England and Wales Lands Tribunal

[2001] EWLands ACQ_125_2000 (05 July 2001)

ACQ/125/2000

ACQ/127/2000

LANDS TRIBUNAL ACT 1949

COMPENSATION - preliminary issue - disturbance payment – Land Compensation Act 1973 s 37 – business premises acquired by authority with compulsory purchase powers – land later developed by company with lease from authority – entitlement to compensation under Landlord and Tenant Act 1954 s 37 – whether such entitlement precludes compensation under 1973 Act s 37(1)(a) – whether fact that development not carried out by authority precludes compensation under s 37(1)(c) – held compensation under s 37(1)(a) not precluded but no entitlement under s 37(1)(c)

IN THE MATTER of a NOTICE OF REFERENCE

BETWEEN GEORGE EVIS

and Claimants

GODFREY RICHARD SMITH

and

COMMISSION FOR NEW TOWNS Compensating

Authority

Re: 4-5 Cargo Fleet Lane Industrial Estate,

Middlesbrough

Before: The President

Sitting at 48/49 Chancery Lane, London WC2A 1JR

on 28 June 2001

The following cases are referred to in this decision:

Cramas Properties Ltd v Connaught Fur Trimmings Ltd [1965] 1 WLR 892

Selborne (Gowns) Ltd v Ilford Corporation (1962) 13 P & CR 350

Prasad v Wolverhampton BC [1983] 1 EGLR 10

Greater London Council v Holmes [1986] 1 QB 989

The following additional cases were referred to in argument:

Syers v Metropolitan Board of Works (1877) 36 LT 277

Wrexham Maelor BC v Macdougall [1993] 2 EGLR 23

Sheffield Development Corporation v Glossop Sectional Buildings Ltd [1994] 2 EGLR 29

Mills and Allen Ltd v Commission for New Towns (LCA/144/2000, unreported)

Mr A Winney with permission of the Tribunal for the claimants

Martin Rodger instructed by Dewar Hogan for the compensating authority


 


DECISION ON PRELIMINARY ISSUES

1. This is a decision on preliminary issues that arise on claims for compensation made by the claimants under section 37 of the Land Compensation Act 1973. Each of the claimants was the tenant of business premises at Cargo Fleet Industrial Estate, Middlesbrough. The land which included the subject premises was acquired by Teesside Development Corporation on 31 March 1995, and on 11 May 1995 the corporation served notice under section 25 of the Landlord and Tenant Act 1954 terminating the tenancies on 30 November 1995. Each notice stated that the corporation would oppose the grant of a new tenancy on ground (f) of section 30(1) of the 1954 Act, that is to say:

"that on the termination of the current tenancy the landlord intends to demolish or reconstruct the premises comprised in the holding or a substantial part of those premises or to carry out substantial work of construction on the holding or part thereof and that he could not reasonably do so without obtaining possession of the holding."

Subsequently the corporation withdrew its opposition to renewal and on 18 August 1995 it offered new leases. The claimants applied for new tenancies.

2. On 4 November 1997 Middlesbrough Football and Athletic Company (1986) Ltd became the registered leaseholder of the land by virtue of a 999 year lease granted by the corporation on 22 May 1997. The company joined in the renewal proceedings but these were eventually discontinued in March 1999. On 26 March 1998 the corporation's property, rights and liabilities were transferred to the Commission for New Towns. The claimant George Richard Smith vacated his premises on 31 January 1999 and the claimant George Evis vacated his premises on 31 March 1999. The company demolished the premises and incorporated the land on which they had stood in a new car park for the adjacent Riverside Stadium, the ground of Middlesbrough Football Club.
3. Section 37 of the 1973 Act as amended includes the following provisions:

"37 Disturbance payments for persons without compensatable interests

(1) Where a person is displaced from any land in consequence of –

(a) the acquisition of the land by an authority possessing compulsory purchase powers;

(b) the making or acceptance of a housing order or undertaking in respect of a house or building on the land;

(c) where the land has been previously acquired by an authority possessing compulsory purchase powers or appropriated by a local authority and is for the time being held by the authority for the purposes for which it was acquired or appropriated, the carrying out of any improvement to a house or building on the land or of redevelopment on the land;

(d) the carrying out of any improvement to a house or building on the land or of redevelopment on the land by a housing association which has previously acquired the land and at the date of the displacement is a registered social landlord within the meaning of the Housing Act 1985 (see section 5(4) and (5) of that Act);

he shall, subject to the provisions of this section, be entitled to receive a payment (hereafter referred to as a 'disturbance payment') from

(i) where paragraph (a) above applies, the acquiring authority;

(ii) where paragraph (b) above applies, the authority who made the order, passed the resolution, accepted the undertaking or served the notice;

(iii) where paragraph (c) above applies, the authority carrying out the improvement or redevelopment; and

(iv) where paragraph (d) above applies, the housing association carrying out the improvement or redevelopment.

