UPPER TRIBUNAL (LANDS CHAMBER)

UT Neutral citation number: [2013] UKUT 214 (LC)

UTLC Case Number: ACQ/130/2011

TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007

 

 

COMPENSATION – electricity – grant of necessary wayleave under Schedule 4 of Electricity Act 1989 – overhead line – injurious affection – whether section 44 of the Land Compensation Act 1973 applies – application of the principle of equivalence

 

 

IN THE MATTER OF A NOTICE OF REFERENCE

 

 

BETWEEN NEVILLE JAMES STYNES Claimants

AND BARBARA STYNES

and

 

WESTERN POWER (EAST MIDLANDS) PLC Compensating

Authority

 

 

Re:  8 Turlands Close,

Walsgrave,

Coventry

CV2 2PT

 

 

Before: Sir Keith Lindblom, President and Mr A.J. Trott F.R.I.C.S.

 

Sitting at: 43-45 Bedford Square, London WC1B 3DN

on 18 and 19 April 2013

 

 

Mr Stephen Tromans Q.C. and Mr Richard Wald, instructed by Hugh James Solicitors, appeared for the claimants  

Mr David Elvin Q.C., instructed by Squire Sanders (UK) LLP, appeared for the compensating authority

The following cases are referred to in this decision:

 

Liaqat v Majid [2005] EWHC 1305 (QB)

United States v Causby (1946) 66 S. Ct. 1062

Turris Investments Ltd. v The Central Electricity Generating Board [1981] 1 E.G.L.R. 186

Macleod v National Grid Co. [1998] 2 E.G.L.R. 217

Welford v EDF Energy Networks (LPN) Plc [2006] 3 E.G.L.R. 165

Welford v EDF Energy Networks (LPN) Plc [2007] 2 P. & C.R. 15

Arnold White Estates Limited v National Grid Electricity Transmission Plc [2013] UKUT 5 (LC)

R. v Secretary of State for Trade and Industry, ex parte Wolf [2000] 79 P. & C.R. 299

Edwards v Ministry of Transport [1964] 2 Q.B. 134

Moto Hospitality v Secretary of State for Transport [2007] EWCA Civ 764

Director of Buildings and Lands v Shun Fung Ironworks Ltd. [1995] 2 A.C. 111

Anchor Brewhouse Developments Ltd. v Berkeley House (Docklands Developments) Ltd. [1987] 2 E.G.L.R. 173

Sovmots Investments Ltd. v The Secretary of State for the Environment [1979] AC 144

Belfast Corporation v O. D. Cars Ltd. [1960] A.C. 490

Bocardo SA v Star Energy UK Onshore Ltd. [2011] 1 AC 380

Newcastle-under-Lyme Corporation v Woolstanton Ltd. [1947] Ch. 427

Naylor v Southern Electricity Board [1996] 1 E.G.L.R. 195

Horn v Sunderland Corporation [1941] 2 K.B. 26

Metropolitan District Railway v Sharpe (1880) 5 App. Cas. 425

Pennsylvania Coal Co. v Mahon [1922] 260 U.S. 393

Baron Bernstein of Leigh v Skyviews & General Ltd. [1978] QB 479

Kelsen v Imperial Tobacco Co. (of Great Britain and Ireland) Ltd. [1957] 2 Q.B. 334

Graham v K.D. Morris & Sons Pty. Ltd. [1974] Qd.R.1

Waters v Welsh Development Agency [2004]1 W.L.R. 1304

 

 

The following further cases were referred to in argument:

 

Blundell v R. [1905] 1 KB 516

The Master and Fellows of University College, Oxford v Secretary of State for Air [1938] 1 All E.R. 69

Delaforce v Evans [1970] 215 E.G. 315

Lithgow v United Kingdom 8 E.H.R.R. 329

British Waterways Board v London Power Networks Plc [2002] EWHC 2417 (Ch)

Road Chef Motorways Ltd. v Secretary of State for Transport [2007] R.V.R. 5

DECISION

 

Introduction

 

1.     This reference concerns the compensation payable to Mr and Mrs Neville Stynes (“the claimants”), the freehold owners of 8 Turlands Close, Walsgrave, Coventry (“the reference property”), for the grant of a necessary wayleave by the Secretary of State for Energy and Climate Change (“the Secretary of State”) to Western Power Distribution East Plc (formerly Central Networks East Plc) (“the compensating authority”). The wayleave was granted on 13 September 2010, under the provisions of Schedule 4 to the Electricity Act 1989 (“the 1989 Act”). It allowed the compensating authority to retain an electricity line above the reference property. The dispute between the parties is about the claimants’ entitlement to compensation for injurious affection.

 

2.     The claimants have owned and lived in the reference property since 1981. Close to the reference property at its rear there is a pylon owned by the compensating authority. The pylon is known as “tower HK34”. It supports a section of the 132kV line constructed between Coventry and Whitley in 1951. The line impinges on the airspace above the back garden of the reference property.

 

3.     In a witness statement dated 17 September 2012 Mrs Stynes explains the basis of the claim. She says that birds sitting on the compensating authority’s line make a mess in the garden with their droppings. This prevents the claimants from using and enjoying the garden as they would wish. According to Mrs Stynes, “[the] pylons [sic] are a continuing source of stress”, the “noise that the pylon and the cables make causes considerable disturbance”, and the “terrible crackling noise” in damp weather is “loud and clearly audible” both in the garden and in the house. Mrs Stynes also says that the claimants are concerned about the “damaging effect” the pylon may be having on their health. For some time they have been “aware of the possible health effects of the electromagnetic fields associated with the pylons and overhead lines”, and this has caused them, says Mrs Stynes, “a great deal of stress”. The compensating authority does not accept all of the evidence put forward in support of the claim. However, such dispute as there is about the factual basis of the claim does not affect the questions we have to consider.

 

4.     At the hearing of the reference Mr Stephen Tromans Q.C. and Mr Richard Wald appeared for the claimants. Mr David Elvin Q.C. appeared for the compensating authority.

 

 

The main issue

 

5.     The main issue in the reference is whether, under paragraph 7 of Schedule 4 to the 1989 Act, the claimants are entitled to compensation for injurious affection not only for the effects of the part of the line that passes over the reference property but also, by the operation of section 44 of the Land Compensation Act 1973 or in accordance with the principle of equivalence, for the effects of the compensating authority’s apparatus, including the pylon, on adjacent land. 

 

6.     The parties have agreed the level of compensation for injurious affection on alternative bases. If the Tribunal decides that section 44 of the 1973 Act does apply in this case, either directly or indirectly through the principle of equivalence, the compensation due to the claimants for injurious affection will be £14,000. If the Tribunal decides that section 44 does not apply the compensation for injurious affection is agreed as £4,000. The valuation date is agreed as 13 September 2010.

 

 

The facts

 

7.     The parties have submitted a statement of agreed facts and issues and two supplementary statements of agreed matters, in the light of which, and the documents before us, we take the following facts as the basis for our decision.

 

8.     Tower HK34 is a double-circuit lattice pylon. It stands 16 metres away from the house on the reference property. It is clearly visible from both the house and the garden. It supports seven electrical cables (six phase conductors and an earth conductor). The line impinges on the airspace above the back garden of the reference property.

 

9.     When the air is still the middle phase conductor overhangs the garden by six centimetres. In windy conditions, when the maximum operating temperature is reached, the line swings in an arc of up to 2.85 metres, and there is a further safety clearance of 3.6 metres within which no building may be constructed.

 

10.  The parties agree that “in consequence of the locations of the Line and Pylon [the reference property] is injuriously affected” (paragraph 1.6 of the statement of agreed facts and issues). This agreement is reflected in the alternative figures for compensation to which we have referred in paragraph 6 above.

 

11.  On 30 July 2009 the claimants served a notice on the compensating authority requiring it to remove all of its high voltage electricity apparatus across the reference property.

 

12.  In a letter dated 12 August 2009 the compensating authority made an application to the Secretary of State under paragraph 6 of Schedule 4 to the 1989 Act for a necessary wayleave to keep the line in place.

 

13.  The application was considered by the Secretary of State’s Inspector, Mr Alan Walker, C. Eng., F.I.E.T., C.Dip. A.F., on written representations submitted by either side. The Inspector prepared a report, dated 14 July 2010, in which he concluded (at paragraph 7.1):

 

“From the material facts presented, which I have summarised in this report, and from my site inspection, I am of the view that the Line is needed, that the electromagnetic fields produced by the Line at the Property are below the nationally accepted ICNIRP reference levels, and that the impact of this Line on the use and enjoyment of the Property does not justify the disruption and the £2 million to £3.8 million of expenditure to divert it away from the Property. I have therefore concluded that it would be expedient to keep the Line in situ.”

 

The Inspector recommended that the necessary wayleave be granted.

 

14.  In his decision letter dated 13 September 2010, having agreed with the Inspector’s conclusions and recommendation, the Secretary of State granted the wayleave. The terms of the wayleave were:

“Grant of a wayleave by the Secretary of State authorising Central Networks East plc to allow an existing 132 kV overhead line swing across land at 8 Turlands Close, Coventry and owned by Mr and Mrs Stynes.”

 

Annexed to the wayleave, in Schedule 1, was a map showing the reference property, with the position and dimensions of the relevant part of the line. Schedule 1 described the grant as being for “[the] retention of the 132kV overhead electric lines marked in the plan annexed hereto …”. The wayleave was granted subject to three conditions:

 

“1 The wayleave hereby granted shall remain in force until determined by either party giving to the other six months’ notice in writing of such termination.

2 A notice pursuant to condition 1 above may not be given until after the expiration of 15 years from the date hereof.

3 Any notice given pursuant to condition 1 above shall be without prejudice to the rights of either party arising under, or pursuant to, Schedule 4 to the 1989 Act.”

 

Thus the minimum term of the wayleave was 15 years.

 

15.  If the wayleave had not been granted the pylon could have remained in place but the line would have had to be removed or realigned.

 

16.  On 31 October 2011 the claimants gave formal notice of a claim for injurious affection following the grant of the wayleave pursuant to paragraph 7 of Schedule 4 to the 1989 Act. The sum claimed was £19,550.

 

17.  On 25 November 2011 the claimants referred their claim for injurious affection to the Upper Tribunal (Lands Chamber). The claim is supported by the expert report, dated 14 September 2012, of Mr Charles Hamer F.R.I.C.S., the Managing Director of Hamer Associates Ltd. For the compensating authority an expert report, dated 7 September 2012, and a rebuttal report, dated 15 November 2012, have been produced by Mr David Cotterill F.R.I.C.S., a Director of Babcock Networks Property Consultancy.

