EXTRA DIVISION, INNER HOUSE, COURT OF SESSION
Lord McCluskey Lord Coulsfield Lord MacLean
|
0/109/17/98
OPINION OF THE COURT
delivered by LORD COULSFIELD
in
APPEAL
From the Sheriffdom of at Cupar
by
EAST OF SCOTLAND WATER AUTHORITY Pursuers and Appellants;
against
ANDREW LOGAN Defender and Respondent:
_______ |
Act: Wright, Q.C.; Dundas & Wilson C.S. (Pursuers and Appellants)
Alt: Reid, Q.C.; Macbeth Currie & Co. (Defender and Respondent)
19 October 1999
In this action, the pursuers seek declarator that a claim submitted by the defender to the Lands Tribunal for Scotland is time-barred and not maintainable in virtue of the provisions of section 20(3) of the Sewerage (Scotland) Act 1968. The action was raised in the Sheriff Court at Cupar in 1996. After sundry procedure, there was a debate, following which the sheriff, on 21 March 1997, allowed a proof before answer restricted to the question when the defender's claim arose. On 29 May 1997, the sheriff principal, in respect of a joint minute of the parties, varied the interlocutor of the sheriff to the effect of expanding the scope of the proof. In due course, the proof was held. At the proof, the defender maintained that his claim had been timeously made and, alternatively, that the pursuers were barred from insisting on any time-bar or had waived their right to do so. On 26 February 1998, the sheriff held that the claim had been timeously made and granted decree of absolvitor. He stated that he did not find it necessary to deal with questions of personal bar or waiver. The pursuers appealed to the sheriff principal who, on 15 July 1998, refused the appeal. The sheriff principal held that the claim had been timeously made but rejected the defender's submissions based on personal bar and waiver. The pursuers have appealed to this court and the defender has lodged cross grounds of appeal in which he maintains that, in the event that the claim has not been timeously made, the pursuers have waived their right to insist on the time-bar: the issue of personal bar, as distinct from waiver, is not pursued in the appeal.
It is convenient to refer at the outset to the relevant provisions of the Sewerage (Scotland) Act 1968. Section 3 of the Act confers on a sewerage authority power to construct sewers on or over any land. However, before constructing a sewer on any land, the authority are required to serve statutory notices and there is provision for objections, and for the determination of objections by the sheriff, if necessary. Sections 4 to 19 confer a number of other powers and duties on the authority. Section 20(1) provides:
"Subject to the provisions of this section, a local authority shall make full compensation for any loss, injury or damage sustained by any person by reason of the exercise by the authority of any of their powers under this part of this Act in relation to a matter as to which he has not himself been in default.".
Section 20(2) provides that any question arising as to the fact of loss, injury or damage or as to the amount of compensation shall, if disputed, be referred to a single arbiter and that the arbiter may state a case for the opinion of the Court of Session on any question of law. Section 20(3) provides:
"A claim for compensation against an authority under this section shall not be maintainable unless it is made to the authority within 12 months after the date on which it is alleged to have arisen.".
Section 20(4) provides that in the determination of compensation in respect of loss arising from the construction of a sewer, account is to be taken of any benefit to the claimant arising from the construction of the sewer.
The history of events which have led up to the claim which is the subject of the present action is somewhat lengthy and complex. The pursuers are the statutory successors of Fife Regional Council, who were the sewerage authority under the 1968 Act until some time in 1996. The defender is the proprietor of lands in the vicinity of Cupar which include an area of about 11 hectares, which is referred to, in the pleadings and judgments in the case, as "the Logan land". In 1988, there was a planning inquiry which dealt, inter alia, with the question whether there was an adequate supply of effective housing land in the Cupar area to meet the statutory local plan target and whether there was a need to approve more housing land. At that time, there was already in existence a detailed planning permission dated in 1979 for the development of a substantial number of houses on an area of agricultural land, referred to as "the Guthrie Trust land", which lay adjacent to the Logan land, to the south. The reporter at the inquiry found that simultaneous development of both the Guthrie Trust land and the Logan land for housing would be excessive in relation to demand and planning requirements. There was, however, an issue as to whether there was a prospect of actual development of the Guthrie Trust land and the reporter concluded that the prospects of that land producing a significant number of houses by 1992 were remote because of infrastructure costs. That factor, among others, led the reporter to recommend the grant of planning permission for housing and other development on areas of land including the Logan land. He recommended, however, that the grant of planning permission should be subject to certain conditions, including a condition that water and sewage services pipes within the Logan land should not be extended southwards into the Guthrie Trust land. The purpose of the condition was to prevent joint development of the two areas of land, since the availability of sewage and other pipework would have made development of the Guthrie Trust a much less remote prospect. The Secretary of State granted planning permission in accordance with the reporter's recommendation, including the condition. Thereafter, the defender entered into conditional missives for the sale of the Logan land at a price of about £67,000 per acre. However, the decision to grant planing permission for the Logan land was appealed to the Court of Session by the owners of the Guthrie Trust land, and by North East Fife District Council. The planning permission was, in due course, quashed by a decision of the Court of Session dated 8 May 1990. The basis of the decision was that the condition in regard to the extension of sewers and pipework into the Guthrie Trust land was an invalid condition and not severable.
