United Kingdom Upper Tribunal (Lands Chamber)
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Cite as: [2014] UKUT 264 (LC)
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UPPER TRIBUNAL (LANDS CHAMBER)
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UT Neutral citation number: [2014] UKUT 0264 (LC)
UTLC Case Number: ACQ/153/2012
TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007
COMPENSATION – preliminary issue – pressure relief shaft constructed under licence – purpose of compulsory acquisition – whether land specially suitable for use as PRS – meaning of “special Act” under s7 of Compulsory Purchase Act 1965 – whether valuation can take account of cost saving to acquiring authority of not having to remove shaft
IN THE MATTER OF A NOTICE OF REFERENCE
BETWEEN CHRISTOPHER MILLER Claimant
and
NETWORK RAIL INFRASTRUCTURE LIMITED Acquiring Authority
Re: Land at Oaktree Hill Barn,
Church Stowe
Northampton
NN7 4SG
Before: A J Trott FRICS
Sitting at: 43-45 Bedford Square, London WC1B 3AS
On: 19-20 February 2014
The following cases are referred to in this decision:
Inland Revenue Commissioners v Clay and Buchanan [1914] 3 KB 466
Lambe v Secretary of State for War [1955] 2 QB 612
Waters and others v Welsh Development Agency [2004] 1 WLR 1304 (CA) and [2001] 1EGLR 185 (LT)
Port of London Authority v Transport for London [2008] RVR 93
Batchelor v Kent County Council (1990) 59 P&CR 357
Laing Homes Limited v Eastleigh Borough Council (1979) 250 EG 350, 459
Montague v Long (1972) 24 P&CR 240
Moto Hospitality v Secretary of State for Transport [2008] 1 WLR 2822
Transport for London v Spirerose [2009] 1 WLR 1797
Vyricherla Narayana Gajapatiraju v Revenue Divisional Officer, Vizagapatam [1939] AC 302 (the "Indian" case)
Rush & Tompkins Limited v Greater London Council [1989] AC1280
Ofulue v Bossert [2009] 1 AC 990
Unilever v Procter and Gamble [2000] 1 WLR 2436
Schering Corporation v Cipla Limited and Another [2004] EWHC 2587 (Ch)
The following decisions were referred to in argument:
Birmingham District Council v Morris and Jacombs Ltd (1977) 33 P&CR 27
Fletcher Estates v Secretary of State for the Environment [2000] 2 AC 307
Graham v Newcastle upon Tyne City Council [2009] UKUT 281 (LC)
Hertfordshire County Council v Ozanne [1991] 1 WLR 105
Inland Revenue Commissioners v Clay [1914] 3 KB 466
Potter v London Borough of Hillingdon [2010] UKUT 212 (LC)
RMC (UK) Ltd v Greenwich London Borough Council [2005] RVR 140
Myers v Milton Keynes Development Corporation [1974] 1 WLR 696
Munton v Newham London Borough Council (1976) 32 P&CR 269
Bwllfa & Merthyr Dare v Pontypridd Waterworks Company [1903] AC 426
DECISION ON PRELIMINARY ISSUES
Introduction
1. This is a reference made by the claimant, Mr Christopher Miller, for the determination of compensation in respect of the compulsory purchase of land (“plot 11a”) by the acquiring authority, Network Rail Infrastructure Limited (“NRIL”) under the Network Rail (West Coast Main Line) (Stowe Hill) Order 2006 (“the 2006 order”).
2. The 2006 order granted NRIL powers to acquire plot 11a for the purposes of using, maintaining or gaining access to a pressure relief shaft which it had previously built under licence from the claimant. The 2006 order also granted NRIL powers to compulsorily acquire a right of way on foot only over plot 11b for the purpose of gaining access to plot 11a. Plot 11b is not included in the reference. The 2006 order did not authorise the construction of works, and this is stated in terms in the Explanatory Note to the order. The pressure relief shaft is one of four such shafts serving the West Coast Main Line (“WCML”) as it runs through Stowe Hill tunnel.
3. The freehold interest in plot 11a was owned by the claimant and formed part of the property known as Oaktree Hill Barn, Church Stowe, Northampton NN7 4SG.
4. The pressure relief shaft which NRIL had constructed on plot 11a is circular in section with an external diameter at surface level of 3.5m. It stands approximately 2.7m above ground level. It descends vertically to the side of the WCML tracks and then forms a right-angle to join the tunnel. The shaft therefore has an “L-shape” in vertical section. As its name suggests the purpose of the shaft is to relieve the air pressure created by the piston effect of a train as it travels through the tunnel. This prevents aural discomfort to passengers. There is no mechanical ventilation and the shaft contains no plant or machinery.
