UPPER TRIBUNAL (LANDS CHAMBER)

UT Neutral citation number: [2012] UKUT 23 (LC)

UTLC Case Number: LCA/48/2011

 

TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007

COMPENSATION – Water – flood defence scheme – interference with mooring – when works completed – business loss – lack of proof and quantification – Water Resources Act 1991 – Sch 21 – para 5(1)

 

 

 

 

IN THE MATTER OF A NOTICE OF REFERENCE

 

BETWEEN DENNIS PARKHILL Claimant

and

THE ENVIRONMENT AGENCY Respondent

 

Re: The Hereford Flood Alleviation Scheme and

Moorings at St. Stephen’s Wharf, Hereford.

 

 

Before: His Honour Judge David Mole QC

 

 

Sitting at 43-45 Bedford Square, London WC1B 3AS

on 8 December 2011

 

 

Mr Lee Parkhill, solicitor, for the Claimant.

Galina Ward instructed by the Solicitor to the Environment Agency for the Respondent

 

No cases are referred to in this decision.

 

 

 

 

 

DECISION

Introduction

1. This is a claim for compensation for loss caused to the claimant by the works carried out by the respondent to construct a new flood defence scheme in Hereford.  Mr Dennis Parkhill, the claimant, ran a business under the name "Cathedral Cruises" from 1997 to 2002 providing trips on the River Wye in two boats, the larger Wye Queen and sometimes the smaller Wye Princess.  (Mr Dennis Parkhill is hereafter referred to as "the claimant" to distinguish him from Mr Lee Parkhill, his son, who is a solicitor and who represented him and who is hereafter referred to as "Mr Parkhill")  These vessels were moored just to the east of the southern end of the Old Wye Bridge in the centre of Hereford at St Stephen's Wharf and were reached by a flight of iron steps attached to the river wall.  The Claimant is the registered freehold owner of the section of the wharf to which the steps are attached.

2. The respondent Environment Agency (hereafter ‘the respondent’) is the statutory body with powers under the Water Resources Act 1991, section 165 to do works to improve any existing watercourse to prevent or alleviate flooding.  Schedule 21, paragraph 5 (1) of that Act declares that where injury is sustained by any person by reason of the exercise of those powers, the respondent shall be liable to make "full compensation to the injured party".  In case of dispute the amount of compensation shall be determined by the Lands Tribunal.  (Paragraph 5(2).) 

3. By virtue of the Wye Navigation Order 2002, regulation 5, it became the duty of the respondent to manage and maintain the River Wye and navigation thereon.  In about 2006 the respondent developed a scheme to improve the flood defences in Hereford.  A planning application for the necessary works was submitted on the 12th of July 2006.  It was clear that those works would prevent the use of St Stephen's wharf for the claimant's business until they were completed.

4. It is common ground between the parties that, as a result of the works undertaken by the respondent in the exercise of its powers, the claimant was obliged to remove and store the Wye Queen and that he was unable to carry on the business of providing river trips until the work was finally completed.  The respondent acknowledges that it is liable to compensate the claimant for the costs of removing and storing the boats, and says that it has done so up until the date when the works were completed.  However the parties differ as to when the works actually were completed so that the claimant would have been able to resume the provision of trips.  Then there is an issue as to any loss of earnings by the claimant: the respondent says that firstly there is no evidence that the claimant would actually have provided trips during the relevant period if it had not been for the respondent's works but, secondly, even if he would have done, there is no evidence whatsoever to quantify his loss.  The claimant argues that he should be compensated by reference to a payment of compensation made to him in 2007 which, he says, had in it an agreed element for loss of earnings.  This element, he submits, should be taken as the measure of his compensation for loss of earnings in subsequent years.

 

The Issues

5. The factual issues for this Tribunal are therefore:

1.     When were the works completed?

2.     Would the complainant have carried on the business of running trips if the works had not interfered?

3.     If he would, should the payment made to him in 2007 be accepted as an acknowledgement or quantification of the claimant’s loss of earnings in subsequent years?

4.     If and to the degree that it should not, is there any other evidence to prove and quantify his loss of earnings?

6. With those issues in mind I shall turn to the facts in greater detail.

The Facts

7. I heard evidence from the claimant and from Mr Hopkins, Mr Andrews and Mr Senior on behalf of the respondent.  Very many of the basic facts are not in issue although the conclusions to be drawn from them may be.  The following matters emerge from the agreed bundle of documents and seem to me to be uncontentious except where I indicate otherwise.

8. In 1991 Hereford Pleasure Boats, a former operator, was given planning permission to dredge an area of the riverbed about 100 metres downstream of the Old Wye Bridge.  The claimant followed this up in 1996 and 1998 by obtaining licences from the council for access.  He did the dredging work.  The claimant told me in his evidence that he paid about two thirds of the cost and the council contributed the remainder.  He then operated the business in the summer months from 1997 to 2002. 