Before the appeal to the Court of Session had been heard, the owners of the Guthrie Trust land had submitted a further application for outline planning permission for development of the Guthrie Trust land on a phased basis. On 24 August 1988 the Secretary of State indicated that he would grant such permission, subject to the making of a section 50 agreement with Fife Regional Council as regional planning authority. Fife Regional Council then served statutory notices on the defender under section 3 of the 1968 Act. The first notices served were not, for some reason, valid, but valid notices were served on 5 December 1991. The defender did not object to these notices and Fife Regional Council started work in laying sewers across the defender's land in about October 1992. The work was completed in about November 1993. Subsequently, residential development on the Guthrie Trust land has been undertaken and is proceeding.
The planning inquiry in relation to the Logan land was re-opened in April 1991. The reporter was aware that Fife Regional Council intended to exercise their statutory powers to construct a sewer to serve the Guthrie Trust site and, in the light of that information, concluded that the Guthrie Trust land would become effective by the end of 1993 and that approval of housing development on the Logan land would be an unnecessary addition to the housing supply. The reporter therefore recommended that the planning application in respect of the Logan land be refused. That recommendation was accepted by the Secretary of State, who refused planning permission for the Logan land in 1992.
In very broad terms, therefore, the defender obtained planning permission for development on the Logan land in 1989 but lost it because of the invalid condition attached to that planning permission: and was unable to obtain reinstatement of the planning permission because of the likely development of the Guthrie Trust land, a development to which the actions of Fife Regional Council as sewerage authority had contributed by, first of all, the service of notices and, later, the construction of the sewer. In equally broad terms, the position now is that the defender maintains that he has suffered loss through the loss of the development value of the Logan land or, alternatively, through losing the ability to negotiate with the owners of the Guthrie Trust land for a share of the development value of that land, in return for permitting the construction of sewers across his land. We shall shortly set out in more detail the nature and alleged basis of these claims, but it is convenient to complete the history of the proceedings before doing so. Claims along the lines just indicated were intimated to the authority in letters written by surveyors, Messrs Strutt & Parker, on behalf of the defender dated 6 April and 18 July 1994. The authority made it clear that they disputed liability to make any payment in respect of these claims. It was then agreed that the dispute should be placed before the Lands Tribunal; and a joint remit was adjusted and was submitted to the Lands Tribunal on 22 November 1995. The remit narrates the service of the notices in December 1991 and continues:
"Whereas the Council thereafter as empowered by the said Act of 1968 entered into the property of Mr. Logan and carried out works there Whereas Mr. Logan has made certain claims arising from said works including a preliminary claim by Messrs Strutt and Parker on behalf of Mr. Logan dated 18 July 1994 in the sum of £800,000 Whereas there is a dispute between the parties as to the correct basis on which to calculate any compensation due to Mr. Logan arising from said work Whereas the Sewerage (Scotland) Act 1968 section 20 provides for the appointment of an arbiter Whereas both parties are agreed standing the sums involved and the matters of principle arising therefrom it would be appropriate for the arbiter to be the Lands Tribunal for Scotland Therefore the said Mr. Logan and the Council jointly submit their dispute to the Lands Tribunal.".