5. On 31 July 2013 the Tribunal ordered that the following matters should be determined as preliminary issues:
(1) Whether, in terms of section 5(3) of the Land Compensation Act 1961, the purpose for which plot 11a was acquired was using, maintaining or gaining access to the pressure relief shaft, as defined in article 3 of the Network Rail (West Coast Main Line) (Stowe Hill) Order 2006.
(2) Whether, given section 5(3) and the Pointe Gourde principle, an enhanced value can be given to plot 11a over and above the amount the land would have fetched if sold in the open market because of NRIL’s special interest in purchasing the land.
(3) Whether, in relation to the compulsory acquisition of plot 11a, for the purposes of section 7 of the Compulsory Purchase Act 1965, the “special Act” comprises the Network Rail (West Coat Main Line) (Stowe Hill) Order 2006 (together with sections 1 and 5 of the Transports and Works Act 1992).
(4) Whether there is any basis in law for the claimant to claim compensation for part of the financial gain or cost saving alleged to have been made by NRIL as result of the making of the Network Rail (West Coast Main Line) (Stowe Hill) Order 2006.
6. The claimant appeared in person. Mr Richard Honey of counsel appeared for the acquiring authority and called Mr Stephen Mellor MRICS, Property Services Manager (South East) of NRIL, as a witness of fact.
Chronology
7. I determine the following chronology from the evidence and the statement of agreed facts produced by the parties.
8. The history of the acquisition goes back to 25 February 2000 when Railtrack plc (the predecessor of NRIL) gave notice to the claimant that it was applying for an order under the Transport and Works Act 1992 authorising, inter alia, the compulsory purchase of 6,130m2 of “pasture land adjacent to A5 and tunnel (Stowe Hill Tunnel) carrying railway (West Coast Main Line).”
9. The claimant objected to the proposed order on 13 March 2000 and the parties subsequently entered negotiations for the purchase of the land.
10. On 22 December 2000 Railtrack submitted a planning application for development described as a “pressure relief shaft and pedestrian access gate.”
11. On 19 January 2001 Railtrack offered the claimant the sum of £1,000 for the freehold interest in an area of 100m2 with the pressure relief shaft head in the centre. In addition Railtrack and their contractors would have the right to occupy up to one acre for the period 1 April to 31 December 2001. There were also to be various accommodation works.
12. Although Railtrack considered that they had reached agreement with the claimant, there was no agreement for the freehold acquisition of the land in writing signed by the parties.
13. On 7 February 2001 planning permission was granted for the construction of the pressure relief shaft.
14. Heads of terms for the freehold purchase were sent to the claimant on 22 February 2001.
15. On 27 March 2001 the claimant and Railtrack completed a licence agreement under which Railtrack were granted access to the site and a working area of 2,450m2 to construct the pressure relief shaft. The licence period was from 1 May 2001 until 31 December 2001 and a licence fee of £200 was paid. Construction of the shaft commenced in June 2001 but was not completed by the expiry of the licence period.
16. A second licence was entered into on 21 January 2002 covering the period 1 January 2002 to 30 June 2002. The licence fee was £300. The works were substantially completed by the end of this second licence.
17. On 25 April 2002 Messrs Cawood Jeffries submitted a claim for compensation on behalf of the claimant even though Railtrack did not at that time have compulsory purchase powers. The claim in respect of the land (to be) taken was £1,000 together with a claim for injurious affection to retained land of £300,000.
18. On 30 June 2002 the inspector issued his report into the objections and representations to the Railtrack (West Coast Main Line) Order. The subject property came within the Northampton sector of the order and the inspector commented as follows on the four pressure relief shafts at Stowe Hill Tunnel:
“5.8 Following the withdrawal of the proposed … 4 pressure relief shafts at Stowe Hill from the Order, the Banbury Lane crossing project was the only remaining Order scheme in the Northampton sector.”
19. The Secretary of State’s decision letter on the order was published on 26 March 2003. It noted that on 3 February 2003 Railtrack plc had changed its name to Network Rail Infrastructure Limited and the name “Railtrack” was replaced by “Network Rail” in the proposed order. The Secretary of State went on to consider the position at Stowe Hill tunnel in paragraphs 39 and 40 of his decision:
“39. The Secretary of State has noted that, notwithstanding the inspector’s statement that the other proposals originally included in this sector had been formally withdrawn, the “filled-up” version of the Order submitted by your client at the end of the inquiry…still contained powers in respect of pressure relief shafts at Stowe Hill tunnel. In response to a request from the Secretary of State for clarification of this matter, your client [NRIL] has confirmed that neither construction powers nor deemed planning permission are required for these shafts and that, in respect of most of the land involved, the compulsory acquisition powers originally sought are also no longer required. This is because the shafts have been built, with the benefit of planning permission from the relevant local planning authorities, under early access agreements with the various landowners most of whom have subsequently agreed to sell their land to your client. Your client advised, however, that they had not withdrawn the compulsory acquisition powers applied for in respect of plot 11 in the District of Daventry, which are still required because it has not been possible to acquire this land by agreement with the landowner concerned (Mr C J Miller).
