994, responsibility for the site within DCC had been transferred to their Land and Property Department.
22. DCC arranged for the pollution monitoring at the site by DCWMCL. DCC contend that the monitoring was in due course carried out pursuant to the contract dated 3 March 1997.
23. On 1 April 1997 DCC's functions in relation to the DBC area were transferred to DBC. Since that date DCC claims to have incurred expenditure of £47,576 for monitoring and £31,695 for maintenance at Creebeck. DBC is seeking clarification of the sums claimed by DCC.
24. The current position is that there are continuing problems with gas and leachate contamination of the site. DBC have recognised the problems (letter 21 December 1999). A landfill gas odour suppression system has recently been installed."
"The County Secretary and Solicitor had stated in his memorandum of 23rd June 1992 that the lessor could seek damages in relation to the rent they could have received were the land to have been restored and handed back as per the original lease(s). Therefore, as we are holding over the lease, I have allowed for a damages claim based on agricultural rates in my valuation.
I have done two valuations in order to compare and contrast the two available options. Firstly, that we comply with the lease terms in restoring the land as soon as possible and hand it back to Bowater plc. This option would mean incurring costs in removing the apparatus which Durham County Council has already installed for gas extraction purposes (assuming land owner held liable for disposal of gas) and may also include being sued for their loss of income since 1984.
The second option would be to purchase the land and restore the land over a period of time, say 10 years, using materials as and when they are available locally and by advertising free tipping for subsoil/topsoil. When sufficient cover to comply with the planning consents has been achieved, then the area can be levelled and re-seeded for use as agriculture. The land can then by managed as such or sold in order to recoup the original purchase monies. The other major cost involved with his second option would be the cost of monitoring the gas extraction and de-watering systems, together with their associated running costs. The gas extraction system is already installed on site and has been for some time. The de-watering and leachate treatment system will have to be installed. (This is due to be done shortly, as the gas extraction system will not operate properly with the water table at its present high level).
There is little difference in cost between restoration now (in its most basic/cheapest form) and purchase of the land with restoration taking place "at our leisure".
It is hoped that soils may become available with the advent of road schemes in the Darlington locality. At present, it certainly does not seem convenient from Waste Disposals point of view, to restore the site. They would prefer to purchase the site; particularly as the gas extraction system is installed and running. Waste Disposal have sufficient funds available for the purchase. I therefore recommend that the purchase of the land proceed.
As the land should have been returned to agricultural, probably grazing only, this has been used as the basis for valuation – approximately £1,000/acre.
We intend to offer £750/acre (Waste Disposal have agreed to this value)."
"The County Council has leased Creebeck Quarry from Bowater plc, for tipping purposes since May 1979. The restoration of the site should have been completed in 1984, but gas and ground water and non-availability of soils have meant that restoration has not been completed.
Bowater plc are now anxious to have the site restored. However, the problems which have hindered the restoration in the past, still remain. To restore the land now would be expensive as soils have to be imported.
Also, landfill gas extraction may still remain the County Council's responsibility even if the restoration of soils were to be completed in accordance with the lease. The County Council has already installed a landfill gas extraction system on the site.
I therefore propose that the County Council purchase this land so the land may be restored as and when soils become available in the locality, such as soils from proposed road schemes in this area. When the land has been restored the County Council will then have the option to manage the land or sell the land for agricultural purposes.
Purchasing the site may avoid the County Council's liability for back rent. If this were to be sought by Bowater plc, the amount of back rent could range from £10,000, if based on loss of agricultural income, to over £160,000 if held to be based upon the last rent payable on this site. The estimated purchase price is £20,000 and funding is available in the Waste Disposal Capital Expenditure budget.
I recommend that the County Council by agreement with the parties concerned acquire the land delineated by red verging, 26.9 acres or thereabouts, on the plan laid on the table, on terms to be agreed by the Director of Land and Property."
(b) The relevant provisions of the Regulations
"(5) The relinquishing authority and the acquiring authority in relation to a transferred area shall, during the preliminary period, use their best endeavours to make agreements which–
(a) identify property of the relinquishing authority to which paragraph (6) below applies and any rights or liabilities acquired or incurred by that authority in respect of any such property or the exercise of any functions in or in relation to the transferred area;
(b) in relation to any property so identified (other than property ("surplus land") mentioned in sub-paragraph (b)(ii) of that paragraph), specify the acquiring authority for the purposes of paragraph (1) of regulation 8; and
(c) in relation to any rights or liabilities so identified (other than rights or liabilities in respect of surplus land), specify that authority for those purposes or that authority and the relinquishing authority for the purposes of paragraph (3) of that regulation.