9. In January 2003 the claimant wrote to the respondent inquiring about their proposals for managing the navigation of the river.  Nothing very much happened and the claimant did not operate the boat business that summer, as he had become employed by Mercia Radiotelephones in January.  I note that Mr Fisher, a director of that company, said in his witness statement that the claimant had told him that it was his intention to start the boat service again in Easter 2004 and the salary he was paid reflected his wish to return to his boat business.  Mr Fisher said that the claimant took time off in connection with organising the boat service.  His plans were set back in subsequent years although he always maintained that it was his intention to restart the boat business when he could.

10.  In May 2004 the claimant wrote again to the respondent to be told that the agency were developing a navigation strategy.  In April 2005 the claimant wrote yet again stating that in order to operate his pleasure boat on the river he required the navigable channel to be maintained.  He pointed out that in the past he had maintained it by dredging.  The bundle does not contain the letter in response but the parties agree that the respondent suggested, in effect, that if the claimant wished the river to be dredged he should apply for consent to do so himself.  The letter of reply dated the 16th of May 2005 shows the claimant’s dissatisfaction with this suggestion as he regarded it as the respondent's responsibility to maintain the river in the same condition that it been in when it had come under their management.  He mentions that he had been employed since the boats stopped operating but said:

"I am seriously intending to resume the service I operated in Hereford.  I have kept the boats at their moorings for that end.  I incur hassle and costs keeping them there, that is why I want this matter resolved quickly."

11.  On 12th July 2006 the respondent submitted a planning application for works to improve the flood defences in Hereford.  The claimant objected to this application on the 20th of July on the grounds that the proposed plans would take away his access to the mooring.  He asserted that "a change in the Navigation Authority caused the service to stop at the end of 2002.  I am still waiting for the EA to carry out their duty to maintain the river to enable the service to resume."  On the 17th of August the project manager of the flood scheme wrote to the claimant to say that the scheme had been designed to allow him to resume the boating services if he wished to do so but that during the construction works the boat would probably have to be moved. 

12.  By May 2007 the works were obviously imminent.  A notice of entry, served on the council by the respondent, was said to apply equally to the area in which the claimant's mooring structure was located.  The respondent repeated that the design of the proposals would allow the claimant to resume boating operations by designing the wall to allow suitable access.  This letter also mentioned the claimant's entitlement to compensation for loss or disturbance due to the scheme.  The claimant responded promptly in his letter of 9th of May 2007, evidently having discussed matters with officials of the respondent.  He pointed out that his only option was to remove the boat from the river and store it on land.  He protested about the length of time that the works would prevent him from having access and continued:

"I would like to make it clear that I am in a position to resume the boat service in Hereford.  The only thing preventing me from doing so is the current works.  I do want to run next year.  The deadline for advertising to run next year is December this year.  I need to know by then that I have all the facilities reinstated.  Your current plans make this impossible."

13.  Ms Bland (then the Project Manager) e-mailed the claimant on the 14th of May 2007 inviting him to obtain a quote for the Wye Queen to be removed from the river and taken into storage and informing him that all that then would be required to obtain reimbursement would be for his agent to submit a claim with receipts and invoices to the respondent's land agent.  There was mention of the condition of the bottom landing of the steps and an acknowledgement that the design of the wall would be modified to include a galvanised steel floodgate in the wall for which the claimant would be given a key.  

14.  On the 24th of May 2007 Mr Lyke of Thompsons Land and Property submitted a claim for compensation on behalf of the claimant.  Item 1 claimed the sum of £10,000 for loss of earnings with the following explanation:

"To compensate the claimant for loss of earnings 2007 as a result of not being able to operate the service in 2007.  Service operated from Easter to end of September each year.  Gross takings have been as high as £20,000 to £25,000 per season business is seasonal and requires little set up each year to run.  It had been planned to run the service in 2007."

15.  Items 2 - 4 related to the costs and losses arising from the relocation of the boat from St Stephen's wharf.  Those costs were broken down in some detail. Item 5 set out the claimant’s requirements for, amongst other things, the environment agency to retain the existing steps and make good any damage caused by the works and to provide a gated access with a key for the claimant. 

16.  Mr Andrews of Llewellyn Humphreys, acting on behalf of the respondent, replied on the 25th of May 2007.  He acknowledged the claim and enclosed guidance as to the details required when making claims against the respondent in respect of trade loss.  He pointed out that these requirements would apply to item 1 of the claim.  The guidance said that compensation would be paid on the basis of loss of net profit from the commencement of the scheme until its completion and asked for schedules of weekly takings during the period of the claim and for the same period in the three preceding years, copies of profit and loss and trading accounts during and before the works and an account of any other factors that might have affected trading. 

17.  Mr Lyke answered on the 30th of May 2007.  He repeated much of the history and asserted that the claimant could easily have resumed his trade in 2007 but had decided to defer the service.  As to the trade loss claim Mr Lyke said:

"In your letter regarding trade loss claim, you asked for copies of weekly takings for the period of the claim, schedule of weekly takings for the same period in the preceding three years, copies of profit and loss trading accounts for the claim period and three financial years preceding, all of these are not possible due to the fact that my client would be completely unable to operate his service this year, has been unable to operate in the preceding three years due to the omissions of the Environment Agency in managing the river."