40. In the circumstances, the Secretary of State is faced with a discrepancy between the inspector’s comments and your client’s position as indicated by the “filled-up” version of the Order and the comments of your client on this matter referred to above. Since he has at no stage received a written request from your client for the withdrawal of the proposed compulsory acquisition powers over plot 11, he intends to treat the application for these powers as extant. However, as the inspector did not consider the case for granting these powers and made no recommendation in this regard, the Secretary of State does not consider that he has sufficient information before him to reach an informed decision on whether to confirm the compulsory purchase provisions in question. He has accordingly decided pursuant to section 13(3) of the TWA to defer consideration of the proposed compulsory acquisition of plot 11 (which will be excluded from the Order to be made following the issue of this letter) and to invite representations from your client and Mr Miller to enable him to determine separately, at a later date, this part of your client’s application …”
The Network Rail (West Coast Main Line) Order 2003 was made, subject to this reservation, on 7 April 2003 (“the 2003 order”).
20. Both parties made further representations to the Secretary of State who on 9 March 2004 asked NRIL to provide a draft of the order that it wanted made. A draft order was submitted to the Secretary of State on 19 May 2004. Correspondence ensued between the Department of Transport and NRIL leading to the submission of a revised draft order on 23 August 2004. This was sent to the claimant on 24 November 2004 for further comment.
21. A further draft order was submitted by NRIL on 9 January 2006 to which the claimant responded on 24 January 2006. On 14 February 2006 NRIL wrote to the Department of Transport saying:
“Network Rail have nothing further to add to previous correspondence on this matter and believe that all attempts to reach agreement with Mr Miller for the purchase of, and the right of pedestrian access to, the land required by Network Rail at the Stowe Hill Tunnel Pressure Relief Shaft have been exhausted.
I am now instructed to request the Secretary of State to proceed to make the Order in the terms of the draft sent to you and to Mr Miller on 9 January 2006 …”
22. On 18 December 2006 the Secretary of State issued his decision. He stated at paragraph 21 of the decision letter:
“21. From the evidence available to him, the Secretary of State sees no good reason to disagree with the expert opinion of your client [NRIL] on the operational necessity for retaining this PRS, both for the purposes of current train movements and in order to ensure the capability for increased train speeds through the tunnel. Furthermore, he is satisfied that, in the absence of a negotiated agreement between your client and Mr Miller, it is necessary for your client to be able to access and maintain the PRS in order to ensure that it remains effective and does not become a danger to the railway (and in turn to public safety).
22. In the circumstances, the Secretary of State has concluded that the public benefit of granting your client compulsory acquisition powers over plot 11 clearly outweighs the private loss to Mr Miller. He considers, furthermore, that the area of plot 11 – which your client has substantially reduced since originally applying for those powers – is the minimum necessary to ensure that the PRS can be adequately maintained. He is accordingly satisfied that, having regard to the purposes of the Order and the policy set out in ODPM Circular 06/2004, there is a compelling case in the public interest to give your client compulsory acquisition powers over plot 11.”
23. The Network Rail (West Coast Main Line) (Stowe Hill) Order 2006 came into force on 12 January 2007. Notice to Treat and Notice of Entry were served on 17 May 2007 and entry was taken on 17 August 2007 (the valuation date).
Statutory provisions
24. The following statutory provisions are referred to in this decision:
(i) Section 5 of the Land Compensation Act 1961 (“the 1961 Act”) states that compensation in respect of any compulsory acquisition shall be assessed in accordance with six rules. Rule (3) states:
“The special suitability or adaptability of the land for any purpose shall not be taken into account if that purpose is a purpose to which it could be applied only in pursuance of statutory powers, or for which there is no market apart from the requirements of any authority possessing compulsory purchase powers.”
(ii) Section 7 of the Compulsory Purchase Act 1965 (“the 1965 Act”) states:
“In assessing the compensation to be paid by the acquiring authority under this Act regard shall be had not only to the value of the 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.”