The defender then lodged a formal Statement of Claim with the Lands Tribunal. The authority lodged answers to the claim in which they raised the question of time-bar: it appears that, while there had earlier been discussion of the effect of section 20(3) of the 1968 Act among the officials of the authority, this was the first time that it was conveyed to the defender that any time-bar point was being taken. At this stage in the proceedings, the time-bar point advanced was that no claim had been made to the authority within 12 months of the completion of the work. As will be seen, it is now accepted that the claims with which this action is concerned were made in the letters of 6 April and 18 July 1994 and were made within 12 months of the completion of the work. The time-bar argument now advanced proceeds on a different basis which is, put shortly, that if any loss relevant to these claims has been sustained, their loss must have arisen in 1991 or at the latest 1992. The Lands Tribunal decided to put out the issue, as it stood on the adjusted pleadings before it, for debate on 12 March 1996. However, as the pursuers' averments in the present action say, before the hearing Fife Regional Council were persuaded that the provisions of section 20(2) of the 1968 Act providing for compulsory arbitration were not wide enough to cover the issue of time-bar under section 20(3). It is also averred that the joint remit was not wide enough to compel the defender to submit the dispute on time-bar to arbitration. The result was that the Lands Tribunal sisted proceedings in the arbitration to await the outcome of the present action, which was raised in order to determine the issue of time-bar.
It is necessary to quote the full terms of the crave in the present action because one of the defender's arguments in the appeal is based on them: they are as follows:
"To find and declare that the claim set out in the Statement of Claims submitted to the Lands Tribunal for Scotland by the defender in respect of a joint remit to arbitration of the Lands Tribunal between the defender and the aftermentioned the Fife Regional Council which was submitted to the Lands Tribunal on 22 November 1995 is time-barred and not maintainable in virtue of the provisions of the Sewerage (Scotland) Act 1968 section 20(3).".
To take the matter further, it is necessary to look in more detail at the terms of the letters of 6 April and 17 July 1994 and of the Statement of Claim submitted to the Lands Tribunal and the adjustments to it. In the letter of 6 April 1994, the surveyors acting for the defender made reference to a claim, which they described as a wayleave claim, relating to the effect of the presence of the sewer on the ability of the owner of the land to make full use of his property. That, it is agreed, was not a reference to the claim or claims to which this action is really directed. The letter proceeds, however:
"Whilst we appreciate that the local plan for Cupar adopted in May 1993 zones part of our client's land as worthy of recreational land protection Tarvit Farm is included in the town envelope; indeed I understand that there are already planning permissions relating to Tarvit. For this reason we consider that there is an element of hope value over OS5400. This of course is severely affected by the scheme.
We are also led to believe that this scheme arises out of the development of the requirement to provide drainage for the development of 16.06 hectares between Tarvit and Castle Hill Primary School. If this is the case the developer is benefiting from the authority's exercise of compulsory powers.".
The area of land referred to in the second paragraph in that quotation was the Guthrie Trust land. There is a further reference later in the letter to the fact that a developer of that land would have had to negotiate with the defender, if the authority had not exercised its powers.
The claims are much more fully described in the letter of 18 July 1994. That letter begins by referring to the effects of the laying of a pipeline in relation to disturbance of soil. It continues, however, to set out the planning history of the land and the Guthrie Trust land, much as has already been narrated. With reference to the hearing before the reporter in 1991, the letter states:
"The council's own witnesses at the hearing suggested that there was no alternative viable means of draining the adjoining land and we therefore consider that our client held ransom over the Guthrie Trustee land. In effect this is similar to the Stokes v. Cambridge Corporation case where the English Lands Tribunal held that the cost of acquiring a ransom interest was one third of the development value. The laying of the sewer extinguished that interest".
Later in the letter it is suggested that the difference between the reporter's conclusions at the first inquiry and at the second inquiry was accounted for by the existence of the Regional Council's scheme to drain the Guthrie Trust land through the defender's property. The letter then says:
"If it were not for the compulsory powers of the Council in forcing through this scheme for the benefit of the neighbouring proprietor then our client would have been able to develop his adjoining site for which he had an offer subject to planning permission of £67,000 per acre.".
In that letter, therefore, there is a clear statement of two claims, one relating to loss of development value and the other relating to loss of a ransom element. It is on that basis that it is accepted by the pursuers in the present action that the claims with which the action is concerned were made to the authority in 1994, within 12 months of the completion of the construction of the sewer across the defender's land; and, therefore, that if the appropriate date for the start of the 12 month period under section 20(3) is the completion of construction, in the circumstances of this case, then the claim was timeously made.