18.  There followed some further general information about the way the business was run.  Mr Lyke concluded by reporting that the claimant did not wish to separate item 1 of his claim from the following items.  This letter was followed by some further discussion and the claimant then announced that he was shortly going away for a few days. 

19.  On the 12th of June 2007 Mr Andrews wrote to Mr Lyke again.  He confirmed that, as had been apparently discussed on the telephone, the respondent was prepared to pay items to three and four in the sum of £5,148.  He continued that in addition the respondent was "prepared to make a one-off payment to your client in full and final settlement of this matter in the sum of £4, 852".  He concluded by noting that it was part of the settlement that the claimant would remove the boat from the river before he went on holiday.  Mr Lyke wrote back the same day confirming that the claimant would accept the sum of £10,000 in settlement of items 1 to 4 provided the accommodation works mentioned in item 5 were undertaken and that the mooring position would either remain where it was or be replaced with a more suitable mooring point.  In fact it was agreed next day that there was not enough time to raise the cheques for the money and remove the boat before the claimant went on holiday so that was postponed until the beginning of July 2007.  Later correspondence again mentioned the issue of a gated access and the steps to the mooring. 

20.  Cheques for a total of £10,000 were finally forthcoming. In a letter of the 9th of July 2007 Mr Lyke wrote:

"My client accepts the cheques in full and final settlement of the claim as presented in so far as the £4852 is accepted in full and final settlement of Item No. 1 of the claim.  The

£5,148 is accepted in respect of Items 2-4 of the claim."

21.  This payment is the foundation for the claimant's assertion that the respondent has, in effect, acknowledged his trade loss and its amount, and that sum should be applied to subsequent years.  However Mr Andrews gave evidence before me, as I record below, about the circumstances in which the payment was made.

22.  The work then proceeded, although not as quickly as the parties would have wished. I was shown several photographs of the finished wall.  What was done below water level was best explained by a cross-section through the wall at or about the position of the steps showing the proposed repair. (‘Proposed Retaining Wall Underpinning & Scour Protection’ from Kaymac Marine & Civil Engineering Ltd, (CH/MC/HRW/140808/1) dated 14/08/2008.)  On this section an approximate indication of the position of the base of the steps had been drawn on behalf of the claimant.  The works involved underpinning the river wall with a massive concrete structure, which extended out from the base of the wall to approximately three quarters of the width of the steps.  To protect against further scour of the wall or its underpinning, a microconcrete filled ‘mattress’ was then laid on the bed of the river along the base of the under pinning.  This ‘mattress’ curled up against the base of the underpinning and was pinned to it by stainless steel rods while its lower edge curled down to toe into the riverbed.  This arrangement meant that the protruding concrete of the underpinning could support the inner part of the bottom of the steps but the outer part was left unsupported.  The claimant told me that a scaffolding pole that he had driven into the riverbed had previously supported the riverward side of the bottom of the steps.  The works would have made the removal of such a pole inevitable.

23.  The claimant e-mailed Ms Bland on the 30th of November 2008 to express his concerns about the design of the steps and the gate.  On the 3rd of December 2008 Mr Lyke wrote again to Mr Andrews saying that the claimant was complaining that the work to the gate and the reinstatement of the steps had not been done correctly and would not pass the inspection that would be necessary before he could resume use of the boat.  The further delay had meant that the boat could not be put back in the water until the end of May 2009 thus requiring a further 12 months storage and an extra cost of £1,214.40, including VAT.  Ms Bland e-mailed the claimant on the 16th of December 2008 to say that the steps on the platform were still undergoing modification to address the issues that had been raised.  On the 10th of February 2009 Mr Andrews wrote to Mr Lyke again saying that the claimant had now been given the keys to the gate and that there was no case for further compensation.  This called forth a response from Mr Lyke stressing that, in the claimant's view, the work was not finished.  The gate was dangerous with metal points sticking out at waist and calf level and the access arrangements had not been approved.  It was now too late to get the boat back on the river before the summer of 2009 and there would be a further claim for storage costs and loss of earnings for 2008 and 2009. This claim was initially refused.

 

24.  The claimant's concern about the new flood-proof gate in the river wall above the mooring was that it was extremely heavy and solid and it was not reasonably practical to expect it to be opened and shut constantly to admit tourists to the boat.  I was shown photographs of it. The suggested solution was to provide in addition to the floodgate a lightweight gate, which would be easy to operate.  When the mooring was in use by visitors the floodgate could be left locked open and access to the mooring controlled by the lightweight gate.