(2) A person shall not be entitled to a disturbance payment –

(a) in any case, unless he is in lawful possession of the land from which he is displaced;

(b) in a case within subsection (1)(a) above, unless either –

(i) he has no interest in the land for the acquisition or extinguishment of which he is (or if the acquisition or extinguishment were compulsory would be) entitled to compensation under any other enactment…

(3) For the purposes of subsection (1) above a person shall not be treated as displaced in consequence of any such acquisition improvement or redevelopment as is mentioned in paragraph (a), (c) or (d) of that subsection unless he was in lawful possession of the land –

(a) in the case of land acquired under compulsory purchase order, at the time when notice was first published of the making of the compulsory purchase order prior to its submissions for confirmation or, where the order did not require confirmation, of the preparation of the order in draft;

(b) in the case of land acquired under an Act specifying the land as subject to compulsory acquisition, at the time when the provisions of the Bill for that Act specifying the land were first published;

(c) in the case of land acquired by agreement, at the time when the agreement was made;

and a person shall not be treated as displaced in consequence of any such order, undertaking or improvement notice as is mentioned in paragraph (b) of that subsection unless he was in lawful possession as aforesaid at the time when the order was made, the undertaking was accepted or the notice was served.…

(4) Where a person is displaced from land in circumstances such that, apart from this subsection, he would be entitled to a disturbance payment from any authority and also to compensation from that authority under section 37 of the Landlord and Tenant Act 1954 (compensation from landlord where order for new tenancy of business premises precluded on certain grounds) he shall be entitled, at his option, to one or the other but not to both.

(5) Where a person is displaced from any land as mentioned in subsection (1) above but is not entitled, as against the authority there mentioned, to a disturbance payment 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) to (3) below."

4. The claimants say that they are entitled to a disturbance payment under either para (a) or para (c) of subsection (1). The authority say they are not. The parties are agreed that the tenants are entitled to compensation under section 37(1) of the Landlord and Tenant Act 1954, which, as amended, provides:

"(1) Where on the making of an application under section 24 of this Act the court is precluded (whether by subsection (1) or subsection (2) of section 31 of this Act) from making an order for the grant of a new tenancy by reason of any of the grounds specified in paragraphs (e), (f) and (g) of subsection (1) of section 30 of this Act and not of any grounds specified in any other paragraph of that subsection, or where no other ground is specified in the landlord's notice under section 25 of this Act or, as the case may be, under section 26(6) thereof, than these specified in the said paragraphs (e), (f) and (g) and either no application under the said section 24 is made or such an application is withdrawn, then, subject to the provisions of this Act, the tenant shall be entitled on quitting the holding to recover from the landlord by way of compensation an amount determined in accordance with the following provisions of this section."

5. The issues between the parties on the question of entitlement to a disturbance payment are as follows:

(a) in relation to section 37(1)(a) –

(i) Whether the effect of section 37(2)(b) of the 1973 Act is to preclude a disturbance payment under section 37(1)(a) where, as here, there is entitlement to compensation under the 1954 Act;

(ii) Whether the claimants were displaced from their premises in consequence of the acquisition of the land by the corporation;

(b) In relation to section 37 (i)(c) –

(i) Whether at the date of displacement the land was "held" by the corporation within the meaning of that provision;

(ii) If so, whether it was held by the corporation for the purpose for which it was acquired;

(iii) If so, whether the claimants were displaced in consequence of the carrying out of redevelopment on the land.