The nature and grounds of the claims are explained in considerably more detail in the Statement of Claim submitted to the Lands Tribunal. In paragraph 1 of the Statement, it is set out that the defender seeks compensation under section 20 of the 1968 Act for the loss and damage sustained by him by reason of the exercise of the authority of their powers under Part I of the 1968 Act to construct a sewer in, on and over the Logan land. In paragraphs 2 to 8 of the statement, the planning history already narrated is set out. Paragraph 9 is in the following terms:
"By reason of the exercise of the authority's statutory powers, the Guthrie Trust land was effectively preferred to the exclusion of the Logan land. Furthermore, the exercise of such statutory powers prevented the claimant from negotiating a share of the development value of the Guthrie Trust land in exchange for permitting a sewer to be constructed through the Logan land.".
In paragraph 10 it is alleged that the claimant, the defender, has suffered loss and damage; the defender avers:
"But for the exercise of their statutory powers by the authority in 1990 and 1991, the planning permission which inured for the benefit of the Logan land would have been reinstated and would have formed part of the value of the Logan land as at 1991 and subsequently. The value of the Logan land has substantially diminished by reason of the exercise by the authority of the statutory powers. The claimant has thereby sustained loss and damage. Alternatively, but for the exercise of their statutory powers, the claimant would have had and taken the opportunity to secure a share in the development value of the Guthrie Trust land. The claimant has lost that share. He has thereby sustained loss and damage.".
In paragraph 11 it is averred that with the benefit of the planning permission and in the absence of the exercise of the authority's statutory powers the Logan land would have had a value of £60,000 per acre, or about £1,680,000 in total, which had been lost because of the authority's proposal to construct a sewer. In paragraph 12 it is stated that the value of the land without the planning permission was about £280,000 in 1991 and accordingly the sum of £1,400,000 is said to be a reasonable estimate of the defender's loss and damage. Paragraph 13 states:
"Alternatively, the compensation to which the claimant is entitled falls to be assessed as follows:- the Guthrie Trustees or their successors could only have proceeded with the development for which they were granted planning permission by constructing a sewer through the Logan land. In the absence of the exercise by the authority of their statutory powers under Part I of the 1968 Act, no such sewer could be constructed without the consent of the claimant. The claimant thus would have had and would have taken the opportunity to negotiate terms on which consent for such construction would have been given. As the owner of the Logan land, the claimant would have been the owner of ransom land. He would have negotiated payment from the Guthrie Trustees or their successors which would have reflected a reasonable share of the development value of the Guthrie Trust land (which) was in 1991, with the benefit of planning permission and the claimant's consent about £50,000 per acre i.e. in total about £1,500,000. The claimant has been advised and avers that in such circumstances, in the open market, a developer such as the Guthrie Trustees or their successors would, acting reasonably, have paid about one third of the development value to the claimant in order to secure its release i.e. about £500,000. By reason of the exercise by the authority of its said statutory powers the claimant lost the opportunity to secure such a payment from the Guthrie Trustees or their successors and thus suffered financial loss."
Some adjustments were made to the statement of the claims before the case was sisted in the Lands Tribunal. The only adjustment which may be significant for the present purpose is that statement 9 of the claim was adjusted so as to make it clear that, in it and succeeding statements, references to the exercise of the statutory powers are references to the completion of the construction of the sewer in 1994.
As we have mentioned, the sheriff heard evidence before reaching the decision embodied in his interlocutor of 26 February 1998. On the basis of the evidence and other material before him he made certain findings in fact but, so far at least as the time-bar question is concerned, there is nothing in the findings or in the sheriff's note attached to his interlocutor which adds to the narrative already given. In giving his decision, the sheriff observes that he was asked to decide the time-bar question without being concerned in the fact of loss, which is a matter for the Tribunal, and that the Tribunal would be in a position to decide whether there was a valid claim and when as a matter of fact that arose. He continues:
"Without the benefit of both parties agreeing a date on which the alleged claim arose I am faced with an agreement about various dates with the pursuers urging me to accept one date as the starting point for time-bar and the defender urging me to accept another. The evidence from Mr. Thornton Kelmsley [the surveyor acting for the defender] was quite clear that the claim did not finally arise until the last section of the sewer was laid. Only at that point did the position become irrecoverable. That happened in November 1993. I accept the evidence of that witness on this point. The defender in his pleadings and in evidence alleged that the date on which the claim arose was the completion of the sewer which was in November 1993. It is agreed that the claim was submitted within 12 months of that date and accordingly I hold that the claim is maintainable in terms of the statute. Having reached that conclusion I do not require to go further into the question of personal bar or waiver".