25.  The correspondence shows a continuing debate about the acceptability of the gate and the steps and whether or not it was really true that the service could not operate in the summer of 2009.  In an e-mail dated the 23rd of December 2009 Ms Bland records a meeting with the claimant on the 6th of August.  A number of issues were covered.  Matters of significance were the fixing and support of the steps and the provision of the lightweight gate.  An important factor in the acceptability of the steps was that at the bottom they "bounced".  I heard evidence about this from the parties, particularly the claimant, which I shall set out below.  Suffice it to say at this stage that it appears clear to me that the works had removed the support the claimant had provided on the riverward side of the bottom platform.  The e-mail of 23^rd December 2009 shows that at that stage the claimant had agreed that he would deal with the necessary support to the bottom of the steps.  He was also going to sort out a wire mooring rope that had become buried in the newly laid concrete and he would install the additional lightweight gate.  These two points had also been discussed at a meeting on the 5th of June 2009 between the claimant and Mr John Hindle.  A note was made of that conversation, I think by Mr Hindle. Point 5 of that note said:

“The steps bounce at the bottom. Mr Parkhill said it was fixed to a scaffold pole before. At the moment it just rests on the concrete at the wall side. Probably just needs filler on the river side so that it is supported in two places rather than one.”

26.  There were meetings on site.  On the 20th of April 2010 the claimant wrote a long letter to Mr David Jordan, the respondent's Director of Operations in which he covered the history as he saw it and set out his claim for further compensation.  He said that although he had agreed to undertake and fund the removal of the steel mooring cable and the installation of the lightweight gate he had changed his mind.  He did not see why he should have to carry out work at his own expense to address deficiencies that the respondent should have completed almost 2 years ago.  However, if the respondent paid for the gate he would organise its installation. 

27.  On the 5th of May 2010 it was agreed that the respondent would pay storage costs for 2008 and 2009.  On the 6th of May 2010 the claimant wrote to Mr Hopkins and particularly discussed the "lightweight gate".  On the 12th of May Mr Jordan, wrote to record that the lightweight gate would be erected before Easter 2011 when the claimant was next intending to start operating cruises.  It was noted that the claimant had agreed to carry out work required to the mooring rope.  It was confirmed that storage costs incurred in 2008 and 2009 would be paid and regret was expressed that the project had taken longer than intended to complete.  This letter repeated that if there were to be claims for trade loss they should be made with the detail that had already been mentioned.  A copy of Mr Andrews's earlier note was attached.  (Those storage costs were eventually paid on the 6th of June 2011 by a cheque for the sum of £ 1,672.)

28.  The 'bouncy' steps had not been put right by the autumn of 2010, when they were inspected by the Environmental Health and Trading Standards Officer of Herefordshire Council in anticipation of the council receiving an application for a licence to run the boat from that location.  That officer advised the claimant, in a letter dated 4th of October 2010 that the steps were not in a satisfactory condition because the bottom half of them were secured only on the riverbank side, leaving the steps free to tilt and bounce.  There was also a criticism of the arrangements made to prevent children falling between the rails on the top landing.

29.  Neither the claimant nor the respondent took action to deal with the steps.  Instead, both parties obtained technical reports about them.  The respondent obtained a ‘note’ from Atkins in March 2011.  This reached the conclusion that:

"We do not believe that the support conditions at the bottom of the steps will have a detrimental effect upon the structure. The slight movement of the steps can be accommodated by the main section sizes and connection details of the steps to the wall.

Extending the mesh section to the upper section of guard rail, down the first flight of stairs and to the intermediate landing should be carried out."

30.  The claimant riposted with a report by Geomex Ltd, dated 22nd of June 2011.  This report noted that the purpose of the brief was to ascertain the serviceability of the steps rather than the structural stability of the steel members of it.  It found that the bottom flight of steps deflected up to 75 mm (3 inches) on the river side and that this was considered unacceptable.  This report pointed out that the solution was to weld to the bottom of the steps a steel leg that would rest on the concrete foundation below and added that this would be at small cost. 

The Claimant’s evidence

31.  The claimant gave evidence that he started trading in the 1997 with the Wye Queen, then used the Wye Princess two years later and another vessel which was later sold.  He spent £60,000 in setting up the operation, which involved making a mooring and obtaining and adapting suitable steps.  He then operated a service on the river for tourists until 2002.  He agreed in answer to Ms Ward’s questions that he could not be sure how many days a week he had been running.  He had an arrangement with another boatman who would run the Wye Princess from time to time.  This was an informal agreement; the other boatman would simply keep his takings up to a certain amount and then hand the excess to the claimant to cover fuel and other costs.  The business did sometimes have the help of one or two crew in addition to himself and the other boatman.  One might be the claimant’s wife, who was not paid, the other was a crewman who would get a daily rate.  He thought that most of the time there would be three of them working.

32.  The identity of the navigation authority was of importance to him because there were constantly obstacles in the River.  He had undertaken dredging in 2006, using the consent applied for by the previous operator and understood that the permission to dredge was continuing.  His problem was not so much with the depth of water but with other obstacles such as trees being washed down the river.  He accepted in cross-examination that he had not explained that to the respondent.  Another big problem was vandalism.  He felt that he could not deal with such matters, partly because it could be a big job and partly because of the consents he would need to obtain.  He felt it was a job for the navigation authority.  The depth of water in the river would not have prevented him operating during the relevant years.  The depth varied according to the weather and seasons but different routes could be taken to avoid the shallows.

