UPPER TRIBUNAL (LANDS CHAMBER)

UT Neutral citation number: [2013] UKUT 265 (LC)

UTLC Case Number: ACQ/389/2010

 

TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007

COMPENSATION – compulsory purchase – blight notice – dispute over compensation, satellite litigation and costs – purported settlement – preliminary issues – whether settlement agreement binding – whether ‘pre-reference’ costs included – decision: binding settlement included all claims and costs )

IN THE MATTER OF THE LAND COMPENSATION ACT 1961

BETWEEN BUCKSTONE GROUP LIMITED

BUCKSTONE TRANSPORT SERVICES LIMITED

BUCKSTONE TRAILER RENTAL LIMITED Claimants

and

OLDHAM METROPOLITAN BOROUGH COUNCIL Respondent

 

Re: Premises at Spencer Street,

Chadderton,

Oldham.

 

 

Before: His Honour David Mole QC

sitting as a Deputy Judge of the Upper Tribunal

 

 

Sitting at: The Employment Tribunal, Alexandra House, 14-22 Parsonage,

Manchester, M3 2JA

on Tuesday 24 April 2013

 

Peter Norbury, Solicitor, of Eversheds Solicitors LLP, Manchester, for the Claimants

Paul Whatley, Counsel, instructed by the Borough Solicitor, Oldham MBC, for the Respondent Authority

 

 

 

The following cases are referred to in this decision:

 

Mannai Investment Co. v Eagle Star [1997] AC 749

Investors Compensation Scheme v West Bromwich B. S. [1998] 1 WLR 896

NBTY Europe Ltd v Nutricia International BV [2005] EWHC 734 (Comm).

 

DECISION

Introduction

1.      In 2003 the Oldham Metropolitan Borough Council, the Respondent Authority in these proceedings (hereafter ‘the council’) was interested in acquiring part of land at Spencer Street, Chadderton, Oldham,  variously owned or occupied by Buckstone Group Limited, Buckstone Transport Services Limited and Buckstone Trailer Rental Limited (hereafter ‘the claimants’). After some negotiation the council announced that it intended to compulsorily purchase the property. Eventually the claimant issued a blight notice dated 17th of June 2008 in relation to those premises. That land became the subject of a general vesting declaration made by the council on 4 October 2008. The relationship between the council and the claimants was not a happy one. In August 2009 the Council issued a County Court claim under the Protection from Harassment Act 1997 against Mr Dugdale, the claimants’ managing director. After a contested hearing the court issued injunctions against him and awarded damages with costs to be assessed. In the meantime negotiations under the blight notice had broken down and the claimants referred the matter to the Lands Chamber on 4 December 2009.

2.      In May 2010 the first claimant started county court proceedings to recover what were described as "pre-reference costs" totalling approximately £37,000. In fact it is evident that this sum was said to be in respect of the professional fees of those surveyors that the claimants had instructed to handle negotiations with the council and strictly speaking that would be part of the claim for compensation. The council disputed these costs. On 26 October 2010 there was a preliminary hearing before the Lands Tribunal. The Tribunal made a number of orders, including orders in relation to that £37,000 in the following terms:

"8. The authority do by 4.00 p.m. on 9th of November 2010 make a payment on account of the claimant's costs of the CPO in the sum of £22,500 (approximately 60% of the sums claimed of approximately £37,000).

9. The authority do by 4. 00 p.m. on 9th of November 2010 set out in writing and serve on the claimant, particulars of what objections it has, if any, to the outstanding claim for costs. The claimant to respond by 4. 00 p.m. on 16th of November 2010. The Registrar to decide on any outstanding issue in this respect at a PTR to be held on [  ] November 2010."

3.      The council paid £22,500. On 9 November 2010 Mr Balmer wrote on behalf of the council, as required by paragraph 9, to explain what the objection was to paying what was described as "the balance of the claimants' claim for costs". This clearly related to what the Tribunal had referred to as "costs of the CPO." On 4 February 2011 the council paid a further sum of £14,500. The letter said -

"The authority's intention remains that the Tribunal shall determine the amount payable and the payment is not an admission of the claimants' entitlement. Should the Tribunal determine that the claimants are due less then in due course the authority will expect reimbursement or set off against any further sums due. On the other hand, should the tribunal determine that your clients are due more then the authority will pay more: your client is not regarded as accepting the payment in full and final settlement.