 

 

The relevant statutory provisions

 

The Land Clauses Consolidation Act 1845

 

18.  Section 1 of the Lands Clauses Consolidation Act 1845 provides:

 

“This Act shall apply to every undertaking authorized by any Act which shall hereafter be passed, and which shall authorize the purchase or taking of lands for such undertaking, and this Act shall be incorporated with such Act; and all the clauses and provisions of this Act, save so far as they shall be expressly varied or excepted by any such Act, shall apply to the undertaking authorized thereby, so far as the same shall be applicable to such undertaking, and shall, as well as the clauses and provisions of every other Act which shall be incorporated with such Act, form part of such Act, and be construed together therewith as forming one Act.”

 

19.  Section 2 defines “the special Act” as “any Act which shall be hereafter passed which shall authorize the taking of lands for the undertaking to which the same relates, and with which this Act shall be so incorporated as aforesaid; …”.

 

20.  The definition of “Lands” in section 3 extends to “messuages, lands, tenements, and hereditaments, of any tenure”.

 

21.  The 1845 Act provides for the “Purchase of lands by agreement” under sections 6 to 15, and for the “Purchase of lands otherwise than by agreement” under sections 16 to 68.

 

22.  Section 63 provides:

 

“In estimating the purchase money or compensation to be paid by the promoters of the undertaking, in any of the cases aforesaid, regard shall be had… not only to the value of the land to be purchased or taken by the promoters of the undertaking, but also to the damage, if any, to be sustained by the owner of the lands by reason of the severing of the lands taken from the other lands of such owner, or otherwise injuriously affecting such lands by the exercise of the powers of this or the special Act, or any Act incorporated therewith.”

 

 

The Compulsory Purchase Act 1965

 

23.  Section 7 of the Compulsory Purchase Act 1965 provides:

 

“In assessing the compensation to be paid to the acquiring authority under this Act regard shall be had not only to the value of land to be purchased by the acquiring authority, but also to the damage, if any, to be sustained by the owner of the land by reason of the severing of the land purchased from the other land of the owner, or otherwise injuriously affecting that other land by the exercise of the powers conferred by this or the special Act.”

 

 

The Land Compensation Act 1973

 

24.  Section 44 of the Land Compensation Act 1973 provides:

 

“(1) Where land is acquired or taken from any person for the purpose of works which are to be situated partly on that land and partly elsewhere, compensation for injurious affection of land retained by that person shall be assessed by reference to the whole of the works and not only the part situated on the land acquired or taken from him.

 

(2) In this section “compensation for injurious affection” means compensation for injurious affection under section 63 or 121 of the Lands Clauses Consolidation Act 1845 or section 7 or 20 of the Compulsory Purchase Act 1965, and subsection (1) above shall apply with the necessary modifications to such compensation under the said section 7 as substituted by paragraph 6 of Schedule 19 to the Highways Act 1980, paragraph 7 of Schedule 3 to the Gas Act 1986,  paragraph 3 of Schedule 9 to the Water Industry Act 1991 or Schedule 18 to the Water Resources Act 1991 (compulsory acquisition of rights over land) or any corresponding enactment, including (except where otherwise provided) an enactment passed after this Act.”

 

The commencement provisions in the 1973 Act are in section 89. Apart from the provisions of Part I (which did not come into force until a month after the date on which the Act was passed), the Act came into force on the day it received the Royal Assent, which was 23 May 1973. Thus section 44, which is in Part IV, came into force on that date. Section 89(3) provides that the provisions of Part IV (except section 48) “relating to the assessment of compensation do not affect any compensation which fell or falls to be assessed by reference to prices current on a date before 17 October 1972”.

 

 

The Electricity Act 1989

 

25.  Section 10(1) of the 1989 Act broadly describes the powers of licence holders. It provides that Schedules 3 and 4 are to have effect “in relation to the holder of a transmission licence” and “to the extent that his licence so provides, in relation to an electricity distributor or other licence holder”. Schedule 3, it says, “provides for the compulsory acquisition of land”; Schedule 4 “confers other powers and makes other provisions”.   

 

26.  Schedule 3 to the 1989 Act is arranged in three parts, under the general heading “Compulsory Acquisition of Land etc by Licence Holders”. Part I, containing paragraphs 1 to 4, is headed “Powers of Acquisition”. Part II, under the heading “Procedure, Compensation etc (England and Wales)” comprises paragraphs 5 to 14. These paragraphs describe the procedural framework for compensation for compulsory purchase of land or rights by licence holders. Part III sets out the corresponding provisions for Scotland.

 

27.  Paragraph 1(1) of Schedule 3 provides for the Secretary of State to authorize a licence holder to purchase compulsorily any land required for any purpose connected with his carrying on the activities he is licensed to undertake. Under paragraph 1(2) “land” includes “any right over land”, and the Secretary of State has the power to authorize the acquisition of rights over land by creating new rights as well as acquiring rights that already exist.

 

28.  In Part II of Schedule 3 Parliament expressly incorporated the main elements of the statutory code for the assessment of compensation for compulsory purchase: for the compulsory purchase of land or rights, the Acquisition of Land Act 1981 (paragraph 5); and for the creation of new rights, the Compulsory Purchase Act 1965, with the necessary general and specific adaptations, as it applies to the compulsory purchase of land (paragraphs 6 to 13). Paragraph 8 provides:

 

“For section 7 of [the Compulsory Purchase Act 1965] there shall be substituted the following section –

 

‘7. In assessing the compensation to be paid by the acquiring authority under this Act regard shall be had not only to the extent (if any) to which the value of land over which the right is to be acquired is depreciated by the acquisition of the right but also to the damage (if any) to be sustained by  the owner of the land by reason of its severance from other land of his, or injuriously affecting that other land by the exercise of the powers conferred by this or the special Act.’ ”

 

Paragraph 14 of Schedule 3 provides:

 

“The enactments in force in England and Wales with respect to compensation for the compulsory purchase of land shall apply with the necessary modifications as respects compensation in the case of a licence holder’s compulsory acquisition of a right by the creation of a new right as they apply to compensation on the compulsory purchase of land and interests in land.”

 

29.  Schedule 4 to the 1989 Act describes other powers of licence holders and includes, in paragraphs 6 and 7, provisions relating to the acquisition of wayleaves and in paragraph 8 provisions relating to the temporary continuation of wayleaves.

 

30.  A necessary wayleave is defined in paragraph 6(1) of Schedule 4 as “consent for the licence holder to install and keep installed the electric line on, under or over the land and to have access to the land for the purpose of inspecting, maintaining, adjusting, repairing, altering, replacing or removing the electric line.” Paragraph 6(2) of Schedule 4 provides:

 

“This paragraph also applies where –

 

(a) for any purpose connected with the carrying on of the activities which he is authorised by his licence to carry on, it is necessary or expedient for a licence holder to keep an electric line installed on, under or over any land; and

 

(b) the owner or occupier of the land has given notice to the licence holder under paragraph 8(2) below requiring him to remove the electric line;

 

…”.

 

The licence holder can apply under paragraph 6(3) to the Secretary of State who may himself grant the necessary wayleave subject to such terms and conditions as he thinks fit, and a necessary wayleave so granted shall, unless previously terminated in accordance with a term contained in the wayleave, continue in force for such period as may be specified in the wayleave. Paragraph 6(5) affords the occupier of the land the opportunity of being heard before a necessary wayleave is granted.  Paragraph 6(6) provides that a necessary wayleave:

 

“(a) shall not be subject to the provisions of any enactment requiring the registration of interests in, charges over or other obligations affecting land; but

 

(b)  shall bind any person who is at any time the owner or occupier of the land.”

 

Paragraph 6(7) states:

 

“Where in pursuance of a necessary wayleave granted under this paragraph a licence holder has erected on any land supports for an electric line, he shall be deemed to have an interest in that land for the purposes of section 7 of the Mines (Working Facilities and Support) Act 1966.”

 

Paragraph 7 contains provisions supplementary to paragraph 6.  It provides:

 

“(1) Where a wayleave is granted to a licence holder under paragraph 6 above –

 

(a)  the occupier of the land; and

(b)              where the occupier is not also the owner of the land, the owner,

 

may recover from the licence holder compensation in respect of the grant.

 

(2) Where in the exercise of any right conferred by such a wayleave any damage is caused to land or moveables, any person interested in the land or moveables may recover from the licence holder compensation in respect of that damage; and where in consequence of the exercise of such a right a person is disturbed in his enjoyment of any land or moveables he may recover from the licence holder compensation in respect of that disturbance.

 

(3) Compensation under this paragraph may be recovered as a lump sum or by periodical payments or partly in one way and partly in the other.

 

(4) Any question of disputed compensation under this paragraph shall be determined by the Tribunal; and section 4 of the Land Compensation Act 1961… shall apply to any such determination.”

 

 

Submissions for the claimants

 

31.  Mr Tromans submitted:

 

(1)    The 1845 Act is incorporated in its entirety (except as expressly varied) into any Act “which shall authorize the purchase or taking of lands” for a relevant undertaking. The 1989 Act authorizes the purchase or taking of lands. Therefore, the 1845 Act – including section 63, which provides for the payment of compensation for injurious affection – is incorporated into, and forms part of, the 1989 Act.

 

(2)    Under section 44(2) of the 1973 Act “compensation for injurious affection” includes compensation for injurious affection under section 63 of the 1845 Act and section 7 of the 1965 Act. Section 44(1) of the 1973 Act applies where land is acquired or taken from any person for the purpose of works “which are to be situated partly on that land and partly elsewhere”.

 

(3)    Paragraph 6(1) of Schedule 4 to the 1989 Act authorizes the taking of land by, inter alia, the licence holder acquiring the right to retain an existing line over land. “Land” includes the airspace over land (see, for example, Liaqat v Majid [2005] EWHC 1305 (QB), per Silber J. at paragraph 34). “Taking” is a concept distinct from, and wider than, “purchasing”. In this case the compensating authority has acquired rights over the reference property for a period of 15 years. The claimants cannot use the area of airspace required for the exercise of those rights. The compensating authority’s line interferes with their ordinary use and enjoyment of the reference property. Its presence would constitute a trespass were it not authorized by the wayleave. The grant of the wayleave amounted to a taking of land for the purposes of the 1845 Act. It involved the acquisition by compulsion of rights inconsistent with the claimants’ use of the reference property. 