(iii) The “special Act” for the purposes of section 7 of the 1965 Act is defined in section 1(2) of the 1965 Act:
“In construing this Part of this Act the enactment under which the purchase is authorised and the compulsory purchase order shall be deemed to be the special Act.”
The case for the Claimant
25. Mr Miller appeared in person and adduced a witness statement of fact from Mr Anthony Roy King a partner with the firm Fullers who had been instructed to act on behalf of the claimant in negotiations with Railtrack for the freehold interest in 100m2 of land required for the pressure relief shaft. Mr King was not called to give evidence and so his witness statement was untested by cross-examination.
26. Mr Miller introduced his case by reviewing the history and background to the modernisation of the WCML and by considering what constituted the scheme for the purposes of compulsory acquisition. He concluded that the scheme was the WCML modernisation as a whole. Mr Miller submitted that a scheme was a plan of action to meet an objective or objectives and, in this case, that objective was set out as early as 1994 in the West Coast Main Line Modernisation Feasibility Study - namely the modernisation and upgrading of the WCML. He said that a scheme was a progressive thing and necessarily contained numerous individual projects. As the inspector recognised in his report dated 26 March 2003 the combination of proposals in the WCML Order was essential to the West Coast Modernisation Programme. It was wrong to restrict the scheme for the purpose of compulsory purchase to the 2006 order.
27. Mr Miller then went on to argue that there was no agreement between the parties for the purchase by NRIL of the freehold interest in the land required for the pressure relief shaft. Such submissions are also reflected in paragraph 5 of the statement of agreed facts which states:
"There was no agreement for the acquisition of the land in writing signed by the parties."
There is no dispute that there was not a binding or enforceable agreement for the sale of the freehold interest in the subject property from Mr Miller to NRIL.
28. Turning to the four preliminary issues Mr Miller made the following submissions.
Issue (1): what was the purpose of the acquisition?
29. Mr Miller said that at the end of the two licences the shaft had been constructed but NRIL did not own the land on which it had been built. Mr Miller had consulted counsel on the point and was advised that the pressure relief shaft had become annexed to the land and as a result was an integral part of it. It was part of the freehold interest. But by allowing NRIL to construct the shaft for a nominal sum Mr Miller had represented to NRIL that they were authorised to continue to use the shaft in perpetuity providing that they maintained it.
30. Mr Miller said that he had signed the licence with Railtrack as an early access agreement on the understanding that Railtrack had compulsory purchase powers and in the belief that they would provide him with information about train numbers and noise levels to assist him with the preparation of a claim for injurious affection. Such information was never forthcoming. He had not been told that there was no urgency for the work to be done and that the proposed works formed phase 11 of a scheme of which phase 1 was only 56% complete.
31. Mr Miller said that there had been "fraudulent misrepresentation" by NRIL that they could run trains through the Stowe Hill tunnel at 140mph. He said that he had not objected to the construction of the shaft itself because he was "unaware that 140mph trains were a mirage." His objections to the original draft order were to the excessive land requirements for the access road. In the event it proved impossible to run trains through the tunnel at 140 mph because (i) the "moving block" signal technology upon which the WCML scheme depended did not work, and (ii) there was no prospect of achieving such high speeds through the Stowe Hill tunnel because of the proximity of the Weedon curve. Mr Miller submitted that the licence to construct the shaft had been entered into by him under the false impression that the trains would run at 140mph. NRIL had knowingly made a false statement about the speed of the trains to justify the operational necessity for the shaft.
32. Mr Miller said that the licence enabling the construction of the shaft had been fraudulently obtained contrary to his human rights. Under these circumstances had NRIL not acquired the property under compulsory powers in 2007 they would have been required to remove it and to restore the land "under the Human Rights Act". NRIL had withheld information from him, had not considered his human rights and had not constructed the pressure relief shaft in pursuance of a legitimate aim in the public or general interest.
33. He concluded that the purpose of the compulsory acquisition was to regain the ownership of an asset and to avoid removing the pressure relief shaft. The purpose of the acquisition could not possibly have been to use, access and maintain the shaft because NRIL already had such rights, derived as they were from the two licences.