33.  When he stopped he thought he would be able to use the fact that he was no longer running as a lever to encourage the relevant authorities to reach agreement about the proper maintenance of the navigation.  He was the only boat operator on the river and the trips he offered were a tourist attraction.  Otherwise he felt he would have had to run in a state of uncertainty.  The claimant explained that if he did not know in the previous December that he could run the next year it made it very difficult for him to do so because of the arrangements and payments that he would have to make.  He had spent time and money maintaining his boats in readiness.  He emphasised that he had been offered the prospect of compensation if he gave up his boat business but had refused the offer because the intended to start again when he could.  He explained the circumstances of his employment and how they took account of his wish and intention to resume.

34.  The claimant turned to how the respondent’s works stood in the way of a restart.  He explained in detail how passengers embarked and disembarked and the problems that a heavy gate would present.  It would have been very difficult for passengers to open and shut the heavy gate themselves. The lightweight gate was not in position until Easter 2011. In cross-examination the claimant agreed that he had agreed to ‘install’ (letter 20/4/10) and possibly ‘procure’ (email to him 23/12/09) the lightweight gate.  He had set out clearly why it was needed.  However he had equally clearly changed his mind by the letter of 20th April 2010 to Mr D. Jordan.

35.  The claimant said that when he had installed the steps originally he had driven a six-foot long scaffolding pole into the riverbed.  This pole protruded from the bed by a foot or so and was attached to the bottom tread of the steps by a bracket. He thought the pole might be just visible in one of the pre-works photos, (at page B79).  The steps had never bounced before the works, had always passed official inspection and there had never been any difficulty in getting the necessary approvals.

 

36.  The claimant agreed that he had agreed to do some of the work himself, particularly the stabilisation of the steps, the installation of the light gate and the removal of the mooring cable, but he intended that to be as part of a package that would include payment by the respondent of the compensation he was seeking. When it became obvious that the respondents were not prepared to pay what he considered to be adequate compensation, he changed his mind and told Mr Jordan so. In cross-examination he accepted that, although he did say he had changed his mind about the gate and the mooring, he never mentioned the steps or said that he had changed his mind about doing that that work. However, he felt that the respondent could not have been expecting him to fix the steps.

37.  The claimant was unable to add much detail about the scale of his trade loss in his evidence.  He never had accounts as such.  He had spent substantial amounts refurbishing the Wye Queen and more would have been needed to get her back into a proper state to continue the business.  He was unable to quantify those costs but was happy that it would have been worth his while to restart the business.  He mentioned that he had originally produced a business plan to the bank, which was probably based on the sort of business other boats other operators had done.  It was possible that he might have a copy of it somewhere, but he could not produce it to the hearing.  It would not show what his actual takings and expenses were.  He had carried on the business, paying his expenses and keeping what was left over without making specific records of it.  He had made tax returns.  He would have based his tax returns on the logbooks that he was required to maintain on shore for safety reasons, which recorded the number of passengers taken onboard and whether they were adults, children or babies.  He would have used those logs to calculate his takings, costs and profits.  He kept a record of what he paid his crew in the logbooks.  He had those logs in 2007 and they could have been made available then but later they were stored in his loft and when that was reinsulated they were thrown out.  He had not attempted to get copies of his tax returns. Ms Ward tried to explore the claimant’s earnings, costs and expenditure with him in cross examination, but he was unable to help in other than the most general terms.

The Respondent’s Evidence

38.  Ms Ward called Mr Timothy Hopkins as the first witness for the respondent.  He is an engineer employed by the respondent and works as a Capital Project Manager.  He took over management of the Hereford Flood Alleviation Scheme from his predecessor Ms Suzanne Bland in January 2010.  In his written statement and oral evidence he gave me an account of the respondent’s dealings with the claimant which is broadly summarised above.  His opinion was that by December 2009 the respondent had addressed all the defects in the works affecting the claimant it had agreed to correct.  He had not agreed to correct the bouncy steps because he understood that this was something the claimant had agreed to do.  When he met the claimant in May 2010 he believed that it had been agreed that the only outstanding work was the installation of the lightweight gate, which was completed before Easter 2011 to enable him to operate in 2011, which he said he wished to do. In answer to Mr Parkhill he agreed that he had no evidence to suggest that the steps bounced before the works were done.  He agreed that the claimant would have needed the respondent’s consent to lay a concrete ‘filler’ to support the bottom of the steps.