(6) This paragraph applies to property-
(a) which is situated in the transferred area or is held for the purposes of, or in connection with, the exercise of functions in or in relation to that area; and
(b) which either
(i) is required by the acquiring authority for the purposes of, or in connection with, the exercise of functions in or in relation to that area on and after the reorganisation date; or
(ii) in the case of property which is land, is neither so required nor required by the relinquishing authority for the purposes of, or in connection with, the exercise of functions, on and after that date, in or in relation to its area."
For the purposes of the Regulations, "the relinquishing authority" referred to is DCC; DBC is "the acquiring authority"; "the transferred area" is the area of DBC, and "the preliminary period" was the period from 6 May 1996 until 31 March 1997.
"10.-(1) An authority in whom any surplus land is vested on the reorganisation date ("the custodian authority")-
(a) shall use its best endeavours to secure that the land is disposed of as soon as is reasonably practicable; and
(b) shall not, except with the consent of the Secretary of State, dispose of it for a consideration which is less than the best that can reasonably be obtained.
(3) Where the custodian authority is the relinquishing authority in relation to a transferred area, the authority shall, as soon as is reasonably practicable after a disposal under paragraph (1) above-
(a) deduct the relevant proportion of any relevant expenditure from the appropriate proportion of the disposal receipt; and
(b) if the amount found after that deduction is a positive amount, pay that amount to the acquiring authority in relation to the area.
(4) For the purposes of paragraph (3) above-
(a) the appropriate proportion is the proportion equal to the proportion which the population of the transferred area bears to the population of the area which, immediately before the reorganisation date, was the area of the relinquishing authority; and
(b) the population of an area shall be taken to be the number estimated by the Registrar General by reference to the date which, at the reorganisation date, is the latest date in respect of which such an estimate is available.
(5) Where the whole of a custodian authority's relevant expenditure is not met by a deduction of such expenditure from the amount of a disposal receipt as mentioned in paragraph (2) or (3) above, that authority may recover an amount equal to the relevant proportion of any relevant expenditure which is not so met from-
(a) (inapplicable); or
(b) where the custodian authority is the relinquishing authority in relation to a transferred area, the acquiring authority in relation to that area.
(6) For the purposes of paragraphs (3) and (5) above, the relevant proportion means such proportion as the authorities concerned may agree, or failing such agreement-
(a) where those authorities are successor authorities in relation to an abolished authority, the proportion equal to the proportion which the council tax base of the authority from whom an amount is to be recovered for the financial year in which the disposal takes place bears to the aggregate of the council tax bases for that financial year of all the successor authorities; and
(b) where the authorities concerned are the relinquishing authority and the acquiring authority in relation to a transferred area, the proportion equal to the proportion which the relinquishing authority's estimate of the council tax base of the transferred area for that financial year bears to that authority's estimate of the council tax base for that year of the area which, immediately before the reorganisation date, was the area of that authority.
(7) In this regulation-
'relevant expenditure' means a sum equal to the amount by which the total of expenditure properly incurred by the custodian authority in connection with the management or disposal of surplus land exceeds the total of payments (other than the disposal receipt) received by that authority in respect of the land; and
'surplus land' means any land identified in an agreement as mentioned in paragraph (2)(d)(i) or, as the case may be, (6)(b)(ii) of regulation 5."
(c) The Arbitrator's decision
"73. I begin with the comment that my opinion is, and always has been, that the onus of care in respect of landfill sites lies primarily upon the owner (or occupier if there is a long lease). If he allows a waste disposal contractor or waste disposal authority, to dispose of waste upon his land, he should make certain that he is fully protected against future potential liabilities. Otherwise, once the waste disposal has finished, he is likely to have no recourse against anyone.