However, the authority will now make an application to stay the otiose County Court claim in respect of the same matter."

4.      There was a further case management hearing in the Tribunal on 8^th March 2011. Eventually the case was listed for hearing on the 4^th and 5^th of October 2011.

5.      It appears that within three months of the blight notice the council had paid an advance payment of 90 % of the amount it calculated as the value of the land. In March 2011 the first claimant started County Court proceedings to recover an alleged shortfall in the 90% advance payment due from the council. In August 2011 the first claimant's application for summary judgement was dismissed and it was ordered to pay the council's costs in the sum of £1,552 .95.

6.      As the date of the hearing approached there were without prejudice discussions between the solicitors for each party. On 2^nd September Mr Balmer for the council wrote to Mr Rubin for the claimants making it plain that the council would not agree compensation unless agreement was also reached on costs. In a letter of 7^th September 2011 Mr Rubin recorded that the claimants believed -  

"that an element of costs and certainly Surveyor fees have been incorporated into the calculation put forward recently by Stuart Beesley. They are therefore part and parcel of the ongoing negotiation whilst we would need to take instructions on any specific offer or proposal, we imagine that if an offer can emerge either at, or realistically close to the figure suggested by Stuart Beesley, which was intended to be realistic, practical and helpful, then in so to as the question of legal costs would rise, our client will be more minded to take a view and be receptive to a suggestion that each party bears its own costs…."

7.      The negotiations culminated with Mr Rubin emailing Mr Balmer on 23 September 2011 in the following terms:

"subject: Buckstone's – without prejudice save as to costs

Bill

Further to our most recent discussions, we have worked hard to trim the figures as far as we possibly can. In order to secure the deal, and ensure all matters are tidied up, our client will accept a full and final payment, to be paid to us within 14 days, of £1,630,000. This figure is inclusive of any contributions to costs and/or interest, and is on the basis that any cross claims or orders for costs arising with from the injunction claim or the summary judgement application are waived, so that in effect, it is a full and final settlement of all or any claims or cross claims between the parties. The figure is intended to avoid any assessment of costs and to ensure no further fees are incurred by either party. A draft settlement agreement can be put together later today or Monday to confirm, and the tribunal notified and counsel stood down."

8.      After a paragraph stressing that there was no further flexibility the email ended -  

"we have stated a very specific total sum and hope you can now agree to close it. If you revert with any other figure we will simply be back where we started. We are firmly of the view that it is now a case of the figure is accepted or the negotiations cease."

9.      On 26 September 2011 Mr Balmer replied to Mr Rubin, with the same heading, saying –

“I can confirm that the council accepts the proposal to settle your client' claims for extinguishment of business and all other claims arising from the CPO as proposed in your email below on the basis of the following points: that payment is to be made by 17th of October, rather than the 14 days proposed, and that you confirm that the agreement is between the authority and all claimants."

10.   The email ended with Mr Balmer asking Mr Rubin to confirm agreement and Mr Rubin duly did so a minutes later saying –

"thanks Bill, that is fine an agreed and I am pleased to confirm the settlement is on behalf of all 3 claimants. I will contact Tribunal this morning and will write more formally during the day, as well as stand counsel down etc."

11.   On the same day an email was sent to the Lands Chamber reporting that "agreement has now been reached" and "a more detailed document setting out the terms of settlement is being finalised and will be lodged shortly." The point was made that the hearing was no longer required. A further letter confirming that terms of settlement had been agreed was sent to the Lands Chamber on 28 September.