Issue (2): enhanced value
34. Mr Miller said that the object of section 5 rule (3) of the 1961 Act was to prevent an acquiring authority having to pay a price which was enhanced by the project or scheme giving rise to the acquisition. The rule was founded upon "the special suitability or adaptability of the land for any purpose." The subject land was not of special suitability for use as a pressure relief shaft because NRIL had agreed that trains could pass through the tunnel at 125mph without the need for any pressure mitigation measures. So there was, and never had been, any operational need for the shaft. The purpose of the acquisition was to enable the retention of the shaft and to avoid the cost of having to remove it. This was not a purpose for which the land was specially suitable and therefore an enhanced value could apply. Mr Miller submitted that but for the compulsory purchase order NRIL would have been required to remove the shaft. They would have been prepared to negotiate a price for the property that reflected the benefit to them of owning the shaft and not having to remove it. The purpose of rule (3) was to protect acquiring authorities from paying sums enhanced by schemes carried out for the public benefit. It was not designed to protect those authorities from failing to fulfil their legal and moral responsibilities.
Issue (3): what is the special Act for the purposes of section 7 of the 1965 Act?
35. Mr Miller said that there had been a continuing process of compulsory purchase dating back to 2000. In March 2003 the Secretary of State's decision letter said that he had decided to defer his consideration of the compulsory acquisition powers over plot 11 and to make a separate determination in that respect. The application for compulsory purchase powers over plot 11 was treated as extant.
36. The 2006 order was the result of a deferral of a decision on Railtrack's original order application. The 2003 order must therefore be regarded as the special Act for the purpose of section 7 of the 1965 Act. Mr Miller said that were this not the case then anyone entering into an early access agreement as he had done, having been led to believe that it was in the public interest, would effectively receive less compensation in the event the acquiring authority subsequently amended its purpose than would someone who had refused to allow the works in the first place. The basis of this argument was that under the 2003 order Mr Miller would be able to claim in respect of injurious affection caused by the use of the WCML tracks whereas if the special Act were restricted to the 2006 order it would only be possible to claim in respect of the more limited purpose of using, maintaining and gaining access to the pressure relief shaft.
Issue (4): can compensation be based upon the financial gain or cost savings alleged to have been made by NRIL?
37. Mr Miller relied upon Inland Revenue Commissioners v Clay and Buchanan [1914] 3 KB 466 and Lambe v Secretary of State for War [1955] 2 QB 612 for his proposition that property can have a value beyond and unrelated to its operational or investment value because of the particular circumstances of the purchaser. In this reference the circumstances were that apart from the compulsory purchase order NRIL would have been obliged to remove the pressure relief shaft because it had been constructed contrary to Mr Miller's legal and human rights. The claimant could therefore have regard to the amount NRIL would be prepared to pay to obtain possession of the shaft rather than having to remove it. If this approach was wrong then, Mr Miller said, "the whole basis of compulsory purchase would be destroyed." An acquiring authority could avoid a public inquiry into their proposals by convincing a land owner to allow the works to take place under licence only then to argue that, having been built, those works gave a benefit that would need to be protected by the exercise of compulsory purchase powers to ensure the proper use and maintenance of the asset and for the prevention of its becoming a danger to the public.
The case for the acquiring authority: evidence
38. Mr Mellor has worked for NRIL (and before that Railtrack) since 1998. He had been involved with the WCML modernisation since that time. He gave a history of the WCML which he described as a programme of major investments (over £9bn) between 1998 and 2009. He explained the nature and extent of the various works some 90% of which were undertaken by means of permitted development rights and which did not require specific statutory authority. The works which did require such authority were progressed through a number of Transport and Works Act orders.
39. Mr Mellor then described the need for and construction of the pressure relief shafts at Stowe Hill and gave the history of Railtrack's/NRIL's negotiations with Mr Miller. He explained the reasons for making a further Transport and Works Act order in respect of the subject pressure relief shaft and referred to the Secretary of State's decision letter dated 18 December 2006. From this he said it could be seen that the justification for the 2006 order was the retention, access and maintenance of the shaft on the claimant's land.
40. Mr Mellor explained that the shaft had to be built in the location it was to ensure that the four pressure relief shafts serving Stowe Hill tunnel were placed equidistantly along its length. Only NRIL could use, maintain and access this shaft since it was the licensed operator under the Railways Act 1993. The land on which the shaft stood had as a matter of fact special suitability or adaptability for the purpose of using, maintaining and gaining access to the shaft, because that was where the shaft was actually located. That purpose could not have been achieved from any other land.
41. Mr Mellor said that Mr Miller’s assertion that the pre-scheme train speed through Stowe Hill tunnel was 70mph due to the proximity of the Weedon curves was wrong. Before WCML modernisation the maximum line speed was 110mph although the large majority of trains could not run at that speed. After WCML modernisation the line through the tunnel was the fast line for both tilting and non-tilting trains. Slower trains went via the Northampton loop. Tilting trains went through the tunnels at 125mph in one direction and 120mph in the other direction. Non-tilting trains travelled at 110mph. The line speed at the Weedon curve was 120mph.