 

(4)    There is no direct authority on the meaning of the word “taking” in section 1 of the 1845 Act.  In United States v Causby (1946) 66 S. Ct. 1062 the United States Supreme Court considered, as a case of first impression, the problem of whether the respondent’s property was taken within the meaning of the Fifth Amendment by frequent and regular flights of military aircraft over the respondent’s land at low altitudes.  The court held that in these circumstances there had been the taking of an easement of flight. The same principles apply here.

 

(5)    The 1845 Act applies to both Schedules 3 and 4 to the 1989 Act. There is no practical difference between the compulsory acquisition of a new right over land under Schedule 3 and the grant of a necessary wayleave under Schedule 4. Apart from their duration, the rights acquired in either case are identical in their effect. In both there is a taking of land. Rights over land acquired compulsorily under Schedule 3 are not an easement in the true sense, because the licence holder has no dominant tenement. Such rights are essentially the same as a necessary wayleave acquired under Schedule 4, which runs with the land and binds future owners and occupiers. A necessary wayleave is more than a simple licence. It is a consent for the licence holder to keep its line installed over land, contrary to the owner’s right of occupation, for a specified period. It is not necessary to show that an interest in land has been created. What matters is the effect of the provision.

 

(6)    Section 44 of the 1973 Act applies to the assessment of compensation under paragraph 7(1) of Schedule 4. Paragraph 8 of Schedule 3 to the 1989 Act modifies section 7 of the 1965 Act so that it applies to the licence holder’s compulsory acquisition of a right by the creation of a new right. Schedule 4 to the 1989 Act does not refer to section 7 of the 1965 Act. When a necessary wayleave is granted, it is section 63 of the 1845 Act that governs the entitlement to compensation for injurious affection. This in turn brings into play section 44 of the 1973 Act, which requires compensation to be assessed “by reference to the whole of the works and not only the part situated on the land … taken …”. Paragraph 7(1) of Schedule 4 of the 1989 Act provides for the claimants to recover from the compensating authority “compensation in respect of the grant” of a necessary wayleave under paragraph 6. This extends to compensation for injurious affection to the value of the whole of the reference property caused both by the portion of the line actually installed over it and by the apparatus standing on other land.  

 

(7)    Previous decisions of the Tribunal indicate that the approach to the assessment of compensation should be the same under Schedule 4 as it is under Schedule 3. In Turris Investments Ltd. v The Central Electricity Generating Board [1981] 1 E.G.L.R. 186, a similar case to this, the Tribunal (Mr J.H. Emlyn Jones F.R.I.C.S.) accepted (at p.189) that visual intrusion, fear about the adverse effects of electromagnetic radiation and the noise of the corona discharge in certain climatic conditions were all relevant aspects of injurious affection. In Macleod v National Grid Co. [1998] 2 E.G.L.R. 217 the Tribunal (Mr P.H. Clarke F.R.I.C.S.) held (at p.229) that, in the light of the principle of equivalence, a claimant is entitled to compensation for any loss flowing from the grant of the necessary wayleave, provided it is not too remote. However, the Tribunal did not consider the application of section 63 of the 1845 Act. It simply adopted the approach taken in Turris. It did so again in Welford v EDF Energy Networks (LPN) Plc [2006] 3 E.G.L.R. 165. In that case (at paragraph 43) the Tribunal (George Bartlett Q.C., President, and Mr N.J. Rose F.R.I.C.S.) favoured a construction of paragraph 7 of Schedule 4 to the 1989 Act that would allow compensation to be assessed for a wayleave of 15 years in the same way as if a permanent easement had been acquired. In the subsequent appeal to the Court of Appeal (Welford v EDF Energy Networks (LPN) Plc [2007] 2 P. & C.R. 15) Thomas L.J. said (at paragraph 14) the compensation payable under paragraph 7 was to be assessed on the same general principles as apply to compensation for compulsory acquisition, and would include injurious affection and disturbance. In its recent decision in Arnold White Estates Limited v National Grid Electricity Transmission Plc [2013] UKUT 5 (LC) the Tribunal’s approach was consistent with that in Welford.

 

(8)    The words “works which are to be situated” in section 44 of the 1973 Act apply to the retention of works already in place. This expression embraces works already present on the land, which would continue to be situated there after the necessary wayleave is acquired. Mr Tromans distinguished the words “to be situated” from the words “to be installed” in paragraph 6(4)(b) of Schedule 4 to the 1989 Act, which were considered in R. v Secretary of State for Trade and Industry, ex parte Wolf [2000] 79 P. & C.R. 299. Unlike the word “installed”, the word “situated” can include a continuous state of affairs – not only the act of situating the works in a particular place but also their being in that place once they have been carried out. Compensation for the initial grant of a necessary wayleave under Schedule 4 to permit new works to be put in place would be assessed under section 44(1) of the 1973 Act. This would also be so when new rights were compulsorily acquired under Schedule 3. But the rights acquired under Schedule 3 would be permanent, whereas those acquired under Schedule 4 would only be temporary, lasting usually for 15 years. If section 44(1) applied merely to future works, then it would not cover the grant of subsequent necessary wayleaves after the first had expired. Compensation would not be assessed in the same way for temporary rights acquired under Schedule 4 as it would for permanent ones acquired under Schedule 3. Yet the impact of the works on the landowner might be no different. That cannot be right.

 

(9)    If the claimants are wrong about the application of section 44 of the 1973 Act they would want to argue that Edwards v Ministry of Transport [1964] 2 Q.B. 134 was wrongly decided, and that, under the principle of equivalence, the words “compensation in respect of the grant” of a necessary wayleave extend to include the effects on value of the off-site works. In Moto Hospitality v Secretary of State for Transport [2007] EWCA Civ 764 the Court of Appeal doubted that Edwards would have been decided in the same way today.

 

(10) Even if the provisions of section 63 of the 1845 Act and section 44 of the 1973 Act do not apply to the grant of a necessary wayleave under Schedule 4, the concept of “compensation in respect of the grant” in paragraph 7 goes wider than simply compensation for the rights granted. It extends here, through the principle of equivalence, to the effects on the value of the reference property caused by works undertaken on other land (see Director of Buildings and Lands v Shun Fung Ironworks Ltd. [1995] 2 A.C. 111, per Lord Nicholls at p.125). The doctrine of fair compensation requires that compensation should be assessed in the same way regardless of whether powers were obtained under Schedule 3 or Schedule 4. This proposition finds support in the Court of Appeal’s decision in Welford. It would be artificial and unfair, when assessing compensation for injurious affection, to disregard the compensating authority’s apparatus as a whole. That would not achieve fair and just compensation for the injury caused by the grant of the wayleave. Nor would it be fair for a landowner whose land was affected by the grant of a necessary wayleave under Schedule 4 to have his compensation assessed on a different basis from someone whose land was subject to the compulsory acquisition of new rights under Schedule 3.

 

 

Submissions for the compensating authority

 

32.  Mr Elvin submitted:

 

(1)    The compensating authority’s basic argument is that compensation for the effects of its off-site apparatus is not payable under the 1989 Act because it would not be “compensation in respect of the grant”. Paragraph 7 of Schedule 4 to the 1989 Act does not entitle the claimants to compensation for the installation of apparatus on land outside the reference property or the acquisition of rights on, over or under other land not subject to the grant of the wayleave.

 

(2)    The statutory provisions for compulsory purchase compensation, including section 44 of the 1973 Act, do not apply to compensation in respect of the grant of a necessary wayleave. The decisions made by the Tribunal in a series of cases have established that the general principles of compensation apply to a claim under paragraph 7. Compensation may be paid for the diminution in the value of the land, for disturbance and for injurious affection. But those general principles do not introduce the statutory provisions for compensation applicable to claims arising from compulsory purchase orders. Schedule 3 expressly incorporates those provisions, with the necessary modifications; Schedule 4 does not. The Tribunal has consistently heeded this difference between the two schedules (see, for example, the Tribunal’s decision in Macleod, at p.229). In Macleod it held that the statutory compensation code for compulsory acquisition did not govern the assessment of compensation for necessary wayleaves under paragraph 7 of Schedule 4, concluding that the planning assumptions in sections 14 to 17 of the Land Compensation Act 1961 did not apply. That decision was treated as correct in Welford and Arnold White. It was not doubted by the Court of Appeal in Welford.

 

(3)    Section 44 of the 1973 Act applies where “land is acquired or taken”. No land has been acquired or taken here. No interest in land has been created (see Hamer and O’Brien’s “Electricity Wayleaves, Easements and Consents” (2007) and Appendix A to the Law Commission’s Consultation Paper No. 205 (2012) “Electronic Communications Code”). Schedule 4 to the 1989 Act made it possible to impose a wayleave in the form of a statutory licence. But it maintained the essential character of a contractual wayleave. Section 1 of the Law of Property Act 1925 did not regard a wayleave as an interest in land. Nor is the grant of a wayleave a disposition that has to be registered under section 27 of the Land Registration Act 2002. The wayleave authorized what would otherwise have been a trespass in the airspace of the reference property (see, for example, Anchor Brewhouse Developments Ltd. v Berkeley House (Docklands Developments) Ltd. [1987] 2 E.G.L.R. 173, per Scott J. at p.175M). However, that did not constitute the taking of land for the purposes of section 44 of the 1973 Act. A necessary wayleave granted under paragraph 6(1) is not an easement, which requires a dominant and a servient tenement. It is a “consent” for the licence holder to install an electric line and keep it installed “on, under or over the land.” Under paragraph 6(6) it is not a registerable interest in land, but is made binding on anyone who owns or occupies the land to which it relates. Paragraph 6(7) deems a licence holder to have an interest in land when, under a necessary wayleave, he erects supports for an electric line. A deemed interest in land is clearly distinguishable from an actual interest in land. Paragraph 7(1)(b) entitles an “occupier” to recover compensation.  An “occupier” could be a bare licensee.

 

(4)    The acquisition of a necessary wayleave under Schedule 4 is not a taking of land of the kind envisaged by the 1845 Act (see Cripps on Compulsory Purchase of Land (11^th edition), at paragraph 1-001). The word “taking” in this context connotes the use of compulsion. The distinction between land being purchased by agreement and its being acquired otherwise than by agreement can be seen in the structure of the 1845 Act; sections 6 to 15 deal with the former, sections 16 to 68 the latter. The definition of “lands” in section 3 of the 1845 Act only includes heritable property rights – as does the relevant definition of “Land” for the purposes of the 1973 Act, in paragraph 5(b) of Schedule 2 to the Interpretation Act 1978. Wayleaves do not come within those definitions. After the decision of the House of Lords in Sovmots Investments Ltd. v The Secretary of State for the Environment [1979] AC 144 it has been necessary for a special Act to contain specific powers for the acquisition of new rights if such rights are to be created when land is compulsorily purchased. The 1989 Act does this in Schedule 3, but not in Schedule 4.