39.  Mr James Andrews told me that he is a partner in Llewellyn Humphreys (Chartered Surveyors) and has acted as Land Agent and Valuer to the respondent since 1998.  He was first instructed to negotiate with the claimant in April 2006.  He met the claimant and confirmed that the claimant had turned down an offer of compensation for relinquishing his rights to run boat trips along the river.  He recalls that the claimant told him that the river was not navigable and said that ‘currently it is not safe to run a boat.’  He gave evidence of the course of negotiations set out above.  He said that he had found himself in a difficult position with regard to the claim put forward on 24^th May 2007 as he felt that the claim for business loss was unsubstantiated and had no merit.  He had not advised the respondent to make any payment in respect of it.  However the then project manager seemed not to have appreciated until much too late that the Wye Queen would have to be moved in order to allow the work to start.  When the contractor was due to begin the problem became acute; work could not start until the boat was moved yet the contractor refused to move it, not regarding moving a boat as within its duties or skills.  No one else could be found prepared to move the vessel either.  Rather than delay the start of the contract, the respondent chose to pay the claimant what he asked in order to get him to move the boat as soon as possible.  The respondent made this payment without following the usual procedures and without asking Mr Andrews to advise on it.  Mr Andrews described the payment as part of a ‘horse trade’.  Mr Andrews told Mr Parkhill in cross-examination that he could not accept that the payment provided any reliable indication that the claimant’s trade loss was accepted in principle or quantified.  As far as he was concerned the apportionment of the £10,000 was entirely arbitrary.  He stressed to Mr Parkhill that he was not saying that there could never, as a matter of principle, have been any compensatable loss of business; his point was that there had never been any substantiation of any trade loss claim.  Had any substantiation been provided it could have been examined and discussed as a possible basis for negotiation.  He found it very surprising that the claimant had been running a business for several days per week but could produce no accounts or documentary evidence of any description.  While he accepted that the claimant might not have been familiar with what was required to substantiate such a claim, the same could not be said of Mr Lyke, who was acting for the claimant.  Mr Andrews had never seen a shred of evidence to support the claims.

40.  Mr Paul Senior had been the respondent’s Navigation Officer for the River Wye from May 2003.  He had contact with the claimant in correspondence, over the telephone and in meetings over an extended period.  The claimant expressed to him the wish to operate on the river and sought to get the respondent to maintain a navigable channel. Mr Senior replied that the respondent had no plans to dredge but that the claimant could apply for permission to do so if he wished.  No application for consent was ever made. He had been on board the boats and on the steps.

Submissions

41.  Ms Ward submitted that on the facts the claimant simply had not made out his claim.

42.  The completion of the works was in December 2009.  The wall was completed by then, as was the floodgate.  While it was appreciated that there were difficulties with using that gate the business could still have operated, if necessary by employing someone to stand at the top and work it.  Delays to the final provision of the lightweight gate were - at least in part - due to the claimant’s initial agreement to install it.  A similar point was made about the bouncy steps.  If it were found that the bounce was due to the works, the claimant had taken upon himself to put it right and never said he had changed his mind about that.  The respondent reasonably thought the claimant would deal with the problem; there was a break in the chain of causation.

43.  The evidence that the claimant really did intend to restart the business was unconvincing. There would have been substantial setting up costs but little real progress seems to have been made.  As for the claim for loss of earnings, the respondent had no problem with such a claim in principle but there was a complete absence of any evidence to substantiate it.  The burden was on the claimant to prove the loss on the balance of probabilities.  With the assistance of Mr Lyke it would not have been difficult to put forward support for the claim in some form, even if there were no formal accounts, but nothing had been produced at any stage. The claimant had completely failed to discharge the burden on him.

44.  Mr Parkhill submitted that the claimant would have restarted the business if it had not been for the works.  There were sensible reasons for a pause in 2002 in the hope that the respondent would have shouldered more of its responsibilities to do something for the river.  But there was no navigational obstruction that prevented a restart.  The claimant had spent considerable sums on the refurbishment of the Wye Queen, which showed his determination. What prevented a recommencement was the unfinished nature of the works, which were not completed to a state where tourists could safely use them until Easter 2011.  It should not be held against the claimant the he had agreed to do some of the work himself.  Some of it he could not do anyway without the consent of the respondent, such as pouring concrete filler to stabilise the bottom of the steps.  He could have done some of the work but it was not unreasonable of him to expect some movement from the respondent in return.

45.  So far as the quantification of the loss of trade claim was concerned, Mr Parkhill explained that the claim was that the claimant should be compensated in the sum of £4,852 for each year of business interruption caused by the respondent's defective flood defence works.  The sum of £4,852 was derived from what should be regarded as a settled agreement in May 2007.  The claimant felt that agreement had been reached which quantified a reasonable amount of annual compensation for that head of loss.  He thought a deal had been done. The Tribunal was entitled to infer from the evidence that this was a business that had the potential to make that sort of profit at least.  Despite what Mr Andrews said the payment made by a statutory body must be some indication of that.

Consideration and Conclusions

Issue 1. When were the works completed?

46.  The starting point is to decide what would have marked completion so far as the claimant was concerned.  It seems to me that the claimant is entitled to say that the works cannot be taken as having been completed until everything had been done that was reasonably necessary to enable him to start the business as near as possibly as it had been run before the works began. There were two potential obstacles to a restart: the bouncy steps and the heavy floodgate.