6. Issues (a)(ii) and (b)(ii) are issues of fact, and by the time of the preliminary hearing the parties had not agreed, and were not in a position to give evidence relating to, the necessary primary facts on which the resolution of these issues depends. They were in agreement that the issues would have to be determined at a later hearing, if they remained relevant after my determination of the other three issues. It is regrettable that the parties were not in a position to address me on these issues of fact since a second hearing into preliminary issues can only add, unnecessarily, to the costs.
7. On the first issue – whether the effect of section 37(2)(b) is to preclude a disturbance payment under section 37(1)(a) where there is entitlement to compensation under the 1954 Act – Mr Martin Rodger for the authority advances two arguments. Firstly he says that the compensation to which the claimants are entitled under the 1954 Act is compensation for the extinguishment of an interest within the meaning of section 37(2)(b). He points out that compensation under the 1954 Act has been described as "in effect compensation for disturbance" (see Cramas Properties Ltd v Connaught Fur Trimmings Ltd [1965] 1 WLR 892, per Lord Reid at 898), so that it is performing the same function as a disturbance payment under the 1973 Act in that it provides compensation where a business tenancy is terminated.
8. Mr Rodger's second argument is that the claimants would have had an entitlement to compensation under section 121 of the Lands Clauses Consolidation Act 1845 if the extinguishment of their interest had been compulsory. As tenants occupying under business tenancies continued by section 24 of the 1954 Act the claimants were persons having no greater interest in the land than as tenants for a year or from year to year (see Selborne (Gowns) Ltd v Ilford Corporation (1962) 13 P & CR 350), and were thus covered by section 121. Applying the wording of section 37(2)(b)(i), therefore, they are excluded from compensation under section 37(1)(a).
9. I cannot accept Mr Rodger's arguments. Compensation under the 1954 Act is not, in my judgment, compensation for extinguishment of an interest within the terms of section 37(2)(b)(i). It is, as section 37(4) of the 1973 Act puts it, "compensation from landlord where order for new tenancy of business premises precluded on certain grounds." It cannot be the case, in my view, given this description of the 1954 Act compensation in subsection (4), that it is embraced within what is referred to as compensation for the extinguishment of an interest in subsection (2).
10. The compensation referred to in subsection (2)(b)(i) is in my judgment compensation payable by an authority possessing compulsory purchase powers in the exercise of such powers. "Acquisition or extinguishment" of an interest is the language of compulsory purchase. There are a number of instances of provisions for the "extinguishment" of rights over land which an authority has acquired compulsorily: see for example Local Government, Planning and Land Act 1980, Schedule 28 para 5(1), Town and Country Planning Act 1990, section 236. While it is right, as Mr Rodger points out, that the power of extinguishment in these instances relates to easements and other such rights, extinguishment is plainly apposite to describe what happens to a short-term interest where the acquiring authority enters into possession before the expiration of the term. Compensation for such extinguishment is provided for by section 121 of the Lands Clauses Consolidation Act 1845 and section 20 of the Compulsory Purchase Act 1965.
11. I can see no basis for Mr Rodger's additional argument that, because the claimants would have been entitled to compensation under section 20 if the extinguishment of their interest had been compulsory, so section 37(2)(b)(i) operates to exclude compensation under section 37(1)(a). He places reliance on the words in parentheses in section 37(2)(b)(i) – "(or if the acquisition or extinguishment were compulsory would be)." Those words are clearly included, in my view, because section 37(1)(a) – "the acquisition of the land by an authority possessing compulsory purchase powers" – extends to acquisitions by agreement as well as to compulsory acquisitions. For sub-para (i) to apply there must have been an acquisition or extinguishment of the person's interest (whether compulsorily or by agreement) for which there is an entitlement to compensation. Here, however, there has been no extinguishment in the sense in which that term is used in the provision. That the claimants would have been entitled to compensation under section 20 if they had been dispossessed before the termination of their tenancies is, therefore, nothing to the point. The fact is that they were not dispossessed in this way and their interests were not extinguished.
12. The final, and in my view a most powerful, argument against Mr Rodger's contentions on section 37(2)(b)(i) is that there is simply no rationale for excluding from the disturbance payment provisions of section 37 a business tenant who is displaced in consequence of the acquisition of the land by an authority possessing compulsory purchase powers but who leaves his premises in circumstances that do not entitle him to compensation under section 20. The circumstances of his leaving may, of course, be relevant to the question of whether he has in fact been displaced, but I am not concerned with that question at this stage. The object of section 37 is, in my judgment, clear. The following passage from 43 Halsbury's Statutes 3^rd Edn 205 was quoted, with implied approval, by Stephenson LJ in Prasad v Wolverhampton BC [1983] 1 EGLR 10 at 14 H-J:

"This section constitutes a new right to a payment in favour of persons displaced from land other than agricultural land. The claimant must have been in lawful possession of the land, but need not have had any further interest in it. The payment is, in fact intended primarily to benefit those who do not otherwise qualify for compensation because they have no interest requiring to be purchased. It is also available to those whose compensation under existing legislation is limited to the value of the land as a cleared site."