74. Durham, in my view magnanimously, acquired the site at Creebeck "so the land may be restored" – see the Director of Environment's report dated 16th March 1993. Durham has, in my opinion, been monitoring this site as owner. There has been discussion as to what capacity of ownership. I do not find it necessary to state an answer in that manner. The fact is that Durham is the owner, and also, in my opinion, the law is as I am just about to state it. Durham has not been disposing or keeping or treating waste on this site since about June 1984 – see Agree Fact 18, Appendix 2 – and no further waste management licence was sought or granted save for some further clay capping. Under section 51(1) of the Environmental Protection Act 1990 the duty of each waste disposal authority is to arrange for the disposal of waste by means of arrangements made with waste disposal contractors. Under section 51(4)(d) they have the power to make land available to waste disposal contractors to enable them to treat, keep or dispose of waste. Under section 32(8) it is the duty of a waste disposal authority to secure that a company which it controls does not engage in activities other than the disposal, keeping or treatment of waste or activities incidental or conducive to, or calculated to facilitate, them. However, under section 33(1)(b) it is unlawful to treat, keep or dispose of waste except under or in accordance with a waste management licence. Therefore, since monitoring has continued after the expiry of the waste management licence, it plainly does not constitute treating, keeping or disposal of waste. It may, or may not, have been carried on under section 111 of the Local Government Act 1972 as an ancillary activity, as Mr Straker submits. That matters not, in my opinion. What Durham were doing on the site in the years prior to 1st April 1997 was not the treating, keeping or disposal of waste.
75. I repeat that Durham has been monitoring this site as owner of it, and not in pursuance of a duty under section 51. Therefore this function has not been transferred to Darlington. Therefore Darlington does not require the property in connection with the exercise of its functions, and regulation 5(6)(b)(i) does not apply.
76. Furthermore, Durham does not require the site for the purposes of, or in connection with, the exercise of functions in relation to its area. Therefore regulation 5(6)(b)(ii) does apply, and the site is surplus land. Therefore, by virtue of regulation 5(5), especially the words in brackets in paragraphs (b) and (c) there is no authority to be identified for the purposes of regulation 8."
(Italics as in original)
"(1) Without prejudice to any powers exercisable apart from this section but subject to the provisions of this Act and any other enactment passed before or after this Act, a local authority shall have power to do any thing (whether or not involving the expenditure, borrowing or lending of money or the acquisition or disposal of any property or rights) which is calculated to facilitate, or is conducive or incidental to, the discharge of any of their functions."
"(1) It shall be the duty of each waste disposal authority to arrange–
(a) for the disposal of the controlled waste collected in its area by the waste collection authorities; and
(b) for places to be provided at which persons resident in its area may deposit their household waste and for the disposal of waste so deposited;
in either case by means of arrangements made (in accordance with Part II of Schedule 2 to this Act) with waste disposal contractors, but by no other means.
(4) For the purpose of discharging its duty under subsection (1)(a) above as respects controlled waste collected as mentioned in that paragraph a waste disposal authority—
(d) may make available to waste disposal contractors (and accordingly hold) land for the purpose of enabling them to treat, keep or dispose of such waste in or on the land;
(5) For the purpose of discharging its duties under subsection (1)(b) above as respects household waste deposited as mentioned in that paragraph a waste disposal authority—
(a) may arrange for the provision, within or outside its area, by waste disposal contractors of places at which such waste may be treated or kept prior to its removal for treatment or disposal;
(b) may make available to waste disposal contractors (and accordingly own) plant and equipment for the purpose of enabling them to keep such waste prior to its removal for disposal or to treat such waste in connection with so keeping it or for the purpose of facilitating its transportation; and
(c) may make available to waste disposal contractors (and accordingly hold) land for the purpose of enabling them to treat, keep or dispose of such waste in or on the land."
"For the purposes of-
(a) any of their functions under this or any other enactment, or
(b) the benefit, improvement or development of their area,
a principal council may acquire by agreement any land, whether situated inside or outside their area."
The Cochrane arbitration
(a) The relevant provisions of the Regulations
"4.1 In the POC paragraph 28(c) Darlington claim interest on any sum awarded pursuant to Regulation 18. The entitlement to interest is not challenged in the POR. Darlington accept that since the question of whether I should award interest goes to jurisdiction I can deal with it nevertheless.
Submissions of Durham and Darlington
4.2 Mr Straker challenges Darlington's right to interest on the basis that such right only arises if money is not paid by the 'due date' which is, under Regulation 17(3), in the absence of agreement, two months plus two weeks after the 'date of service of the notice setting out the calculations which give rise to the liability to pay'. Since Regulation 16(1) will require Durham to serve a further notice, in addition to the notice of the Initial Calculations already served under Regulation 14, to reflect the effect of this Award and, obviously, they have not yet done so, liability for interest has not yet arisen.