The Steps

47.  I see no evidence that the steps bounced before the respondent did the work. I accept the claimant's evidence about the installation of a scaffold pole and bracket to support the bottom tread and stabilise the steps.  The relevant authority appears to have been happy to grant a licence to operate.  I have no doubt that it was the work done by the respondent that removed that pole.  While the wall side of the bottom of the steps was supported on the concrete of the underpinning, the river side of these steps was left without support and free to ‘bounce’.  This left the steps in an unsatisfactory condition, so unsatisfactory indeed that Mr Parkhill could not get a licence to carry on the business.  This was a serious problem, although not difficult to fix once consent to do works in the river had been obtained from the respondent. However, until it was fixed it does not seem to me that the works can be said to have been properly completed. (I find it surprising that the parties set about obtaining experts’ reports rather than doing anything practical to fix the problem. Indeed, as far as I am aware it still has not been fixed.)

48.  But the respondent says that the reason it is not responsible for the non-completion of the steps is because the claimant told it that he would rectify the problem and never told it that he had changed his mind.  The claimant agrees that he did say that and did not say he had changed his mind. He appreciated that he would have to obtain consent from the respondent to do the work.  But he made no attempt to get that consent.  He says he made it plain that his agreement to do some of the remaining work was a concession on his part made to encourage an agreement about further compensation. When it became clear the compensation would not be forthcoming, he changed his mind.  He plainly did change his mind about some work, as he said in the letter of April 2010.  In that letter, although he referred to the gate and the mooring cable, he made no mention of the bounce on the steps, which he had also earlier volunteered to rectify.

49.  Against that background I find it very difficult to see how the respondent can be held responsible for the non-completion of the work necessary to the steps. Because the work necessary was not particularly difficult or costly, involving either pouring more concrete or providing another steel leg to support the outer end of the steps, it was not unreasonable for the respondent to accept the claimant’s assurance that he would do it.  Of course the respondent’s consent to interfere with their underwater work was necessary but the claimant never asked for it.  Had he done so and had he been refused or subjected to lengthy delays, he would have had an overwhelming case that it was once more for the respondent to finish the works.  Had he said that he had changed his mind about stabilising the steps, the same would have been true. But I cannot spell out of the letter of 10^th April an implicit notice that he would not now fix the steps in addition to the explicit notice of a change of mind about the gate and the mooring cable.  In my judgement the failure to complete the work to the steps is not something for which the respondent can be held liable.

The Gate

50.  I accept the claimant’s account of the serious difficulties the heavy flood gate would present if he were to try and run his business in the usual way.  It would be quite impractical to expect passengers to operate it.  He would certainly have had to employ someone to stand at the top of the steps and, amongst other things, operate the gate. Had he chosen to do that it might well have been sensible and compensatable mitigation of his loss.  However I do not think he was obliged to do that.  He was entitled to expect the provision of some method of access passengers could negotiate for themselves as they had done before.  The lightweight gate was the chosen solution.  It was not provided until Easter 2011.  In my judgement not until then can the works be said to have been completed.

51.  I do not overlook the complicating factor that for a period of several months up until April 2010 the claimant appeared to be prepared to take upon himself the responsibility for providing or perhaps installing the light gate.  It is possible that if he had not done so the gate would have been provided earlier.  However there is no clear evidence before me that justifies such a finding.

Issue 2: Would the complainant have carried on the business of running trips if the works had not interfered?

52.  I can understand the respondent’s submission that the claimant stopped in 2002 and never, during the relevant period, seriously intended to restart the business. It is not very clear to me why the claimant stopped in 2003. He may have been unsettled by the coming of the environment agency and hoped to try and persuade them to take a more active role (as he saw it) in the management of the River. From 2003 onwards it seems to me that may have become his main focus. He hoped to put pressure on the respondent by suggesting that the condition of the river made it difficult, at least, to run what was undoubtedly a tourist attraction. Perhaps to that end, he said a number of things about the river that were certainly capable of being taken as suggesting that he could not operate on it. However, although I have no doubt that there were problems of greater or lesser importance at different times, I accept the claimant’s evidence that in fact they would not have prevented him operating. He could have worked round the problems.

53.  The claimant did say on a number of occasions that he wished to resume business when he could.  He refused the offer of compensation to give up his right to do so.  He took less advantageous employment to keep that possibility open.  He took active steps in such matters as maintaining and floating his vessels.  By 2007 it must have been obvious to the claimant that he was getting nowhere in trying to persuade the respondent to maintain the river in the way the claimant wished.  On the balance of probabilities I think Mr Parkhill did intend to recommence the business of providing trips as soon as he could.

54.  The EA has already paid Mr Parkhill the cost of removing storing and replacing the vessel in 2008 and 2009.

 

 

 

Issue 3: should the payment made to him in 2007 be accepted as an acknowledgement or quantification of the claimant’s loss of earnings in subsequent years?