Subsection (4) of section 37 requires a person who is displaced and who is entitled both to 1954 Act compensation from the authority and to a disturbance payment to opt between them. On the face of it that provision applies whether the circumstances of the displacement fall under (a), (b), (c) or (d) of subsection (1). There is no apparent reason why, if in the circumstances set out in (b), (c) and (d) a person should have a dual entitlement and should be able to opt between the two types of payment, he should be excluded from such an option where he is displaced by the acquisition of land by an authority possessing compulsory purchase powers but leaves his premises in circumstances that do not entitle him to section 20 compensation. Mr Rodger for his part was unable to suggest any rationale for such an exclusion.

13. On section 37(1)(c), Mr Rodger advances two arguments. The first is that land "for the time being held" by an authority in this provision means held in reversion only to the interests of the persons displaced. The second argument, which I take first, is that the provision only applies where the redevelopment that displaces a person is carried out by the authority that acquired the land. Mr Rodger says that the reason for this is that a person entitled to a disturbance payment under the subsection is entitled to receive it from –

"(iii) Where paragraph (c) above applies, the authority carrying out the improvement or redevelopment."

14. There can be no entitlement to compensation under paragraph (c), Mr Rodger says, where the redevelopment is carried out by someone other than the authority. Here it was Middlesbrough Football Club who carried out the redevelopment that displaced the claimants. Greater London Council v Holmes [1986] 1 QB 989, relied on by Mr Rodger, is good authority for his contention. That was a case under section 29 of the 1973 Act (home loss payments) rather than section 37, but the relevant wording and the considerations are the same. At [1986] 1 QB 996 F-G Oliver LJ (with whom Ralph Gibson LJ and Anthony Lincoln J agreed) said:

"That, however, does not dispose of the matter, because there remains the further question whether the displacement of the defendant was in fact consequence – and [counsel for the authority] stresses these words – of the carrying out of the development on the land by the plaintiffs. As he points out, the machinery of the Act is to enable the displaced person to obtain his home loss payment from the authority which carries out the redevelopment and from no one else. If therefore one finds that the defendant was displaced by something legitimately called 'redevelopment' one still has to find, before he establishes his claim, that that redevelopment was carried out by the plaintiffs."

15. Mr Rodger's contention is, in my judgment, plainly right and the case he relies on is good authority for it. For this reason the claimants are not entitled to compensation under section 37(1)(c). It is therefore unnecessary for me to consider Mr Rodger's other argument – that "held" in this paragraph means held in reversion only to the interest of the persons displaced. However, I can see nothing in the words used in the provision that compels such a qualification to be read into them, nor is it necessary to do so in order to avoid the consequence about which Mr Rodger expresses concern – that an authority might have to pay compensation where it did not wish to participate in redevelopment carried out by its lessee. That result cannot arise under the paragraph for the reasons I have already given.
16. On the preliminary issues that are before me, therefore, I conclude:

(1) Disturbance payments under section 37(1)(a) of the Land Compensation Act 1973 are not precluded by the claimants' entitlement to compensation under section 37 of the Landlord and Tenant Act 1954.

(2) Neither claimant is entitled to a disturbance payment under section 37(1)(c) of the Land Compensation Act 1973.

17. On costs, Mr Rodger said that, if I determined the preliminary issues in a way that did not dispose of the claimants' claims, I should order that costs be reserved. Mr Winney agreed with this. Costs are accordingly reserved.
18. The issues that remain to be determined are, firstly, whether the claimants were displaced in consequence of the acquisition by the authority and, secondly, if so, the amount of the disturbance payments. It still seems to me appropriate that the question of entitlement to disturbance payments should be determined before costs are incurred in the preparation of detailed evidence on the amount of the claim. The first issue will accordingly be the subject of a further preliminary hearing. Orders of the Tribunal relating to disclosure and the lodging and service of witness statements which have not been complied with must be complied with forthwith.

DATED 5 July 2001

George Bartlett QC, President