4.3 Durham further submit that whilst there is a general power under section 49 of the Arbitration Act 1996 to award interest that power, in the case of a statutory arbitration, is restricted by section 95 of the Act which provides that '(1) The provisions of [section 49] apply to a statutory arbitration (a) as if the arbitration were pursuant to an arbitration agreement and as if the enactment were that agreement.' The effect of section 95, Mr Straker argues, is that the parties must be treated as having agreed to interest being dealt with in accordance with the regulations and that the Arbitration Act adds nothing to those provisions.
4.4 Mr Drabble argues that the notice setting out the calculations which give rise to the liability to pay, referred to in Regulation 17(3)(b), is the original notice under Regulation 14 (in this case the letter dated 13th October 1997 B540) and that the notice under Regulation 16 giving effect to this award, which, of course, does not yet exist, must be construed as merely amending the original notice under Regulation 14.
4.5 Alternatively Mr Drabble argues that if Mr Straker is right, and the Regulations only provide for interest pursuant to the notice under Regulation 16 giving effect to this award, then there is a lacuna in the Regulations as to what happens in the period between the two notices. In that case, says Mr Drabble, section 49 of the Act can still take effect since, ex hypothesi, there is no requirement of the Regulations which overrides it.
Findings and Reasons
4.6 Under Regulation 14(1)(b) Durham served its notice in respect of its 'Initial calculations' on 13/10/97 (B540). On 4/12/97 Darlington notified Durham pursuant to Regulation 14(4) that it disagreed with the initial calculation. The parties then by agreement referred the dispute to me for arbitration under Regulation 19. If the result of this arbitration is that all or part of the Capital Reserve should be apportioned then Durham will have to serve a further notice under Regulation 16. The 'notice giving rise to the liability to pay' is, in my opinion, the Regulation 14 notice not the Regulation 16 notice which merely affects an amendment to the original notice.
4.7 Any other construction of the Regulations would produce a result that is both absurd and inequitable.
4.8 It may be, as Mr Drabble suggested, that the draftsman of the Regulations did not anticipate there being a gap between the Regulation 14 notice and the Regulation 16 notice of as much as five years and made no specific provision for interest during that period. Alternatively, therefore, if I am wrong in my construction of the Regulations, I agree with Mr Drabble that I have jurisdiction under section 49 of the Act to deal with the lacuna."
(Italics as in original)
"6.1 Darlington Borough Council's claim for a pro rata share of the line 85 reserve, namely £2,211,050 (ie 17.151971% of £12,890,939) succeeds.
6.2 (1) Durham County Council shall pay interest on the said sum in accordance with and at the rate prescribed by Regulation 18 from 27th December 1997, alternatively (2) pursuant to the powers given to me by section 49(3) of the Arbitration Act 1996, Durham County Council shall pay interest on the said sum from 27th December 1997 until the date which is two months and two weeks after the date of service of the notice under Regulation 16 and thereafter shall pay interest pursuant to Regulation 18. During both periods the rate of interest shall be as prescribed by Regulation 18(2)(a)."
(a) Interest under the Regulations
(b) Interest under the Arbitration Act 1996
"49.—(1) The parties are free to agree on the powers of the tribunal as regards the award of interest.
(2) Unless otherwise agreed by the parties the following provisions apply.
(3) The tribunal may award simple or compound interest from such dates, at such rates and with such rests as it considers meets the justice of the case—
(a) on the whole or part of any amount awarded by the tribunal, in respect of any period up to the date of the award;
(b) on the whole or part of any amount claimed in the arbitration and outstanding at the commencement of the arbitral proceedings but paid before the award was made, in respect of any period up to the date of payment.
(4) The tribunal may award simple or compound interest from the date of the award (or any later date) until payment, at such rates and with such rests as it considers meets the justice of the case, on the outstanding amount of any award (including any award of interest under subsection (3) and any award as to costs).
(5) References in this section to an amount awarded by the tribunal include an amount payable in consequence of a declaratory award by the tribunal.
(6) The above provisions do not affect any other power of the tribunal to award interest."
"94.— (1) The provisions of Part I apply to every arbitration under an enactment (a "statutory arbitration"), whether the enactment was passed or made before or after the commencement of this Act, subject to the adaptations and exclusions specified in sections 95 to 98.
(2) The provisions of Part I do not apply to a statutory arbitration if or to the extent that their application—
(a) is inconsistent with the provisions of the enactment concerned, with any rules or procedure authorised or recognised by it, or
(b) is excluded by any other enactment.