42. Mr Mellor reviewed the background to the WCML modernisation programme. He said that Railtrack thought that moving block signal technology would be the best way to meet the obligations contained in its 1997 agreement (known as “PUG 2”) with West Coast Trains Limited (part of the Virgin Rail Group) under which Railtrack was to upgrade track and signalling on the WCML so as to enable Virgin to run faster and more frequent services on the route using new tilting trains. The upgrade would enable trains eventually to reach speeds of 140mph.
43. In 1998 Railtrack appointed Alstom as the contractor to provide the moving block signal technology but they were unable to provide it quickly enough. In December 1999 Railtrack abandoned the use of moving block signalling. They considered other options but by 2001 they were not on target to deliver the upgraded infrastructure and in October 2001 they went into Railway Administration. Part of the reason for the administration was the spiralling costs of the WCML programme, the estimate of which had risen from £2bn to £13bn. By January 2002 the Secretary of State instructed the Strategic Rail Authority (SRA) to intervene and to find a way forward for the WCML Programme. The SRA’s final strategy was published in 2003 and was based upon what could be delivered at an affordable cost. This meant continuing with line improvements to allow speeds for tilting trains of 125mph.
44. Mr Mellor said that Railtrack had appointed AEA Technology (now part of Delta Rail) to consider the effect of air pressure on the comfort of passengers as trains went through Stowe Hill tunnel. Pressure changes of four kiloPascals in four seconds (the maximum pressure change without causing severe aural discomfort) would be exceeded when train speeds were above 100mph. Mr Mellor said that the position on pressure relief had been set out in a letter from Rees & Freres (NRIL’s parliamentary agents) dated 23 May 2006 in which it was stated:
“Network Rail is advised that research studies show that passengers on another train being passed by a Class 390 train travelling at 125 mph through the unmodified Stowe Hill Tunnel would experience pressure changes well in excess of the comfort criterion. Mitigation measures are therefore required in order that the criterion is achieved. The pressure relief shafts which have been installed at the Stowe Hill tunnel provide effective mitigation for current train movements and it has not therefore been necessary to undertake further specific mitigation modelling to ascertain whether lesser mitigation measures in respect of trains travelling at 125mph would be effective.
The four pressure relief shafts at Stowe Hill tunnel were designed to mitigate the effects of trains running up to a maximum of 140mph. Although the current maximum train speed is 125mph the railway has been designed to accommodate running the class 390 trains at 140mph. Network Rail is seeking the powers needed to retain the fourth pressure relief shaft – not only to mitigate existing train movements but also to preserve the future availability of trains to operate at 140mph.”
Mr Mellor said that there was an operational need for the pressure relief shafts in 2006 and subsequently.
45. Mr Mellor said that he had not seen any evidence that Railtrack/NRIL had acted fraudulently or falsely when dealing with Mr Miller. At no time did NRIL tell Mr Miller that they had compulsory purchase powers and they had done nothing to give that impression. Railtrack had said that they were applying for such powers and that they wanted to negotiate with Mr Miller in advance of obtaining them. Nor had Railtrack encouraged Mr Miller to sign the licence agreements without seeking legal advice. In a letter dated 1 February 2001 Railtrack’s Agent, Mr Herbert, had written to Mr Miller saying of the licence agreement:
“I will send this to you initially for your consideration and there may be matters which we need to discuss. When we think in principle the document is acceptable to you, subject to contract, you may then wish to send this to your solicitor. I would suggest that they are not involved initially and that you and I try to sort out the practicalities and they are left to the fine tuning.”
The case for the acquiring authority: submissions
Issue (1): what was the purpose of the acquisition?
46. Mr Honey submitted that section 5 rule (3) of the 1961 Act comprised two grounds for excluding the special suitability or adaptability of the land for any purpose. Firstly, where the purpose is one to which the land could be applied only in pursuance of statutory powers and, secondly, where there was no market for that purpose other than the requirements of any authority possessing compulsory purchase powers. In this case both grounds were satisfied and therefore rule (3) applied. It was part of the claimant’s case that:
“Network Rail had an interest in purchasing the land because they wished to ensure the continued maintenance of an asset they had constructed on the land.” (Statement of Case, paragraph 3.1)
Mr Honey said that identified the purpose of the acquisition as being under rule (3). The rule was intended prevent an acquiring authority from being held to ransom. There was a special need of the acquiring authority that had to be left out of account, per Lord Nicholls in Waters and others v Welsh Development Agency [2004] 1 WLR 1304 at 1314E:
“Rule 3 is expressed in absolute terms which appear to leave no room for taking into account a potential use of the land where the acquiring authority is the only person who could turn this potentiality into an actuality.”