In his interlocutor of 15 July 1998 the sheriff principal makes certain additional findings but again there is nothing in them which materially adds to the narrative already given, so far as time-bar is concerned. The sheriff principal recites the arguments advanced to him and says that he prefers the approach of counsel for the defender. He then says:
"The sheriff has held that the loss, injury or damage did not arise until November 1993. I agree with him on that point. It seems to me that the loss did not occur until the sewer was complete. Up to that point the defender still had the veto on development on the neighbour's land and therefore his ransom value was still extant. So far as the development value is concerned once the sewer was completed the possibility of developing the defender's land fell away because the development next door would proceed unchecked. In my view, therefore, the sheriff came to the correct decision. The defender's claim is not barred in terms of section 20(3) of the Act.".
The sheriff principal did proceed to consider, as has already been mentioned, the questions of personal bar and waiver, on which his conclusion was in favour of the pursuers. It is, however, convenient to postpone consideration of the detailed circumstances in relation to waiver and the sheriff principal's reasons for his decision to a later stage in this opinion and to deal first with the submissions made to us in relation to the time-bar question.
In approaching this question, it seems to us important to observe, as the sheriff also did, that the question of the validity of the claims made in the arbitration proceedings by the defender is not in any sense before us. In our view, there may be difficult questions as to whether claims of the type made by the defender fall within the scope of the compensation provisions in the 1968 Act, particularly in view of the fact that the sewerage authority has certain duties in regard to the drainage of its area: and as to whether, even on the assumption that such claims are competent, any loss sustained in the circumstances of the present case results from the exercise of the powers of Fife Regional Council as sewerage authority or whether any such loss should properly be regarded as resulting from decisions of the planning authority. We were urged by counsel for the pursuers to approach the question of time-bar without making any assumptions as to the possible validity of claims of this type, but simply to look at the claims as stated and see whether they were alleged to have arisen within the 12 month period. It is difficult to approach the question without making some assumption about the possible validity of claims along the lines made by the defender but it must be clear that anything that we do say about the claims as they are stated does not involve any recognition that the claims are valid claims. There is some artificiality in discussing questions of time-bar without also addressing the question whether claims of this sort, which are unusual, at least, and possibly entirely novel, have any validity but in the circumstances of this case there is no alternative but to attempt to do so.
Counsel for the pursuers submitted that what the court required to do was to consider when the claims were alleged to have arisen. On that basis, on any fair reading, the entire claim made was based on what had occurred in 1991, or at the latest in 1992. It was possible that there might be a number of claims arising from a particular situation but for the present purposes the only claim to be looked at was the claim for loss of land value. It was accepted that that claim had been stated, albeit in a shadowy form, in the letter of 6 April 1994 and therefore the pursuers had to establish that that claim had arisen prior to 6 April 1993: they did not require to establish a precise date provided that it was before 6 April 1993. It was accepted by both parties that each head or type of claim had to be considered separately. There could, therefore, be different claims arising at different stages in the exercise of the statutory powers. It was also accepted by the pursuers that if all they could do was to attack the basis of the valuation of the claim, that was not sufficient for them to succeed in the time-bar argument. On the other hand, it was not enough for the claimant simply to assert that his claim had arisen less than 12 months before it was notified to the authority. If that were enough, the claimant could avoid time-bar simply by asserting that his claim had arisen on a particular date even if such an assertion was inconsistent with the claim itself. What the court required to do was to look at the claim and decide for itself what loss it was based on and when it was said to have arisen, on a fair reading of the claimant's allegations. In the present case, both parts of the claim were on a fair reading alleged to have arisen by January 1992 at the latest. In so far as the defender claimed the difference between the value of the Logan land with and without planning permission, that arose at the latest in 1992 when the Secretary of State refused planning permission for the Logan land. So far as the ransom value claim was concerned, that arose at the latest when the sewerage authority served valid statutory notices in December 1991 or shortly thereafter when the time for challenging the notices had passed. From then on, any attempt to claim a ransom value from the Guthrie Trust would have been rejected because the proposed exercise of statutory powers made it unnecessary for the owners of the Guthrie Trust land to seek consent from the owner of the Logan land for laying of sewers in that land. In any event, it was submitted, under reference to the decision in George Porteous Arts Limited v. Dollar Rae Limited 1979 S.L.T. (Sh. Ct.) 51 that some part of the loss now claimed had arisen on the service of the notices for the construction of the work and therefore that time should be begin to run from that date. It was also submitted that declarator could be granted in relation to part, even if not the whole, of the claim made in the Statement of Claim.