(3) In this section and the following provisions of this Part 'enactment'—
(a) in England and Wales, includes an enactment contained in subordinate legislation within the meaning of the Interpretation Act 1978;
95.—(1) The provisions of Part I apply to a statutory arbitration—
(a) as if the arbitration were pursuant to an arbitration agreement and as if the enactment were that agreement, and
(b) as if the persons by and against whom a claim subject to arbitration in pursuance of the enactment may be or has been made were parties to that agreement.
Interpretation of Part and general provision
13.-(1) In this Part-
"the final accounts" means the accounts of the relevant authority for the final year;
"the accounts date" means the date on which the responsible financial officer signs the statement of accounts prepared in relation to the final accounts (1);
"designated authority" means-
(a) in a case where there are two or more successor authorities in relation to an abolished authority which are principal councils, the successor authority which is specified in a section 17 order as the designated authority in relation to this Part; and
(b) in the case of the relinquishing authority and the acquiring authority in relation to a transferred area, the relinquishing authority;
"the final year" means the financial year ending immediately before the reorganisation date;
"participant authority", in relation to a designated authority, means-
(i) in a case where the designated authority is one of two or more successor authorities in relation to an abolished authority which are principal councils, any other such successor authority; and
(ii) in a case where the designated authority is the relinquishing authority in relation to a transferred area, the acquiring authority in relation to that area;
"the relevant authority", in relation to a designated authority and any participant authority, means-
(a) where those authorities are successor authorities in relation to an abolished authority, the abolished authority; and
(b) where the designated authority is the relinquishing authority in relation to a transferred area and the participant authority is the acquiring authority in relation to that area, the relinquishing authority.
(2) Any notice under this Part which sets out calculations made in accordance with Schedule 1 shall include an explanation of the basis on which the amount or value ascribed to each of the items of the formulae in that Schedule was determined.
(3) Any notification by a participant authority under this Part that it disagrees with any calculations made by the designated authority in accordance with Schedule 1 shall state the reasons for the disagreement.
(4) A participant authority may, within one month of service by a designated authority of a notice under this Part, request that authority to supply such information relating to the contents of the notice as may be specified in the request; and the designated authority shall, as soon as is reasonably practicable, supply the information.
14.-(1) A designated authority-
(a) within such period as that authority and each participant authority may agree or, failing such agreement, the period of one month beginning with the accounts date, shall make calculations in relation to each participant authority in accordance with Schedule 1; and
(b) as soon as is reasonably practicable, shall serve on each participant authority a notice setting out the calculations it has made in relation to that authority and any other participant authority.
(2) At any time within the period of two months beginning with the date of service of the notice mentioned in paragraph (1) above, a designated authority may serve on each participant authority one further notice setting out calculations made in accordance with Schedule 1 in substitution for the calculations set out in the first-mentioned notice.
(3) A notice under paragraph (2) above shall include a statement of the designated authority's reasons for serving it.
(4) Not later than the expiry of the period of two months beginning with the date of service of a notice under paragraph (1) or, where a notice has been served under paragraph (2) above, the date of service of that notice ("the relevant period"), each participant authority shall notify the designated authority and any other participant authority in writing whether or not it agrees with the calculations set out in the notice.
(5) Where a participant authority, pursuant to paragraph (4) above, notifies the designated authority that it does not agree with the calculations set out in a notice under paragraph (1) or, as the case may be, paragraph (2) above, the designated authority shall, not later than the expiry of the period of one month beginning with the end of the relevant period, serve on each participant authority a notice which either-
(a) sets out calculations made in accordance with Schedule 1 in substitution for the calculations set out in the notice under paragraph (1) or, as the case may be, paragraph (2) above; or
(b) states that the designated authority does not intend to make any such calculations and the reasons for not doing so.
(6) A participant authority may, within the period of two months beginning with the date of service of a notice under paragraph (5) above, notify the designated authority and any other participant authority in writing that it disagrees with any substitute calculations set out in the notice or, where the notice does not set out such calculations, in respect of the calculations set out in the notice under paragraph (1) or, as the case may be, paragraph (2) above.
15.-(1) As soon as is reasonably practicable after the conclusion of the audit of the final accounts, a designated authority shall make calculations in relation to each participant authority in accordance with Schedule 1 and shall serve on each such authority a notice setting out the calculations it has made in relation to that authority and any other participant authority.