47. Mr Honey submitted that the statement of agreed facts and issues was critical in considering the application of rule (3). It contained the following statements:
“13. The Order confers powers for the purpose of ‘using, maintaining or gaining access to the pressure relief shaft’ (Article 3).
…
15. Using the shaft for the purpose of reducing air pressure in the tunnel, maintaining and gaining access to the shaft are purposes which can only be undertaken in pursuance of Network Rail’s statutory powers.
16. No other land apart from plot 11a could have fulfilled the purpose of using, maintaining and gaining access to the shaft because no other land had the shaft on it.
17. Plot 11a had special suitability for the location of the shaft itself. Given the design requirements for this particular tunnel being met by the provision of four shafts, and given the physical circumstances, including in particular the relative locations of the tunnel and the A5 there was no other land on which the shaft could have been constructed.”
These paragraphs established that rule (3) applied. Only NRIL had the power to run the railway and to use the pressure relief shaft. Whatever label was applied it was not possible to take the special suitability of the acquired land into account when assessing its open market value. Hence Mr Miller’s claim to do so must fail.
48. The second limb of rule (3) was made out in favour of the acquiring authority on the evidence of Mr Mellor. That evidence led inevitably to the conclusion that the subject land was uniquely suited to the purposes of the acquiring authority, a purpose to which it could only be applied in pursuance of statutory powers. Only NRIL could use the pressure relief shaft. No other person would have lawfully been able to use, maintain and access the shaft since under section 6(1) of the Railways Act 1993 any person acting as an operator of a railway asset would be guilty of an offence unless authorised by licence. NRIL was the licensed operator. Mr Mellor had also explained that the only market for the land upon which the shaft stood would have comprised NRIL. It was the only legal operator and the land could not be used for any beneficial purpose given the existence of the shaft. No one except NRIL would have seen the shaft as anything other than a substantial burden given the risks if it fell into disrepair or was damaged.
49. Mr Honey relied upon several authorities in support of his submissions. In Lambe Parker LJ said at page 619:
“In other words, if one of the potentialities of the land is such that there is only one purchaser of the land with that potentiality, the added amount which he would pay is to be ignored.”
He went on to say at page 620:
“The expression ‘special suitability or adaptability of the land’ in rule (3) is, I think, clearly referring to the quality of the land as opposed to the needs of a particular purchaser.”
Mr Honey submitted that in the applying rule (3) one was therefore looking at the potentialities of the land.
50. In Port of London Authority v Transport for London [2008] RVR 93 the Lands Tribunal (Mr P R Francis FRICS) had to consider the value of bridge rights over the riverbed, soil and air space of the River Lea which had been acquired for the purposes of road widening. The Tribunal concluded at page 99 that:
“38… it is evident that there is no market for the land for the purpose of constructing the bridges apart from the requirements of [the] acquiring authority, which is an authority possessing compulsory purchase powers. Indeed, as Mr Sheard acknowledged, nobody had been able to produce any evidence of open market transactions, all of the settlement evidence relied upon related to statutory undertakings with compulsory purpose powers (whether they were used or not), and there would be no demand for the right to build a bridge at this location other than from the acquiring authority.
39. Rule (3) thus applies in the present case, and it operates so as to exclude any value of the land to the acquiring authority by reason of its special suitability for construction of the bridges. …”
Mr Honey submitted that the present facts were on all fours with those of Port of London Authority except in the present reference it was an acquisition of land rather than of rights.
51. In Batchelor v Kent County Council (1990) 59 P&CR 357 Mann LJ said of rule (3) at page 362:
“The order land may have been the most suitable land for access to the south but it was not specially suitable for that purpose. Most suitable does not correspond with specially suitable.”
Mr Honey said that in the subject case the land for the pressure relief shaft was specially suitable for the purpose of using, maintaining and gaining access to the shaft because it was the land upon which the shaft had been built under licence. No other land was suitable for that purpose because the shaft was not, and could not be, on other land.
52. Finally on this issue Mr Honey referred to the Lands Tribunal decision (Mr E C Strathon FRICS) in Laing Homes Limited v Eastleigh Borough Council (1979) 250 EG 350, 459 as an example of a case where the second limb of rule (3) was engaged. The Tribunal found, at page 461, that the:
“… reference land possesses the quality of special suitability for the purposes of building the spine road. The market for such a purpose would be limited; it is clear that Eastleigh would be in the market and Mill Lodge, as the owner of [the] land, to carry out the construction works on behalf of Eastleigh to enable Eastleigh to adopt the road. … I accept the submission of Mr Harman that the special suitability of the reference land for the purpose of building the spine road shall not be taken into account because for that purpose there is no market apart from the requirements of Eastleigh or the special needs of Mill Lodge on behalf of Eastleigh.”