Counsel for the defender submitted, firstly, that the crave of the writ focused on the claims set out in the Statement of Claim whereas the issue of time-bar fell to be determined, in accordance with section 20(3), by reference to the claims made to the authority, that is by reference to the letters in April and July 1994. It was plain from those letters that the claim related to ransom value or loss of development value and that it was being alleged that that loss arose from the construction of the sewer. That had also been established by the proof at which it had never been suggested that the letters alleged a claim arising in 1991 or 1992. The terms of the Statement of Claim were open to adjustment and could be altered from time to time, whereas the letters were the proper intimation of the claim submitted to the authority which was the only claim which an arbiter would have authority to deal with. The action was therefore misconceived in so far as it was directed to the Statement of Claim and even if decree were granted in terms of the crave that would not prevent a claim being submitted to arbitration. References in the letter and in the pleadings before the Lands Tribunal to the values of the land at various dates were made for the purpose of valuation of the claim but did not affect the fact that the allegation was that the claim arose on the completion of the work. In the case of a continuing act such as the construction of a sewer, it was necessary to look at the exercise of the statutory power as a whole, namely the completion of the construction. That was supported by section 20(4) which could only be applied to determine whether there had been any benefit to the claimant once the work had been carried out. The joint remit also made it clear that what was remitted to arbitration related to the completed works. The Statement of Claim also contained other material in respect to which no claim of time-bar was made. Section 20(3) was not, in any event, a strict time-bar provision: it did not require that proceedings should be commenced but only that the claim should be intimated to the authority. Counsel further submitted that regard should be had to the true nature of the assertions made by the pursuers. Their defence really was not that the claim was time-barred but that any loss occasioned was not the result of the exercise of statutory powers by the authority but was caused either by planning decisions some years earlier or by the service of the statutory notice. This was not really a time-bar argument but a no-loss or causation argument which fell to be decided by the statutory arbiter. The pursuers themselves had said that the issue was whether loss arose from construction of the sewer or some years previously. Continued reference to the situation in 1991 and 1992 was futile, given that the claim to be considered was the claim as focused in the letters in 1994 or the statement of claim as adjusted. The grant and refusal of planning permission formed part of the background as set out in the claim and the letters but that could not be the occasion of a statutory claim under section 20. The service of statutory notices by the authority was not the exercise of the statutory power: it was no more than the performance of a statutory duty to give notice, given that they proposed to exercise their powers. The process was a three stage one. The authority had to decide to construct a sewer, under section 3(1)(a)(iii). There followed a statutory duty to serve notices under section 3(2). There was then the exercise of the statutory power by laying a sewer. That construction was consistent with section 3(4) and with section 20(4). The true issue was whether the defender had made a claim within 12 months after the date on which the claim for compensation for loss sustained by reason of the exercise of the statutory power was alleged to have arisen. A claim under the 1968 Act could not have arisen
In our view, the issue in this part of the case really depends on the view taken of section 20(3). There is no true analogy between that provision and a prescription or limitation provision in the ordinary sense because, as both parties accepted, different heads or types of claim may have to be considered separately, for the purposes of section 20(3) and because section 20(5) does not relate to the start of any proceedings but to the intimation of a claim to the authority. Moreover, as counsel for the pursuers remarked at one point, the statute does not provide any method for dealing with claims arising from a continuing event. The result is, in our view, that what has to be considered as the exercise of a statutory power under the 1968 Act for the purposes of a particular claim must depend upon the particular circumstances. It is possible to envisage that, notwithstanding the argument put forward by counsel for the defender, the