55.  The claimant invited me to infer that the payment of £4,852, which he had claimed under the heading of loss of profit, indicated acceptance by the respondent that he had lost profits of at least that amount.  I accept the evidence of Mr James Andrews of Llewellyn Humphreys about the circumstances in which that payment had been made. In essence the respondent had got itself into difficulty and was prepared to pay the claimant what he asked in order to settle the matter and get the boat moved as quickly as possible.  Mr Andrews was not asked to advise the respondent whether to make that or any payment and did not do so; in his words, it was a horse trade.  His description of it in the letter to Mr Lyke as a ‘one-off’ payment rather gives that impression.  He said he would not have been prepared to recommend any payment for trade loss without substantiation.  By contrast Mr Lyke’s unilaterally declared attribution of the payment to trade loss carries little persuasive power. In all those circumstances I do not think any reliance can be put on that payment as an acknowledgement of an appropriate level of trade loss and I am not prepared to base any inference on it.

Issue 4: Is there any other evidence to prove and quantify The Claimant’s loss of earnings?

56.  The issue of quantification relates to loss of profits.  As the claimant concedes there is simply nothing in the way of evidence to substantiate his loss of profit. He was asked by Mr Andrews to produce accounts.  That was the natural first request of a valuer faced with a claim for compensation for loss of profits.  Of course he could not have been expected to produce comparative accounts in exactly the form they were requested in the guidance note but he could have produced more than he did. Mr Lyke, FRICS, advised him at that stage.  The claimant believes he still had his logbooks then.  They would have proved the numbers of passengers and enabled the reconstruction of an important part of an account of profits.  His explanation for not producing them was that he had not been asked for them.  It is difficult to believe that he was not made aware of the potential significance of these documents.  These logbooks were then put in his attic until they were thrown out when the loft was re-insulated.  I find that a surprising explanation for the absence of records.

57.  The claimant was aware months ago, at the very latest in April 2011 when he received the respondent's Reply, that the lack of any substantiation for his claim was a point of fundamental importance being taken against him.  But nothing was attempted to remedy the lack before this hearing.  There was no attempt to recover from HMRC the tax returns, which the claimant said in evidence he had prepared and which showed profit and loss for the years of operation.  Nor did the claimant see if he could find a copy of the business plan that he says he produced for the bank.  He did not attempt to reconstruct an approximate account from the sort of general details Mr Lyke advanced on his behalf, which might have been better than nothing.

58.  It is for the claimant to prove his claim on the balance of probabilities.  Of course the nature and degree of the proof that will be sufficient changes according to the circumstances.  What might be demanded of a large business is not expected of one man running trips on the river. But there must be something. Given any sort of credible substantiation I would not have been surprised if I had reached the view that the claimant would probably have made a profit, although it is not inevitable that he would.  However, in the complete absence of any evidence that substantiates the claim or enables me to quantify it I cannot reach that conclusion.  The claimant has failed to make out his claim on this basis.

59.  I conclude that the claim fails.  The parties are now invited to make submissions on costs, and a letter about this accompanies this decision, which will become final when the question of costs has been determined.

 

Dated 31^st January 2012

 

His Honour Judge David Mole QC

 

Costs Addendum

60.  The Tribunal has received submissions on costs from both parties.  The Tribunal has a discretion as to the award of costs but the general principle is that the successful party ought to receive its costs. 

61.    In this case the claim for compensation was dismissed. It now appears that the respondent Environment Agency made two offers to settle the matter to Mr Dennis Parkhill, both of which were rejected.  The first offer dated the 18th of November 2011, approximately three weeks before the hearing, was an unconditional offer to pay £5,000 in respect of all matters.  The second offer dated the 1st of December 2011 increased that offer to £6,000.  However I note that it added a condition relating to the withdrawal of judicial review proceedings and requiring the making of an acknowledgement  by the claimant that it was his responsibility to bring the steps to the required standard.  The addition of these conditions complicates the matter and causes me to put less weight on this offer.  It seems to me that the making and rejection of the unconditional offer of £5,000 is a significant factor.  It was a fair offer that should have been accepted in the circumstances.  Parties are encouraged to make such reasonable efforts as they can to settle matters before they come to a hearing, thus saving both themselves and the Tribunal time and expense. 

 

62.    On the other hand, the claimant points out that he did succeed on two issues of some importance, namely that works were not completed until the user-friendly gate was installed in April 2011 and that the claimant did intend to resume his business, albeit that for different reasons these findings did not result in the award of any compensation to him.

63.    In all the circumstances it seems to me that, although in principle the Environment Agency must be entitled to a substantial proportion of its costs, certainly including all the costs of the hearing, some reduction is warranted.  The total costs claimed by the Environment Agency are £8,400. That amount appears to me to be reasonable.  The claimant will pay the Environment Agency £6,000 towards those costs.

 

 

Dated 3 May 2012

 

 

His Honour Judge David Mole QC