 

(5)    The decision of the United States Supreme Court in Causby is not authority for the proposition that a necessary wayleave entails any taking of land.  In two cases decided at the highest level in this jurisdiction – Belfast Corporation v O. D. Cars Ltd. [1960] A.C. 490 and Bocardo SA v Star Energy UK Onshore Ltd. [2011] 1 AC 380 – Causby has not been followed. 

 

(6)    As that analysis shows, Mr Tromans’ reliance on sections 1 and 63 of the 1845 Act is misplaced, and his contention that section 44 of the 1973 Act applies in the circumstances of this case is untenable.

 

(7)    Even if those submissions are wrong, however, section 44 of the 1973 Act could not apply here because the wayleave was granted not for works “which [were] to be situated” on any relevant land but for the retention of existing works. Section 44 does not entitle a landowner to recover compensation for injurious affection caused by works that are already in place. In Wolf, Sedley J. held that the words “to be installed” in paragraph 6(4)(b) of Schedule 4 did not relate to an existing line that the licence holder sought to retain. A similar conclusion should be reached here. In this case the compensating authority’s apparatus was installed in 1951. Any claim for damage caused by the apparatus or its use should have been made within the limitation period running from the date on which it was erected.

 

(8)    Quite apart from that, section 44 of the 1973 Act can be of no relevance in this case because it does not apply to works carried out before Part IV of the 1973 Act came into force on 23 May 1973.

 

(9)    Moreover, no relevant interest in land has been acquired or taken to engage the provisions of section 44. Section 44 operates when there is an acquisition or taking of land for “works which are to be situated partly on that land and partly elsewhere”. So in this case, for the extended assessment of compensation for injurious affection to apply, there would have to be works of the compensating authority at least partly situated on the reference land. But there are none.

 

(10) Mr Tromans’ submissions on the principle of equivalence are misconceived. That principle applies only to the assessment of compensation properly recoverable under the relevant statutory regime, in this case paragraph 7 of Schedule 4. It cannot extend the claimants’ entitlement to compensation further than losses arising “in respect of the grant” of the wayleave. It does not produce a separate and additional right to compensation beyond that which Parliament has provided.

 

 

Discussion

 

The statutory scheme

 

33.  As we have said, the main issue for us to decide in this case concerns the scope of compensation for injurious affection that is payable to an owner or occupier of land when a wayleave is granted to a licence holder under Schedule 4 to 1989 Act. That issue, as the parties agree, turns on the construction of the relevant statutory provisions, and principally the provisions of paragraph 7 of Schedule 4.

 

34.  We begin with the structure of the statutory scheme.

 

35.  Section 10(1) of the 1989 Act draws a clear distinction between the provisions of Schedule 3 and those of Schedule 4. Separate and different regimes apply to the compulsory purchase of land and rights – in Schedule 3 – and the grant of wayleaves – in Schedule 4.

 

36.  The provisions of Part II of Schedule 3, which set out the procedures for assessing compensation when land or rights have been compulsorily acquired by licence holders, have no parallel in the provisions for wayleaves in paragraphs 6, 7 and 8 of Schedule 4. This cannot have been an oversight. Had Parliament intended to insert the panoply of statutory provisions for the compulsory purchase of land and interests in land into its scheme for the assessment of compensation payable in respect of the grant of a wayleave, it would undoubtedly have included in Schedule 4 provisions matching paragraphs 6 to 14 of Schedule 3. It did not do so. And in our view it would be wrong to read into paragraph 7(1) of Schedule 4 provisions corresponding to those paragraphs in Schedule 3 when it is clear that the legislature deliberately did not include them.

 

 

 

 

The essential nature of a wayleave

 

37.  An entry upon land that would otherwise be a trespass may be justified “either by operation of law, or by the act of the claimant or of his predecessors in title, where the entry is made under a right of easement or of profit a prendre, or under a licence …” (Clerk & Lindsell on Torts, at paragraph 19-29). There are, therefore, several means by which an intrusion on to land or into the airspace above land may be authorized.

 

38.  In this case the compensating authority needed lawful authority of some kind to justify what would otherwise have been an actionable trespass. It required such authority to retain its line in the airspace above the claimants’ land. But this does not mean that the statutory power it used must have yielded for it an interest in land.

 

39.  It seems to us clear from the statutory language itself that the acquisition of a wayleave under paragraph 6 of Schedule 4 to the 1989 Act does not amount to an acquisition of land, or of any right over or interest in land.

 

40.  As Mr Elvin reminded us, in Sovmots the House of Lords held that when land is compulsorily acquired there is no implied power for the compulsory purchase order to grant rights, such as easements, that did not previously exist. This can only be done by a specific power in the relevant legislation itself – whether a special or general Act. Parliament could authorize an authority to take a person’s land. But if it sought to confer on an authority power to require an owner to create, in its favour, limited interests or rights less than the owner’s interest, it must do so in specific terms (see the speech of Lord Wilberforce at p.171). The 1989 Act does this in Schedule 3, where it specifically provides for the acquisition of rights over land and also the creation of new rights. Schedule 4, by contrast, provides a different avenue for the licence holder, which takes him not to the acquisition of land or any right over it, but to a consent to do what he needs to do on, under or over the land, within the defined scope of wayleaves acquired under paragraph 6.

 

41.  A necessary wayleave granted under paragraph 6 is one of those rights Parliament has provided to enable statutory undertakers to enter on privately owned land and install, maintain and repair the services – such as pipes, cables or wires – for which they are responsible. It is not an easement. Parliament has chosen to define it simply in terms of its being a “consent” for the licence holder to do certain specified things – “to install and keep installed the electric line on, under or over land and to have access to the land for the purpose of inspecting, maintaining, adjusting, repairing, altering, replacing or removing the line”. The consent creates an exclusive right of occupation, but not an easement or any right of ownership. On acquiring a right of this kind the statutory undertaker does not become a purchaser of the land or airspace through which his pipe, cable or wire passes or will pass, and thus subject to a requirement to register title. This is not a property right. The grant of a wayleave was not specified by section 1 of the Law of Property Act 1925 as an interest in land, and it is not a disposition required to be registered under section 27 of the Land Registration Act 2002.

 

42.  This analysis, we think, sits well with the traditional understanding of the character of a wayleave. It is supported by Gale on Easements (18^th edition), which states (at paragraph 1-121)  that the rights conveyed by a necessary wayleave granted under the 1989 Act “do not give the licence-holder an interest in land but simply a right of occupation”. Gale cites as authority for this proposition the decision of the Court of Appeal in Newcastle-under-Lyme Corporation v Woolstanton Ltd. [1947] Ch. 427. That case concerned the statutory powers of local authorities to lay gas pipes underground. In the leading judgment Morton L.J., with whom Cohen L.J. agreed, quoted with approval Evershed J.’s description of the right acquired by the plaintiff corporation (at p.456):

 

“They have by force of the statute the exclusive right to occupy for the purpose of their statutory undertaking the space in the soil taken by the pipes … but that exclusive right of occupation, which continues so long as the corporation carry on their undertaking, does not depend upon or involve the vesting in the plaintiff corporation of any legal or equitable estate in the land.”

 

Morton L.J. went on (at p.457) to set out these basic conclusions

 

“… (a) That the corporation have no right of ownership or proprietorship of the soil in which their pipes are laid; (b) That they are not the tenants of any part of that soil; (c) That no easement is vested in the corporation; (d) That the corporation have no title, legal or equitable, in that soil; and (e) That the corporation are not the inheritors of the right to support admittedly vested in the owners of the surface land [and that] the corporation have not the exclusive right to occupy any portion of that soil, as distinct from the space or cavity occupied by their pipes.”

 

Somervell L.J. expressed similar conclusions (at p.466), observing that the only right the corporation acquired in these circumstances was “a right of support for their mains”.

 

43.  Mr Elvin also drew our attention to the commentary in Hamer and O’Brien’s “Electricity Wayleaves, Easements and Consents” (2007), which states (at paragraph 5.10) that “[the] legal category into which a wayleave most neatly fits … is a contractual licence”, which “does not create any interest in land”. Similarly, the Law Commission’s Consultation Paper No. 205 (2012) on the Electronic Communications Code (in paragraph A.3 of Appendix A) contrasts a “statutory easement” – “a non-ownership right created through compulsory purchase legislation”, such as may be acquired under Schedule 3 to the 1989 Act – with a “statutory wayleave” granted under Schedule 4. In essence, a wayleave is “a consent for a particular purpose rather than a property right” (ibid., paragraph A.6).

 

44.   A necessary wayleave acquired under paragraph 6 of Schedule 4 is not an easement, or any form of interest in or right over land. Schedule 4 puts in place a statutory mechanism for granting a consent that would otherwise have been possible only by way of an agreement, which binds subsequent owners and occupiers but does so without producing any property interest or right. The words “consent for the licence holder to install and keep installed the electric line on, under or over the land …” in paragraph 6(1) do not connote the granting of an easement. An easement requires both a dominant and a servient tenement. A necessary wayleave does not.

 

45.  As is clear from the provisions of paragraph 6(1) and (2), a necessary wayleave merely allows the licence holder to do certain things on the land in question, subject to any conditions imposed under sub-paragraph (3).

 

46.  This understanding of the essential nature of a necessary wayleave is reinforced by sub-paragraphs (5) and (6), and, in our view, is put beyond doubt by sub-paragraph (7). The occupier, for whom sub-paragraph (5) secures the right to a hearing before a wayleave is granted, may be, as Mr Elvin pointed out, no more than a bare licensee. Sub-paragraph (6) makes it clear that a necessary wayleave is not a registerable interest in land, though it is binding on anybody who is for the time being an owner or occupier of the land. Sub-paragraph (7), which deems the licence holder to have an interest in the land when he erects supports for an electric line upon it, makes it absolutely clear that a necessary wayleave does not generate any interest in the land. If the grant of the wayleave had created an actual interest in land this deeming provision would have been unnecessary. This provision is enough on its own to dispel the idea that a wayleave brings into existence any new interest in land. 