12.   The council paid a cheque for £530,280 on 12 October 2011. This was immediately challenged by Mr Rubin. He said –

"I think you have sought to deduct the pre-litigation costs which, as you know, you were required to pay. These were paid and you cannot now seek to obtain a credit for them. Those figures were not part of the extinguishment claim as debated between the surveyors. We settled the claim on the basis of the £1.63 m less the payment made on account of the valuation. "

13.  To this Mr Balmer expressed his complete disagreement saying "the agreement reached was a global settlement figure for "extinguishment of business and all other claims arising from the CPO". He said it could not be clearer. Mr Rubin answered that the cheque would be accepted as a payment on account as the claimant considered the correct sum was somewhat higher. After a further exchange of correspondence the matter was referred to the Tribunal. On 16^th January 2013 the Tribunal directed that a preliminary issue be determined namely: (1) is there a binding agreement between the parties about the amount of compensation payable to the Claimants by the acquiring authority? (2) if the answer to question (1) is yes, what are the terms of that agreement? In particular, do the terms of the agreement include some or all of the costs, pre-reference costs, costs of the reference and/or any other costs including costs of the proceedings before the County Court?

Submissions

14.   Mr Norbury for the claimants argued that the "pre-reference costs" had been left to the tribunal. It was contemplated that the tribunal would determine the correct sum and therefore it was not for the parties to do so.  The tribunal had made a peremptory order. There was nothing said about those costs at the later hearing; that was because the issue had been resolved by the payments made. If it had not been put to the tribunal for decision then it cannot have been outstanding. There was nothing in the agreement that enabled that figure to be determined. For that reason either the terms of the agreement did not deal with every matter and therefore there was no meeting of minds or, if there was an agreement, the £37,000 was not included in it.

15.   At one stage it seemed as if Mr Norbury was saying that the terms were unclear because they appeared to be saying that there should be a payment of £1.63 million without any matters being taken into account. Sensibly, he did not press this argument, and in reply he accepted that there plainly were going to be deductions from the £1.63 million but he said this simply went to show that it was a loose and careless attempt at an agreement that really amounted to no agreement at all. He accepted that there could, of course, be a global settlement without identifying each and every element that made it up but, he submitted, it was at least necessary to know what was included within the globe. Without that there could be no agreement. Was the £37,000 to be within the globe? The answer had to be no. It simply was not addressed by the parties.

16.   Mr Whatley, for the council, submitted that it was perfectly clear that there had been a global settlement. He drew attention to the general principles stated by Lord Hoffmann in the case of Mannai Investment Co. v Eagle Star [1997] AC 749 at page 779 and Investors Compensation Scheme v West Bromwich B. S. [1998] 1 WLR 896 and referred me to the case of NBTY Europe Ltd v Nutricia International BV [2005] EWHC 734 (Comm). He accepted that the sums called "pre-reference costs" were important in the case. He pointed out that they were actually part of the compensation, as the Tribunal had said, The issue was whether the payment of £37,000 in respect of the ‘pre-reference costs’ had been a payment on account which had not been finally resolved, in which case that money could be brought into the settlement and deducted, or whether it was a final liquidated sum that had been paid, in which case the council could not deduct it.

17.   Mr Whatley said the  council's letter of  4^th February 2011 made it perfectly clear that although the £37,000 had been paid, the issue as to whether it was the right sum remained to be determined. It had never been determined and therefore it could be brought into the settlement. Mr Whatley argued that on the plain words of the claimants’ offer any objective observer with a knowledge of the context would conclude that it was intended that everything should be wrapped up in the final settlement. Mr Rubin talked about the desire to "put this to bed in all respects." It could not be clearer. Mr Rubin made a plain offer, there was a counter offer and it was accepted. It was a simple contract. There was no need for writing or any other formality. The principle is that unless the parties specify that there shall be no agreement unless the contract is reduced into writing, the agreement binds. Of course the parties can negotiate on a global basis; that is a matter for them. It permits the parties to determine the litigation without a painstaking and probably disputed item by item analysis.

Consideration and conclusion

18.   The basic principles were considered authoritatively (albeit in the context of a lease) by the House of Lords in Mannai Investment Co. v Eagle Star [1997] AC 749. Lord Hoffman said, at page 779 –

“When, therefore, lawyers say that they are concerned, not with subjective meaning but with the meaning of the language which the speaker has used, what they mean is that they are concerned with what he would objectively have been understood to mean. This involves examining not only the words and the grammar but the background as well.”