service of a statutory notice might, in some circumstances, fall to be considered as in itself the exercise of a power which had given rise to a claim. On the other hand, as counsel for the defender also argued, in some circumstances the exercise of a statutory power may be constituted by the whole process of the planning and construction of a sewer. It is only in the context of a complete exercise of a power in that sense that section 20(4) can be applied. It seems to us, therefore, that the argument advanced by counsel for the pursuers that, because some loss may have been sustained in 1991 or 1992 by the service of the statutory notices, therefore time should be taken to begin to run against the defender from that date, is not well-founded. The matter goes further, however, because it seems to us equally that the fact that some loss has been sustained by the refusal of planning permission in 1992 that does not exclude the possibility that the actual exercise of the statutory power by the construction of a sewer and its completion has given rise to loss of the type claimed by the defender. Section 20(3) requires us to look at what is alleged by the claimant. What the claimant alleges is that the exercise of the statutory power by the construction and completion of the sewer caused loss of the kind claimed. It may well be open to the pursuers to maintain that no such loss was sustained at that time because any loss which is relevant must have been sustained at an earlier date as a result of the refusal of planning permission or, it may be, as a result of the service of statutory notices. Essentially, however, that is, as counsel for the defender submitted, an argument on causation, not an argument on time-bar, particularly not a time-bar argument of the type with which section 20(3) is concerned. In all the circumstances, therefore, the sheriff and the sheriff principal reached the correct result and the appeal should be dismissed.
In these circumstances it is not necessary for us to reach a conclusion on the question of waiver, but we should, we think, say something about it, in the light of the arguments advanced. The sheriff did not directly deal with the point although, as we shall see in a moment, he made some findings relevant to it. The sheriff principal referred to the decision of the House of Lords in Armia v. Daejan Developments 1979 SC (HL) 56 and in particular to the speech of Lord Keith which was accepted before him, and also before us, as defining the appropriate test for a question of waiver. The Sheriff Principal continued:
"While the sheriff did not make any decision on the matter he made some albeit brief findings in fact. Finding in fact 8 is in the following terms:-
'Prior to lodging answers to the pursuers' claim with the Lands Tribunal the pursuers had never asserted that the claim was time-barred. The question of time-bar was specifically raised by the defender's agents with the pursuers' legal staff at an earlier stage. The defender incurred substantial financial costs in connection with the formulation of his claim and the preparation of the documents for the Lands Tribunal. At no time did the pursuers nor their predecessors specifically state that they were giving up their right to claim time-bar. At no time did the pursuers or their predecessors state that the matter of time-bar was in issue prior to the lodging of the answers with the Lands Tribunal'.
Mr. Reid invited me to make an additional finding as follows:
'The pursuers' actings were wholly inconsistent with an intention to exercise their rights to assert that the defender's claim was time-barred'.
Mr. Wright suggested that there was no express abandonment. Inconsistency and acting unwisely or ineptly did not amount to waiver. The test to be applied objectively is whether the pursuers have abandoned their right to take the plea. The pursuers' intentions or failings are irrelevant. The defender's advisers assumed that the question of time-bar was behind them when they entered into the joint minute. It would appear that the pursuers initially considered that they could take the point before the arbiter. As Mr. Wright pointed out the parties were at a pre-litigation stage until the matter went before the Lands Tribunal and each were invited to state their case. The pursuers did not require to reveal their hand until the litigation had started. The defender was clear he would not have entered into the joint remit if he thought that the question of time-bar was still extant. While not entirely on all fours with Presslie v. Cochrane McGregor Group Limited 1996 S.L.T. 988 the situation is very similar. It is a very narrow point but I consider that the pursuers' actings were not wholly inconsistent with an intention to exercise their right to assert that the defender's claim was time-barred. I am therefore against the defender on this point".