 

47.   In summary, a necessary wayleave granted under paragraph 6 of Schedule 4 to the 1989 Act is nothing more and nothing less than a statutory licence or consent. It does not create any property interest or right. This in our view is clear.

 

 

Paragraph 7 of Schedule 4 – “compensation in respect of the grant”

 

48.  We turn to the provisions for compensation in paragraph 7 of Schedule 4. It is in those provisions, and only in them, that Parliament has provided for compensation to be paid when a wayleave has been granted to a licence holder under paragraph 6.

 

49.  In this case the only compensation available to the claimants is “compensation in respect of the grant”, under paragraph 7(1) of Schedule 4. This is plainly not a case within paragraph 7(2), under which compensation is available for damage caused “in the exercise of any right conferred by such a wayleave”, for the wayleave granted over the claimants’ land does not and could not confer any rights over land that they do not own.

 

50.  What is meant by the words “compensation in respect of the grant” in paragraph 7(1)? In our view Mr Elvin was right to submit that these words serve to confine the availability of compensation under paragraph 7(1) to loss that is specifically attributable to the grant of the wayleave, and only that. They do not create any entitlement to compensation for the effects of apparatus installed by the licence holder on other land, or for the acquisition of any right beyond that contained in the terms of the grant itself.

 

51.  The scope of “compensation in respect of the grant” under paragraph 7(1) has been considered by the Tribunal in several cases. Paragraph 7(4) provides that any dispute as to the compensation to be paid will be determined by the Tribunal. The Tribunal has consistently held – once with the endorsement of the Court of Appeal – that the general principles of compensation apply to a claim made under paragraph 7. The cases referred to by counsel illustrate the approach, though in widely differing circumstances.

 

52.  In Turris the Tribunal considered the compensation payable following the acquisition of the right under a compulsory purchase order to place, repair and maintain an overhead electric line across the claimant’s land. It said (at p.188):

 

“It is therefore proper in determining the amount of compensation to take into account not only the value of the interest acquired but also the effect of the cables and the pylon on the value of the whole of the subject land and also the effect of the interference with quiet enjoyment which is posed by the possibility of access without notice by the board onto the land.”

 

53.  Naylor v Southern Electricity Board [1996] 1 E.G.L.R. 195 concerned the compulsory acquisition of the right to pass three electric cables over the claimant’s land following the determination in 1988 of an existing wayleave. The support for the cables was close to, but not located on, the claimant’s property. The Tribunal (Mr J.C. Hill F.R.I.C.S.) said (at p.197):

 

“It is probably not in issue that the presence of this installation as a whole [including the nearby wood-pole support] might have a detrimental effect on the value of the subject property and that the effect is more than nominal. We are concerned here, however, in the narrower context of the consequences of the rights acquired by the board which are operable only within the boundaries of the subject property. Effectively this means that the only factors which can be taken into account in assessing any depreciation in the value of the property are those arising directly from the presence of those parts of the board’s installation which physically cross the property, i.e. two cables over the northern boundary, one cable over the western boundary and the associated insulators and connections which overhang the boundary.”

 

54.  Macleod concerned the assessment of compensation arising from the grant of a necessary wayleave under paragraph 6 of Schedule 4 to the 1989 Act authorizing the retention of an electric line across the site of an agricultural research centre for a further 15 years. The Tribunal held (at p.229) that “compensation for the grant of a necessary wayleave is to be assessed under [paragraph] 7 of Schedule 4 to the 1989 Act and not also by specific reference to the legislation relating to compensation for compulsory purchase.” It gave three reasons for this conclusion:

 

“First, para 7(4) of Schedule 4 to the 1989 Act states that any question of disputed compensation shall be determined by the Lands Tribunal (see also para 12) and that sections 2 and 4 of the 1961 Act shall apply to such determination. These sections relate to Lands Tribunal procedure and costs respectively. If the whole of the compensation legislation applied to compensation under para 7, then the express incorporation of sections 2 and 4 of the 1961 Act would not have been necessary. If it had been the intention of [Parliament] to incorporate the whole or other parts of the compensation legislation into the determination of compensation under para 7, then there would have been express provision for such incorporation.

 

Second, a distinction is made in the 1989 Act between the acquisition of a wayleave, which is dealt with in paras 6 to 8 of Schedule 4, and the compulsory acquisition of land, which is dealt with in Schedule 3. In my view, this is a clear indication that compensation for the grant of a wayleave is to be assessed under para 7 of Schedule 4 to the 1989 Act. … [Where] a licence holder acquires a new right over land by compulsory purchase under Schedule 3, the legislation relating to compensation on compulsory purchase is applied to the determination of compensation. But where a licence holder acquires a necessary wayleave under para 6 of Schedule 4, compensation is determined in accordance with para 7 of that Schedule. This contains no provision similar to para 14 of Schedule 3 for the application of the compensation legislation.

 

Third, para 7(3) of Schedule 4 provides that compensation for a wayleave may be a lump sum or periodical payments. This is inconsistent with compensation for compulsory purchase where it is implicit in the transaction – a sale and a purchase – that the price is a once for all capital payment ascertained at a particular date … . I am of the opinion that provision for annual payments is, at the least, an indication that the transaction or grant is not a compulsory purchase. …

 

It follows from my decision on this issue that the 1961 Act (including sections 14 to 17 relating to assumptions as to planning permission), the Compulsory Purchase Act 1965 and the Land Compensation Act 1973 … do not apply to the assessment of compensation on the grant of a necessary wayleave. …”

 

The Tribunal went on to say (at p.230):

 

“Although compensation for the grant of a necessary wayleave is to be determined by reference to para 7 of Schedule 4 to the 1989 Act, this provides for the recovery of “compensation in respect of the grant.” A fundamental principle of compensation is equivalence: see Horn v Sunderland Corporation [1941] 2 KB 26 (not cited), at p 49. It follows, therefore, that Mr Macleod is entitled to compensation for all the loss (that is not too remote), that flows from the grant of the necessary wayleave. This includes direct loss due to the siting of the pylons and line on the land and indirect loss due to the depreciation in value of the reference land that is not under the pylons and line. …”

 

The Tribunal acknowledged (ibid.) that this approach had previously been adopted in Turris and Naylor.

 

55.  In Welford a wayleave had been granted for underground cables running across the middle of a site used as a waste transfer station. The grant of the wayleave gave rise to claims for compensation for injurious affection and disturbance. EDF accepted that compensation was to be paid for injurious affection. The contentious issue in the case was the claim for disturbance and, in particular, whether the claim for loss of profits was too remote. The Tribunal (George Bartlett Q.C., President, and Mr N.J. Rose F.R.I.C.S.) referred (at paragraph 35) to what the Tribunal had said in Macleod about the recovery of “compensation in respect of the grant” under paragraph 7 of Schedule 4 to the 1989 Act. It considered the contrasting provisions of Schedules 3 and 4 (at paragraph 43). It noted that the right to install or retain and to maintain an electricity line, whether overhead or underground, could be acquired compulsorily as an easement under Schedule 3 or as a wayleave under Schedule 4. It observed that there was no obvious reason why compensation should be assessed on a different basis if the right was acquired in one way rather than the other. However, it noted that the provisions for compensation are quite different. Schedule 3 applies, with necessary adjustments, the statutory regime governing compensation for the compulsory purchase of land – market value of the interest acquired, injurious affection of the land retained, disturbance or other loss not directly based upon the value of the land. Schedule 4 on the other hand says nothing about market value or injurious affection. It simply provides for “compensation in respect of the grant”, and provides for damage and disturbance “in terms that owe nothing to the compulsory purchase code but appear to be derived from section 35(3) of the [Electricity Act 1957]”. The Tribunal thought the explanation for these differences lay in the fact that paragraph 7 of Schedule 4 was designed to provide compensation for occupiers as well as owners and for damage to chattels as well as land, and to cover wayleaves that might only be short-lived. And it went on to say this (ibid.):

 

“… Despite the differences between the two sets of provisions, however, we should be reluctant to construe para 7, as it applies to a wayleave for 15 years, in a way that would require a different approach to the assessment of compensation from the one that would apply if a permanent easement had been acquired. Happily, we see no need to do this.”

 

The Tribunal found the words “compensation in respect of the grant” in paragraph 7 “apposite … to cover compensation both for the value of the wayleaves and compensation for any consequential reduction in value of the claimants’ land” (paragraph 44). It said (ibid.):

 

“… The member in Macleod treated the provision as operating in this way, and we think that he was right to do so. Disturbance is specifically provided for in subpara (2) and, although what it relates to is disturbance in the enjoyment of land that has not been acquired, there is no difficulty in applying this provision in accordance with the principles established under the law relating to the compulsory purchase of land. We are thus concerned with the three standard elements of compensation. …”.

 

56.  Dismissing the subsequent appeal, the Court of Appeal noted the approach the Tribunal had taken to the injurious affection claim – a part of its decision against which there was no challenge – and supported its approach to the disturbance claim for loss of profits. Thomas L.J., with whom Chadwick and Scott Baker L.JJ. agreed, observed (at paragraph 10) that in tackling the claim for disturbance the Tribunal had relied not on a close examination of the words of paragraph 7(2) of Schedule 4 but on the principles generally applicable to compulsory purchase. He went on to deal with the general approach to the award of compensation under the statutory provisions:

 

“13 The statutory provisions under para.7 of Sch.4 which provide for compensation for the grant of a wayleave make no express reference to the basis on which compensation is payable under sub-paras (1) or (2) in contradistinction to the provisions in respect of compensation for the grant of an easement under Sch.3; the latter paragraph expressly applies the provisions relating to the compulsory acquisition of land.

 

14 However, there was no dispute before us as to the correctness of the general approach which, as set out at [10] above, had been taken by the Tribunal. Although para.7 to Sch.4 expressly distinguishes between compensation under sub-para. (1) for diminution in the value of the land and, under sub-para. (2) for disturbance, compensation payable under the whole of para.7 is to be assessed on the general principles applicable to the payment of compensation for compulsory acquisition which recognises these two separate heads as elements of the claim for compensation – injurious affection and disturbance. The distinction drawn in para.7 of Sch.4 is a necessary distinction in relation to compensation for the grant of a wayleave for a fixed period to enable occupiers and owners of chattels to recover compensation for disturbance.”