(2) A participant authority may, not later than the expiry of the period of two months beginning with the date of service of the notice under paragraph (1) above, notify the designated authority and any other participant authority in writing that it disagrees with the calculations set out in the notice.
Calculations following determination of differences
16.-(1) As soon as is reasonably practicable after the determination under regulation 19 of a difference notified under regulation 14(6) or 15(2), a designated authority shall, subject to paragraph (2) below, make calculations in relation to each participant authority in accordance with Schedule 1 and shall serve on each such authority a notice setting out the calculations it has made in relation to that authority and any other participant authority.
(2) Where amounts or values are ascribed in the determination to any items of the formulae in Schedule 1, the designated authority shall ascribe those amounts or values to those items when making the calculations required by paragraph (1) above.
Payments by or to the designated authority
17.-(1) Subject to paragraph (2) below-
(a) where the amount calculated in relation to a participant authority in accordance with the formula in paragraph 8 of Schedule 1 is a positive amount, the designated authority shall pay to the participant authority a sum equal to that amount; and
(b) where the amount so calculated is a negative amount, the participant authority shall pay to the designated authority a sum equal to that amount expressed as a positive amount.
(2) Where notification has been given by a participant authority under regulation 14(6) or 15(2) that it disagrees with any calculations made by the designated authority, any sum required, by virtue of paragraph (1) above, to be paid by that authority, any other participant authority or the designated authority in respect of those calculations shall be reduced by 20%.
(3) Any sum payable by virtue of paragraph (1) above shall be paid on or before-
(a) such date as the authority by whom ("the paying authority") and the authority to whom ("the payee authority") the payment is to be made may have agreed during the period of two months beginning with the date of service of the notice setting out the calculations which give rise to the liability to pay; or
(b) failing such agreement, the day (other than a Saturday, a Sunday or a Bank Holiday) which falls two weeks after the end of that period.
(4) Where the authorities concerned so agree, any liability to pay a sum by virtue of this Part may be discharged, in whole or in part, by the transfer to the payee authority of investments held by the paying authority.
(5) At any time after the reorganisation date, the designated authority or a participant authority may each make a payment on account to the other in respect of any sum which the authority estimates it will be liable to pay to the other in consequence of calculations to be made in accordance with paragraph 6 of Schedule 1.
18.-(1) The paying authority shall pay interest to the payee authority in respect of any sum which has become payable by virtue of this Part and has not been paid by the due date.
(2) Interest payable under paragraph (1) above-
(a) shall be calculated in accordance with such method as may be agreed between the paying authority and the payee authority or, failing such agreement, shall be simple interest calculated on the unpaid amount in respect of the period beginning with the due date and ending with the day before the day on which the sum is paid at a rate equivalent to two per cent. above the highest base rate quoted by any of the reference banks at any time during that period; and
(b) shall be paid at the same time as the sum is paid.
(5) In this regulation-
"the due date" for payment of a sum is a reference to the date on or before which the sum is required to be paid; and
"sum" includes a reference to a part of a sum.
19.-(1) Any question as to the interpretation or application of any provision of these Regulations may be determined-
(a) in the case of a question as to the interpretation or application of regulation 9, by the Charity Commissioners; and
(b) in any other case, by a person agreed on by the parties concerned or, in default of their agreement, appointed by the Secretary of State;
(i) any matter which falls to be agreed under regulation 8(4) and is not so agreed; or
(ii) any difference notified under regulation 5(4), 14(6) or 15(2), shall be determined by such a person.
(6) Section 31 of the Arbitration Act 1950 (1) shall have effect for the purposes of a determination under this regulation by any person mentioned in paragraph (1)(b) above as if such a determination were an arbitration under any other Act within the meaning of that section.
Calculations by Designated Authorities
8. The fourth calculation is-
W - (X - Y)
W is the amount found by the calculation made in accordance with paragraph 6 above;
X is the aggregate of-
(a) amounts paid by the designated authority to the participant authority by virtue of paragraph (1) of regulation 17 in consequence of calculations previously made in accordance with paragraph 6 above; and
(b) amounts so paid by virtue of paragraph (5) of that regulation; and
Y is the aggregate of-
(a) amounts paid by the participant authority to the designated authority by virtue of paragraph (1) of regulation 17 in consequence of such calculations; and
(b) amounts so paid by virtue of paragraph (5) of that regulation.