Counsel for the defender submitted that a public authority could waive a time-bar through the conduct of its officials. Waiver, as had been held in Armia, was a question of fact to be considered on an objective survey of the evidence. The defender's argument was restricted to reference to six circumstances supporting the plea of waiver. Firstly, there had been an invitation by the pursuers to the defender to submit a claim in a letter dated 1 November 1993 in which the Regional Council had stated that the major part of the contract through the Logan land had been completed and had invited a compensation claim. By that time, the right to assert that the claim was time-barred was already vested in the pursuers. Secondly, there had been discussion between the authority and the defender's advisers to the effect that if the defender was proceeding with his claim arbitration would be required. That was referred to in the evidence and in a letter dated 19 July 1995. Thirdly, there was the knowledge that the arbiter should deal with the fact of loss and the amount of compensation. Fourthly, there was the agreement to the joint remit to arbitration. Fifthly, there was the text of the joint remit which made the reference which was accepted by the Lands Tribunal at about the end of November 1995. Sixthly, there was an implication that by allowing the claim to proceed to arbitration the pursuers accepted that it was maintainable. Taken together, these factors inferred that the plea of time-bar was being departed from. It was not to be assumed in an objective consideration of the evidence that officials would act in a wasteful way by allowing a pointless arbitration to proceed. As against that, there was the fact of the pursuers' silence on time-bar but that was properly neutral in itself. There was no aspect of the evidence which established conduct by the pursuers which, objectively considered, was consistent with maintaining their plea of time-bar. The situation was not comparable to that in Presslie v. Cochrane McGregor 1996 S.C. 289, a case dealing with court proceedings in which silence, even though lengthy, did not prevent a party from taking the plea that the case should be referred to arbitration. Here the parties had referred to arbitration, which was comparable with agreeing a proof in a litigation on questions of causation and quantum and then attempting to take a time-bar plea.
Counsel for the pursuers submitted that the action of entering into a joint remit on certain issues did not itself resolve the issues in relation to time-bar and further that, in the circumstances of this case, that action, as it was required by the Act, fell far short of a waiver. The essence of the defender's argument related to the entering into the arbitration. However, it was established that going to arbitration on some issues left others for the court to consider (Hunter Arbitration 201, Bell Arbitration 307). The solicitor for the Regional Council had told the court in evidence that he thought that the question of time-bar would be decided in the arbitration and the plea was immediately taken in the formal proceedings. It was consistent with that that there had been a failure to appreciate the working of the procedure and that in turn was inconsistent with abandonment of the time-bar plea. It was relevant that the claim had been an unusual or unprecedented one and had not yet formally been set out at the time of the joint remit. There was nothing to show that the pursuers expressly accepted that the claim was timeous. It was true that the time-bar claim which the pursuers' officials initially had in mind was one proceeding on the basis that the completion of the works was more than 12 months before the claim was stated: that had even appeared in the answers lodged in the Lands Tribunal. The history was comparable to a case in which there had been correspondence about a claim and pleadings and the plea of time-bar had emerged only after some time. The whole argument turned on the joint remit which was not in itself inconsistent with taking a time-bar plea. Looked at objectively, the evidence did not support a waiver. The original invitation to claim compensation in November 1993 had no relevance to this issue.
As the sheriff principal says, the issue in regard to time-bar is a narrow one. The point on which the defender's case really turns is, as counsel for the pursuers submitted, the act of entering into the joint remit, taken, of course against the background of all the other circumstances of the case. The issue has to be considered against all the circumstances, which include, on the one hand, the fact that the question whether the pursuers were to take the time-bar plea was raised with them before the joint remit but also, on the other hand, the evidence that, rightly or not, the pursuers' officials were under the impression that the time-bar point might be considered in the arbitration. In the argument before us, it was not made very clear what view parties took about the method by which the time-bar point should properly have been raised and decided, against the background that there is a statutory requirement to submit to arbitration on the claims. It is, we think, clear that the pursuers' officials might very well have been expected to mention the point about section 20(3) before the joint remit was entered into but, as against that, it has to be borne in mind that the statute requires reference to arbitration and that, as the joint remit itself bears, the reason for making a reference to the Lands Tribunal was not to refer to arbitration a matter which otherwise would have been open to litigation but to appoint the Lands Tribunal to the office of arbiter, because of the novelty and difficulty of the questions potentially raised. Balancing all the factors, we have come to the conclusion that the sheriff principal reached the correct result on the view that, while the point of time-bar might well have been, and probably should have been, raised before it actually was, nevertheless what occurred objectively considered did not go far enough to amount to a waiver of the right to insist on the point.
In the whole circumstances, however, for the reasons given earlier in this opinion the appeal falls to be dismissed.