 

57.  Most recently, in Arnold White Estates – which concerned a claim based on the loss of a contractual entitlement to sell residential development land at a particular price as the result of the grant of a wayleave – the Tribunal (again Mr Bartlett Q.C., President, and Mr Rose) took the same approach. It referred (at paragraphs 25 and 26) to the decisions in Welford and Macleod, citing the passage in paragraph 44 of the Tribunal’s decision in Welford, in which it had agreed with the approach taken in Macleod. The Tribunal went on to emphasize (in paragraph 33) that what is payable under paragraph 7(1) of Schedule 4 to the 1989 Act “is compensation; and that must mean compensation for loss occasioned by the grant”. Since paragraph 7 provides for compensation to the occupier as well as the owner, “this would tend to suggest that the basis of compensation is not limited to depreciation in the value of the land”. The Tribunal granted permission to appeal in Arnold White Estates on 23 June 2013, on the question of whether contractual losses can be recovered under paragraph 7.

 

 

Sections 1 and 63 of the 1845 Act

 

58.  We cannot accept Mr Tromans’ argument that section 1 of the 1845 Act grafts on to Schedule 4 of the 1989 Act the provisions of section 63 of the 1845 Act relating to the payment of compensation for injurious affection, which – under section 44(2) of the 1973 Act – is a type of compensation to which section 44 relates. Mr Elvin has satisfied us that that argument is wrong. It is based on a misconstruction of the words “the purchase or taking of lands for an undertaking”, in section 1 of the 1845 Act, and the words “lands taken” in section 63. As Mr Elvin submitted, paragraph 7 of Schedule 4 is not concerned with a relevant “purchase or taking” of “lands” in the sense in which that concept is used in the 1845 Act.

 

59.  The purpose of the 1845 Act, as Lord Blackburn observed in Metropolitan District Railway v Sharpe (1880) 5 App. Cas. 425, at p.440, was made clear in its preamble – to collect into a single statute provisions usually found in special Acts for “the acquisition of lands required for undertakings or works of a public nature, and to the compensation to be made for the same …”. The commentary on the 1845 Act in Cripps on Compulsory Acquisition of Land (11^th edition) states (at paragraph 1-001, “Power to acquire land”) that a local or private Act providing a power to acquire land for the carrying out of the statutory purpose “usually gives a general power of acquisition and by the incorporation of the Lands Clauses Acts enables the acquisition of land to be by agreement or compulsorily …”. The definition of “the special Act” in section 2 of the 1845 Act refers to a subsequent statute authorizing “the taking of lands”. The distinction in the legislature’s mind between the “purchase” and the “taking” of lands is apparent in the structure of the 1845 Act, which gathers the provisions for the “Purchase of Lands by Agreement” in sections 6 to 15, and those for the “Purchase of Lands Otherwise than by Agreement” in sections 16 to 68. The use of the expression “taking” in the words introducing the second of those two groups of sections plainly means acquisition by compulsion.

 

60.   The meaning of “lands” that may be purchased or taken under powers in a relevant special Act is to be seen in section 3 of the 1845 Act. That definition of “lands”, as Mr Elvin submitted, encompasses heritable property rights – a proposition supported by the commentary in paragraph 1-661 (“effect of definition of “lands” in Lands Clauses Act, 1845”) in Cripps – in contrast to a wayleave, which, as we have said, is a form of consent that does not create any interest in land.

 

 

Section 44 of the Land Compensation Act 1973

 

61.  The provisions for compensation for injurious affection in section 44 of the Land Compensation Act 1973 are predicated on “land” being “acquired or taken” from someone. Section 44 does not apply in any other circumstances. The relevant definition of “land” is in paragraph 5(b) of Schedule 2 to the Interpretation Act 1978, in these terms:

 

“… in any Act passed before the commencement of this Act and after the year 1850, “land” includes messuages, tenements and hereditaments, houses and buildings of any tenure;”

 

This definition is in similar terms to that in section 3 of the 1845 Act. It does not include wayleaves.

 

62.  In this case, as we have said, no land has been acquired or taken. The suggestion that the grant of a necessary wayleave under paragraph 6 of Schedule 4 to the 1989 Act involves an acquisition or taking of land clashes with our understanding of the legal status of such a consent. What the compensating authority acquired by the grant of the wayleave was not an interest in land, but merely a right to do what the wayleave permitted.  

63.  In our view, Mr Tromans’ argument gains nothing from the decision of the United States Supreme Court in Causby.

 

64.  As Mr Elvin pointed out, that decision was based on the fundamental principle enshrined in the Fifth Amendment of the American Constitution – and, indeed, common to all civilized states – that private property is not to be taken for public use without just compensation. The issue the court had to deal with was whether the use of the respondent’s airspace by low flying military aircraft was so great as to constitute expropriation. Douglas J., giving the opinion of the court, held (at p.261) that the ancient doctrine that at common law, ownership of the land extended to the periphery of the universe – “Cujus … est solum ejus est usque ad coelum” – had “no place in the modern world”. The air was a public highway. It had been conceded, however, that if the flights over the respondent’s property rendered it uninhabitable, there would be a taking “compensable” under the Fifth Amendment. If, because of the frequency and altitude of the flights, the respondents could not use their land for any purpose, there would be a “taking”, albeit “only an easement of flight”. It would be “a definite exercise of complete dominion and control over the surface of the land”. The court observed that if an elevated railway had been constructed over the respondent’s land at the altitude at which the aeroplanes were flying there would be a partial taking of the land because there would be “an intrusion so immediate and direct as to subtract from the owner’s full enjoyment of the property and to limit his exploitation of it”.

 

65.  Causby was cited in argument before the Judicial Committee of the House of Lords in Belfast Corporation v O.D. Cars Ltd. In that case the House of Lords was considering the meaning of the words “take any property without compensation”, in section 5(1) of the Government of Ireland Act 1920. Their Lordships concluded that the imposition of restrictions on the user or development of property under section 10(2) of the Planning and Housing Act (Northern Ireland) 1931 did not amount to the taking of property for the purposes of section 5(1) of the 1920 Act. In his speech (at p.517) Viscount Simonds acknowledged the help given to their Lordships by counsel in their researches of the Federal Constitutions of the United States of America, Canada and Australia, in which similar words had been used. Viscount Simonds doubted “whether at the end of that journey the path was brightly illuminated”. He went on to consider “the simple language of the Constitutional Act” with which their Lordships were concerned. He said (ibid.):

 

“… I hope that I do not over-simply the problem, if I ask whether anyone using the English language in its ordinary signification would say of a local authority which imposed some restriction upon the user of property by its owner that that authority had “taken” that owner’s “property.” … He would agree that “property” is a word of very wide import, including intangible and tangible property. But he would surely deny that any one of those rights which in the aggregate constituted ownership of property could itself and by itself aptly be called “property” and … he would deny that the right to use property in a particular way was itself property, and that the restriction or denial of that right by a local authority was a “taking,” “taking away” or “taking over” of “property.””

Viscount Simonds referred (at p.519) to the American cases, including, in particular, Pennsylvania Coal Co. v Mahon [1922] 260 U.S. 393, in which Holmes J. said that the “general rule” was that “while property may be regulated to a certain extent, if regulation goes too far it will be recognised as a taking”. Viscount Simonds said that if the question was one of degree, the day had not yet come when the relevance of that observation to the constitution of Northern Ireland had to be considered. Lord Radcliffe, having referred (at p.523) to the general principle that “[acquisition] of title or possession” was “taking”, went on to conclude (at p.525) that the “taking of property referred to in section 5(1) of the [1920 Act] ought not to be treated as applying to the imposition of restrictions on user and development under town-planning powers”.

 

66.  Causby was not followed by the House of Lords in Bocardo. That case concerned the licensed exploration for and getting of oil in a reservoir of petroleum and natural gas beneath the claimant’s land. Lord Hope of Craighead observed (at paragraph 26 of his judgment) that the Latin brocard (“Cuius est solum, eius est usque ad coleum et ad inferos”) still had value in English law. It encapsulated a proposition of law that had commanded general acceptance. However, Lord Hope went on to say (ibid.) that it is “an imperfect guide, as it has ceased to apply to the use of airspace above a height which may interfere with the ordinary user of land: Baron Bernstein of Leigh v Skyviews & General Ltd. [1978] QB 479”. Lord Hope referred to the observation of Douglas J. in Causby that the airspace could be regarded “as a public highway to which only the public had a just claim”, and he contrasted this with the strata below the surface of the ground. He held (at paragraph 28) that the claimant’s title extended “down to the strata through which the three wells and their casing passed”. Lord Hope’s was a dissenting judgment in that case, but his observations on Causby seem not to have been controversial.

 

67.  Intrusion into airspace is a trespass. And, as we have said, the wayleave granted to the compensating authority authorized what would otherwise have been an actionable trespass in the airspace above the reference property. In our view, however, this was not tantamount to a taking of land for the purposes of section 44 of the 1973 Act. In Anchor Brewhouse Developments Ltd., the court had to consider an application for injunctions to restrain tower cranes on a building site oversailing the plaintiffs’ properties. Scott J. (as he then was), in an ex tempore judgment, said this (at p.175M to p.176B):

 

“What is complained of in the present case is infringement of air space by a structure positioned upon a neighbour’s land. The defendant has erected tower cranes on its land. Attached to each tower crane is a boom which swings over the plaintiffs’ land. The booms invade the air space over the plaintiffs’ land. Each boom is part of the structure on the defendant’s land. The tort of trespass represents an interference with possession or with the right to possession. A landowner is entitled, as an attribute of his ownership of the land, to place structures on his land and thereby to reduce into actual possession the air space above his land. If an adjoining owner places a structure on his (the adjoining owner’s) land that overhangs his neighbour’s land, he thereby takes into his possession air space to which his neighbour is entitled. That, in my judgment, is trespass. It does not depend upon any balancing of rights.

 

The difficulties posed by overflying aircraft or balloons, bullets or missiles seem to me to be wholly separate from the problem which arises where there is invasion of air space by a structure placed or standing upon the land of a neighbour. … In my judgment, if someone erects on his own land a structure, part of which invades the air space above the land of another, the invasion is trespass. That conclusion is consistent with the judgment of McNair J in [Kelsen v Imperial Tobacco Co. (of Great Britain and Ireland) Ltd [1957] 2 Q.B. 334], with the concession made in [Woollerton and Wilson Ltd. v Richard Costain Ltd. [1970] 1 W.L.R. 411], with the decision of Campbell J in the Australian case [Graham v K.D. Morris & Sons Pty. Ltd. [1974] Qd.R.1], and also with the dictum of Griffiths J at p 486 in the Bernstein case. If that is right, then the cranes oversailing the plaintiffs’ land commit trespass.”