19.   He continued –

“In the case of commercial contracts, the restriction on the use of background has been quietly dropped. There are certain special kinds of evidence, such as previous negotiations and express declarations of intent, which for practical reasons which it is unnecessary to analyse, are inadmissible in aid of construction. They can be used only in an action for rectification. But apart from these exceptions, commercial contracts are construed in the light of all the background which could reasonably have been expected to have been available to the parties in order to ascertain what would objectively have been understood to be their intention: Prenn v. Simmonds [1971] 1 W.L.R. 1381, 1383.”

20.   He summarised the same points in Investors Compensation Scheme v West Bromwich B. S. [1998] 1 WLR 896 as follows:

"1. Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.

2. The background was famously referred to by Lord Wilberforce as "the matrix of fact", but this phrase is, if anything, and understated description of what the background may include. Subject to the requirement that it should have been reasonably available to the parties and to the exception to be mentioned next, it includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man.

3. The law excludes from the admissible background the previous negotiations of the parties and their declarations of subjective intent they are admissible only in an action for rectification. The law makes this distinction for reasons of practical policy and, in this respect only, legal interpretation differs from the way we would interpret utterances in ordinary life."

21.   Mr Balmer’s letter of 4^th February 2011, while enclosing a cheque to pay the balance of the £37,000, made it clear that the council’s intention remained “that the tribunal should determine the amount payable and the payment is not an admission of the claimants’ entitlement” and pointed out that the eventual sum might go up or down. In my view that payment cannot be regarded as a final settlement of that particular head of claim, which therefore remained to be litigated before the tribunal or settled by the parties. Litigation before the tribunal would inevitably involve further costs.

22.   Mr Rubin’s email of 23^rd of September 2011 must be read against that background. His offer was to accept £1.63 million “inclusive of any contributions to costs”. It was “on the basis that any cross claims or orders for costs arising …. are waived, so that in effect, it is a full and final settlement of all or any claims or cross claims between the parties.” He stressed that “the figure is intended to avoid any assessment of costs and to ensure no further fees are incurred by either party.”

23.   Broad language of that nature is very often used in settling disputes. It is used because it can be very difficult or impossible to get the parties to agree on the issues, the individual sums to be included or how an overall figure might be broken down. Broad language is employed precisely to avoid uncomfortable specificity. Every intractable argument over detailed issues is wrapped up in an all-inclusive blanket of words such as ‘full and final settlement of all or any claims.’ It can never be an objection to such a settlement that no one can say exactly what allowance has been made for this or that head of claim: that is the point. Nor can it be objected, when the settlement says ‘all’ claims are included, that it is impossible to know from the agreement what they are: all means all.

24.   Because there had been no final settlement of the claim for £37,000 as costs (as the claimants described that sum) or compensation, any settlement that did not include that disputed head would not be ‘final’, would not resolve ‘any claims or cross claims between the parties’, would not ‘avoid any assessment of costs’ and would certainly not ‘ensure no further fees are incurred by either party.’ To my mind the meaning of that offer would have been perfectly clear to any objective and reasonable recipient of it who had the background knowledge of the parties, including particularly the knowledge of the position of the dispute about the £37,000. The offer was meant to settle all outstanding claims and counter-claims of whatever sort. Mr Balmer indicated his acceptance in principle, subject to two points, in his email of 08.00 on 26^th September 2011 and Mr Rubin accepted that counter-offer eight minutes later saying “that is fine an(d) agreed and I am pleased to confirm the settlement is on behalf of all 3 claimants.”I have no doubt that a reasonable man, having all the background knowledge available to the parties at the time of the offer of 23 September 2011, would conclude that the offer was intended to include everything, including the "pre-reference" costs and was accepted on that basis.

25.   It follows that the answers to the preliminary issues are –

(1)         Yes, there was a binding agreement  about the amount of compensation payable by the council and 

(2)         the terms of the agreement included all the claimants’ pre-reference costs, costs of the reference and/or any other costs including the cost of proceedings before the county court.

26.   A letter concerning costs accompanies this decision, which will become final when the question of costs has been determined.

 

DATED 29 May 2013

 

 

 

His Honour David Mole QC