 

68.  Trespass into airspace does not constitute an expropriation of land. It does not involve the acquisition or taking of land from the person who owns it. And it does not, therefore, engage the provisions of section 44 of the 1973 Act as to compensation for injurious affection.

 

69.  In summary, the general principles of compensation are engaged in the assessment of compensation under paragraph 7 of Schedule 4. However, the statutory compensation code – section 44 of the 1973 Act included – was not inserted into Schedule 4, either comprehensively or in the way this was done in Schedule 3. This dichotomy between the provisions of Schedule 3 and Schedule 4 has been recognized by the Tribunal in its decision-making and by the Court of Appeal in Welford. As the Court of Appeal noted in Welford, Schedule 3 expressly applies the statutory provisions relating to the compulsory acquisition of land; Schedule 4 does not. Nor has section 44 of the 1973 Act been woven into Schedule 4 by the operation of sections 1 and 63 of the 1845 Act. Mr Tromans’ submissions to that effect, attractively presented though they were, are unsound. If claims for injurious affection fall within the scope of the provisions for compensation under paragraph 7 of Schedule 4, such a claim will only be available where damage is caused to land owned by the claimant as a consequence of the grant itself – which was so, for example, in Welford. In our view, therefore, compensation under paragraph 7(1) cannot be granted in this case for the effect of the presence and use of the compensating authority’s apparatus on land not owned by the claimants, to which the grant of the wayleave does not relate, and as to which no rights were conferred upon the compensating authority by the grant of the wayleave. Such compensation would not be “compensation in respect of the grant”, and therefore is excluded from the ambit of compensation available under paragraph 7(1).

 

70.  Those conclusions are, we believe, fatal to the claimants’ case, and enough to dispose of this reference.

 

71.  However, we shall go on now to consider whether the provisions of section 44 of the 1973 Act, if they are to be read into paragraph 7 of Schedule 4, could properly be applied in the circumstances of this case.

 

72.  In our view, for each of three reasons submitted by Mr Elvin, they could not.

 

73.   First, section 44 operates only if the acquisition or taking of land is for the purpose of works that “are to be situated” partly on that land and partly elsewhere, and in this case that was not so because the works in question already existed when the wayleave was granted. 

 

74.  As Mr Elvin submitted, it is significant that in section 44(1) of the 1973 Act Parliament used the expression “works that are to be situated”, rather than “works that are situated” or “works that are situated or to be situated”. The futurity in the expression “to be situated” is clearly deliberate. In our view the concept here looks to a future event and not to an existing state of affairs. As Mr Elvin submitted, it does not, and cannot convey the idea of the keeping in place of works already in place at the time of the grant of the wayleave. To construe the words “to be situated” as if they meant “works that are already in existence but that will have come to be situated on the land once the wayleave has been granted” is to strain their meaning beyond breaking point.

 

75.  Sedley J. reached a similar conclusion in Wolf. In that case the court had to consider the meaning of the words “to be installed” in paragraph 6 of Schedule 4 to the 1989 Act. It was submitted on behalf of the applicant for judicial review that the prohibition on the Secretary of State entertaining an application by the licence holder for a necessary wayleave in any case where the line was “to be installed” on or over the land in question included not only the situation envisaged in sub-paragraph (1) where the licence holder sought to introduce a line on to land, but also the situation contemplated in sub-paragraph (2) where the licence holder’s intention was to keep an electric line installed on land. Sedley J. accepted (at p.302) the respondents’ submission that the “grammatical approach” to the words “to be installed on or over the land” in sub-paragraph (4) can produce only one answer: that the phrase “looks to a future event”, namely “the installation of a line on land upon which it does not at present exist”. Sedley J. rejected the submission that the past participle “installed” is equally capable of describing a state of affairs rather than an event, and that the court should favour this wider construction embracing sub-paragraph (2) in the prohibition because it is a construction that protects the property rights of individuals. Sedley J. went on (at p.303) to say that “[while] the past participle “installed” is capable of describing a state as well as an event, the phrase “to be installed” could only be made by a recondite use of the English language to mean anything except a line which does not exist over the land but which it is intended to place over the land”. Sedley J. added (at p.304):

 

“… There is a difference … between the situation of a person who is confronted out of the blue with a proposal to place over his or her land, electric lines which he or she does not want, so that in such a situation the Secretary of State cannot force the wayleave on them but must leave the supplier to seek a compulsory purchase order, and the situation where the landowner has come with open eyes to land over which the line runs, whether that line was running over house or garden at the material time or whether he has chosen to extend his garden so that it is now under the pre-existing line. Such a person may intelligibly be made subject to compulsion by the Secretary of State in the manner that it seems to me this paragraph seeks to do.”

 

76.  Those observations seem relevant here. As Mr Elvin submitted, in this case the compensating authority’s apparatus with which the reference is concerned was installed in 1951. It was open to landowners affected by the presence of the apparatus at that time to pursue any appropriate claim available to them. It seems that this was not done. Anyway, it is clear that the claimants bought the reference property well aware of the presence of the compensating authority’s pylon and line.

 

77.  But leaving that history aside, we cannot construe section 44(1) of the 1973 Act as having the meaning for which Mr Tromans contended. Mr Elvin’s submissions, based on Sedley J.’s judgment in Wolf, are in our view plainly correct. We do not accept that there is any material difference between the words “to be installed” in paragraph 6(4)(b) of Schedule 4 to the 1989 Act and the phrase “to be situated” in section 44(1) of the 1973 Act. Both expressions contemplate an event involving action being taken in the future.

 

78.  Secondly, as Mr Elvin reminded us, section 44 of the 1973 Act was introduced because Parliament had seen the need to reverse the effect of the decision of the Court of Appeal in Edwards. Under the commencement provisions in section 89 of the 1973 Act, section 44 came into force on 23 May 1973. In this case, even if there had been, in the sense contemplated by section 44, a relevant taking or acquisition of land for the purpose of the works giving rise to the claim for compensation, that acquisition or taking took place, and the works themselves were carried out and completed, before the 1973 Act came into force. In our view Mr Elvin was right to submit that the provisions of section 44 do not bite in a situation such as this. It seems to us impossible to construe the statutory language as having that retrospective effect.

 

79.  Thirdly, section 44 does not extend the scope of claims for compensation for injurious affection beyond cases in which the injurious affection is of land retained by a person from whom other land is acquired or taken for the purpose of the works, and this is not such a case. The works in question must be works that are to be situated at least “partly” on land owned by the claimant and subject to the acquisition or taking. If the works are to be situated only on land in which the claimant has no interest the provisions of section 44(1) do not apply. In this case, as Mr Elvin submitted, for the extended definition of injurious affection of section 44 to be engaged, there would have to have been works of the licence holder at least partly situated on the reference property. Since there are no relevant works situated, even in part, on the reference property, section 44 could not operate to bring the effect of the whole of the works into the scope of compensation for injurious affection to the value of the reference property.

 

 

The principle of equivalence

 

80.  We come finally to the principle of equivalence.

 

81.  The principle itself is not controversial. It is long established and well understood, and indeed is a fundamental part of the law of compensation for compulsory purchase. In Horn v Sunderland Scott L.J. referred (at p.49) to “the principle of equivalence which is at the root of statutory compensation, the principle that the owner shall be paid neither less nor more than his loss”. He had observed (at p.40) that the “main object” of the Acquisition of Land (Assessment of Compensation) Act 1919 was “undoubtedly to mitigate the evil of excessive compensation which had grown up out of the theory, evolved by the Courts, that because the sale was compulsory the seller must be treated by the assessing tribunal sympathetically as an unwilling seller selling to a willing buyer”. He went on to say this (ibid.):

 

“The word “compensation” almost of itself carried the corollary that the loss to the seller must be completely made up to him, on the ground that, unless he received a price that fully equalled his pecuniary detriment, the compensation would not be equivalent to the compulsory sacrifice. The 1919 Act, by its abolition of the ten per cent. addition for compulsory purchase (s.2 r.1), and by its special rules in rr.3, 4 and 5, undoubtedly contributed to the intended reform, but perhaps the provision that was most likely to check exaggerated prices for the land was the reversal by r.2 of the old sympathetic hypothesis of the unwilling seller and the willing buyer which underlay judicial interpretation of the Act of 1845.”

 

82.  More recently, Lord Nicholls, in the Privy Council in Shun Fung, said this (at p.125):

 

“The purpose of these provisions, in Hong Kong and England, is to provide fair compensation for a claimant whose land has been compulsorily taken from him. This is sometimes described as the principle of equivalence. No allowance is to be made because the resumption or acquisition was compulsory; and land is to be valued at the price it might be expected to realise if sold by a willing seller, not an unwilling seller. But subject to these qualifications, a claimant is entitled to be compensated fairly and fully for his loss. Conversely, and built into the concept of fair compensation, is the corollary that a claimant is not entitled to receive more than fair compensation: a person is entitled to compensation for losses fairly attributable to the taking of his land, but not to any greater amount. It is ultimately by this touchstone, with its two facets, that all claims for compensation succeed or fail.”

 

83.  In Waters v Welsh Development Agency [2004] 1 WLR 1304 Lord Nicholls (in paragraph 4 of his speech, at p.1307B) described the aim of compulsory purchase compensation as being “to provide a fair financial equivalent for the land taken”. In the context of the Pointe Gourde principle and the separation between the concepts of “value to the owner” and “value to the purchaser”, he said (in paragraph 61, at p.1319C-E) that Parliament’s objective had been to provide “dispossessed owners with a fair financial equivalent for their land”. They were to receive “fair compensation but not more than fair compensation”. This was the “overriding guiding principle when deciding the extent of a scheme.”

 

84.  We cannot accept Mr Tromans’ submissions on the application of the principle of equivalence in the circumstances of this case.

 

85.  As Mr Elvin submitted, the principle that a claimant is entitled to receive, as Lord Nicholls put it in Shun Fung, compensation for “losses fairly attributable to the taking of his land, but not to any greater amount”, applies to the determination of compensation under the relevant statutory scheme. It does not extend the scope of compensation available under paragraph 7(1) of Schedule 4 to the 1989 Act beyond the parameters set by that provision. The compensation properly recoverable under paragraph 7(1) remains “compensation in respect of the grant”. The principle of equivalence does not generate a right to be compensated for losses that do not flow from the grant of the necessary wayleave itself. It does not increase the compensation available under paragraph 7(1) to a level that could only be attained if section 44 of the 1973 Act were engaged. It does not entitle the claimants to receive compensation for injurious affection attributable to the presence and use of the compensating authority’s apparatus on the land adjacent to the reference property. Such compensation, as we have said, cannot be paid in a case such as this, where no land has been taken from the claimants, no interest in land created, and no property rights acquired.

 

86.  Mr Tromans complained that this conclusion is both unfair and unjust. We disagree. In this statutory context the principle of equivalence rests in the concept of “compensation in respect of the grant”. Parliament has embodied the principle of fair compensation in those statutory words. If the compensation due to a claimant is less when a necessary wayleave for a period of 15 years has been granted under Schedule 4 than when land or rights are compulsorily acquired under Schedule 3, the principle of equivalence is not offended. Sometimes, no doubt, a smaller amount of compensation will be payable because the licence holder has sought and acquired a 15-year wayleave for a particular section of line rather than a permanent easement. But the principle of equivalence does not mean that a claimant is entitled to an equal amount of compensation in either case. What it requires is a fair and complete assessment of compensation under the relevant statutory scheme.

 

87.  Neither in combination with section 44 of the 1973 Act nor independently of it does the principle of equivalence justify the approach Mr Tromans urged upon us. If, as we have held, section 44 of the 1973 Act does not apply to the assessment of compensation for injurious affection when a necessary wayleave is granted under Schedule 4, we do not think the principle of equivalence is a means of achieving the same result. To expand the concept of “compensation in respect of the grant” so as to mean compensation both in respect of the grant and in respect of matters not in the grant would distort it more than it could bear. Construing the statutory words in that way would not, in our view, be consistent with the principle of equivalence. It would negate that principle. It would warrant an award in excess of fair and full compensation for any loss one could attribute to the consent given under paragraph 6. Thus it would offend the jurisprudence in the passage of Lord Nicholls’ speech in Shun Fung to which we have referred and on which Mr Tromans sought to rely. Fairness does not require compensation in this case to be assessed as if the grant of the necessary wayleave under Schedule 4 could be equated with a compulsory acquisition of land or rights over land under Schedule 3. Fairness surely requires the statutory provisions to be read and applied as they are framed. The Court of Appeal did not suggest otherwise in Welford.

 

88.  Finally, we come to the argument Mr Tromans reserved: that the Court of Appeal’s decision in Edwards was wrong. In that case the court held that, under section 63 of the 1845 Act, compensation for injurious affection should be awarded only for such injury as had resulted from the use of the land acquired from the landowner being compensated, and not for any injury attributable to the use of land acquired from others. Mr Tromans suggested that that conclusion would be untenable in the modern culture of “full and fair compensation”. As he pointed out, its correctness was questioned by Carnwath L.J. (as he then was), giving the judgment of the Court of Appeal in Moto Hospitality Ltd. (at paragraph 54), where he said that the court had “some doubt” whether Edwards would have been decided the same way today, having regard, for example, to the Privy Council’s decision in Shun Fung. But Carnwath L.J. expressed no concluded view on that question. He acknowledged that the effect of the decision in Edwards, as it bore on section 63 of the 1845 Act (now section 7 of the 1965 Act), had been reversed by section 44 of the 1973 Act.

 

89.  As we think Mr Tromans acknowledged, it is not for us to decide whether or not the Court of Appeal was wrong in Edwards. In determining this reference we must take the statutory provisions as we find them, and apply them in the light of the relevant case law. In our view Mr Tromans’ submissions on Edwards do not enhance his argument on the issues we have to decide, either on section 44 of the 1973 Act or on the principle of equivalence. 

 

 

Conclusion

 

90.  For the reasons we have set out we cannot accept Mr Tromans’ argument. In our view Mr Elvin’s submissions are well founded and we accept them. Compensation for injurious affection in this case will therefore be assessed on the basis contended for by the compensating authority. As we have said, the parties have agreed that the amount of compensation payable to the claimants in the event that section 44 of the 1973 Act does not apply in this case is £4,000, and we so determine.

 

91.  A letter on costs accompanies this decision, which will take effect when, but not until, the question of costs is determined.

 

 

Dated 19 July 2013

 

 

 

 

 

Sir Keith Lindblom, President

 

 

 

Mr A.J. Trott F.R.I.C.S.

 

 

Addendum on costs

92. The compensating authority has applied for its costs.

93. We shall deal with this application under rule 10 of the Tribunal Procedure (Upper Tribunal) (Lands Chamber) Rules 2010 (see rule 10 of the Tribunal Procedure (Amendment No.3) Rules 2013).

94. The compensating authority made sealed offers to settle the claimants’ claim for compensation on 25 November 2011, on 9 February 2012, and on 17 February 2012. The Tribunal’s award exceeds each of those three sealed offers.

95. A further sealed offer, in a letter dated 19 July 2012, was for £4,500, plus reasonable pre-reference costs and reasonable legal and professional fees up to the date of the offer, in “full and final settlement” of the claim. The compensating authority says this offer “was served in accordance with Rule 13 of the Tribunal Procedure (Upper Tribunal) (Lands Chamber) Rules 2010 by sending it by pre-paid post or Document Exchange to the Claimants’ Solicitors at their address for service on 19 July 2012”.  A copy of that sealed offer was lodged with the Tribunal on 23 October 2012. The Tribunal’s award of £4,000 does not exceed the sealed offer of 19 July 2012. The compensating authority therefore submits that the principle in section 4(1) of the Land Compensation Act 1961 (“the 1961 Act”) should be applied, with the consequence that the claimants should bear their own costs and be liable for the compensating authority’s costs from 19 July 2012. There are no special reasons to make any other award. As the pre-reference costs are part of an award of compensation payable under rule 6 in section 5 of the 1961 Act, and as no details of these costs were submitted to the Tribunal by the claimants during the proceedings, no additional award should be made for these costs. But in any event the sealed offer of 19 July 2012 treated pre-reference costs as a separate payment. It follows that any award of pre-reference costs would make no difference to the application of the principle in section 4 of the 1961 Act in this case.

96. The claimants resist any order for costs being made against them. They say that at the time when the wayleave was granted, in September 2010, the compensating authority was “only prepared to pay £1,000 for an easement to keep the line in situ”. After the claim was referred to the Tribunal, on 31 October 2010, the compensating authority made its four sealed offers. The last of these offers was “not actually received by the claimants until 10 January 2013”. The claimants accept that the Tribunal’s award of £4,000 is a less favourable outcome than the compensating authority’s final offer. They accept too that the general rule is that the successful party ought to receive its costs. And they accept that the legal argument they put forward has failed. However, they say, they acted reasonably in putting this argument before the Tribunal. The legal issues were important for the power generating industry, and the outcome has implications for many other cases. To make an award of costs against them in these circumstances would be unjust.

97. In its reply to those submissions the compensating authority maintains that its final sealed offer was sent to the claimants’ solicitors “at their address for service on 19 July 2012”. There was no response. On being asked, in January 2013, whether they had received the sealed offer, they said they had not. A further copy of it was therefore sent to them on 10 January 2013.

98. In their letter to the Tribunal dated 25 October 2013 the claimants’ solicitors say:

“… We have no record of having received the offer letter dated 19 July 2012 and the [compensating] authority’s solicitors have not provided any fax confirmation or proof of posting. It was only when we received an e-mail from the [compensating] authority’s solicitors dated 8 January 2013 referring to the sealed offer that we were aware of it. We note that the letter is marked “by fax and post” but also bears our DX number in the address section. We maintain that we have no record of having received the offer when it was originally sent.”

99. With their letter of 25 October 2013 the claimants’ solicitors have provided the relevant correspondence between themselves and the compensating authority’s solicitors.

100. In our view the compensating authority’s submissions are clearly correct in principle, and we accept them. The general principle in section 4 of the 1961 Act clearly applies in this case. The Tribunal’s award exceeds the sealed offers made by the compensating authority in November 2011 and February 2012, but not the final one. The fact that the contentious issues in this claim were matters of law and the possibility that our decision will have implications for other cases are not, in our view, reasons for departing from the basic principle that in these circumstances an award of costs will be made against a claimant.

101. This leaves the question of the date from which costs should be awarded. The claimants say that they did not receive the compensating authority’s final sealed offer until 10 January 2013. The compensating authority, as we understand it, does not dispute this as a matter of fact. But it insists that the offer was sent to the claimants’ solicitors on 19 July 2012.

102. We note that the compensating authority’s solicitors’ letter dated 19 July 2012 concludes:

“We look forward to hearing from you.”

It seems to have been only on 8 January 2013, in an e-mail to the claimants’ solicitors, that the compensating authority’s solicitors sought the claimants’ response to that offer. The claimants’ solicitors responded in an e-mail on the same day. They said that they had not received a sealed offer dated 19 July 2012, and that the most recent offer they had had was the one made in the compensating authority’s solicitors’ letter dated 17 February 2012. They asked for a copy of the sealed offer letter to which the compensating authority’s solicitors had referred “by return”. Two days later, on 10 January 2013, the compensating authority’s solicitors enclosed a copy of their letter dated 19 July 2012 with a letter to the claimants’ solicitors, in which they said:

“We enclose for your attention a copy of our client’s sealed offer letter dated 19 July 2012, previously sent to you by fax and by DX on 19 July 2012, which remains open for acceptance by your client.

…”.

The Tribunal had received a copy of the compensating authority’s sealed offer dated 19 July 2012 with a letter from the compensating authority’s solicitors dated 23 October 2012. A second copy was sent to the Tribunal on 10 January 2013.

103. We cannot find, in the light of the material before us, that the compensating authority’s solicitors failed to send the final sealed offer to the claimants’ solicitors on 19 July 2012. Nor, however, can we find that the claimants received that offer before 10 January 2013. In the five and a half months between 19 July 2012 and 8 January 2013 there appears to have been no correspondence about it. In the circumstances we think the right thing to do is to award the compensating authority its costs from 31 January 2013, which allows 21 days as a reasonable time for the claimants to consider and respond to the offer once they had received it.

104. The claimants must therefore pay the compensating authority’s costs from 31 January 2013, such costs, if not agreed, to be the subject of detailed assessment by the Registrar on the standard basis.

105. The parties have agreed the pre-reference costs in the sum of £2,600 plus VAT, and this will be reflected in any order the Registrar is required to make.

106. Finally, we note the submissions made on either side on interest. The claimants submit that they are entitled to interest. The compensating authority accepts this. However, as it points out, the applicable rate of interest is currently nil, and it follows that no interest is payable on our award.

Dated: 8 November 2013

 

 

 

Sir Keith Lindblom, President

 

 

A.J. Trott F.R.I.C.S.