In the present case there was no market for the reference land apart from the special needs of NRIL.
53. Mr Honey concluded that when rule (3) referred to a purpose it was to a proposed or potential use of land. Mr Miller said that gave rise to an enhanced value, but any such value was derived from the purpose for which NRIL wanted the land. The purpose for which the land was acquired in this reference was derived from article 3 of the 2006 order, namely “for the purposes of using, maintaining or gaining access to the pressure relief shaft”. The land was specially suitable for that purpose and rule (3) therefore applied.
54. Turning to the claimant’s submissions on issue (1) Mr Honey said that Mr Miller had referred on several occasions to NRIL’s motive in compulsorily acquiring the reference land. Rule (3) used the word “purpose” and it was not open to Mr Miller to substitute another word in its place. To do so was an error of law. Rule (3) was concerned with the purpose to which the land could be applied. That was very different to considering NRIL’s motive which was an attempt to look into their mind. That exercise was impermissible and was not what rule (3) required.
55. Mr Miller was wrong to say that the purpose of the acquisition was to avoid having to remove the shaft. That argument was contrary to Mr Miller’s own submission that at the end of the licences NRIL could continue using the shaft into perpetuity provided they maintained it because Mr Miller had allowed them to construct the shaft for a nominal sum. In making this submission Mr Miller had relied upon Montague v Long (1972) 24 P&CR 240. Mr Honey said that the acquiring authority had no contractual rights under the licences to use, maintain and gain access to the shaft. The licence in Montague went further. It was a licence “to erect and maintain in perpetuity” a bridge linking river banks. Graham J said at page 247:
“It is implicit in the licence, in my judgment, that all parties, and anyone properly authorised by any of them, should be entitled to use the bridge because it is necessary to make such an implication to give the licence any real business efficacy. Clearly the plaintiff’s predecessor must have been entitled to use it as long as he maintained it; otherwise there was no point in his having gone to the expense of building it. Equally clearly the defendant’s predecessor must have been entitled to use it because it was fixed in such a way that it was his bridge and was expressed to be for the purpose of linking two pieces of his land.
In my judgment, therefore, the plaintiff here must fail on the wording of the licence itself, and that is the basis on which he puts his claim forward.”
56. Mr Honey said that the licences in the present reference clearly envisaged a transfer of the freehold interest since reference was made to it in terms. The licences provided for the construction of the pressure relief shaft and the rectification of any snagging works. But the licences gave NRIL no rights to use, maintain or gain access to the shaft. Mr Honey accepted that the right to construct the shaft implied the right to retain it but, unlike Montague, NRIL were not given any right to maintain the structure after its construction and the licences went no further than implying that having constructed the shaft Mr Miller had represented that he would not require its removal. That was the only legal construction that made sense. It would be “utterly pointless” that NRIL could be required to remove the shaft. But NRIL could not assume that it had any use, maintenance or access rights. In conclusion Mr Honey submitted that Mr Miller was wrong in his proposition that NRIL could be made to remove the shaft and it was wrong to maintain that NRIL already had use, maintenance or access rights under the licences.
Issue (2): enhanced value
57. Mr Honey said that the acquiring authority’s case was that rule (3) answered this issue. Alternatively if rule (3) did not apply in this case then the Pointe Gourde principle would apply to the same effect. The general approach to the valuation of the land taken was well settled and was considered in detail by the House of Lords in Waters. Lord Nicholls said at page 1309H that open market value as the basis for compensation was subject to a qualification which had given rise to difficulty:
“The qualification is that enhancement in the value of the land attributable solely to the particular purpose for which it is being compulsorily acquired, and an acquiring authority’s pressing need of the land for that purpose, are to be disregarded. … When granting a power to acquire land compulsorily for a particular purpose Parliament cannot have intended thereby to increase the value of the subject land. Parliament cannot have intended that the acquiring authority should pay as compensation a larger amount than the owner could reasonably have obtained for his land in the absence of the power. For the same reasons there should also be disregarded the “special want” of an acquiring authority for a particular site which arises from the authority having been authorised to acquire it.”
58. The single guiding principle throughout was the need to pay fair compensation. The Pointe Gourde principle was that the level of compensation for the compulsory acquisition of land could not be increased by a change in the value of land which was entirely due to the scheme. The purpose of the principle was “to prevent the acquisition of the land being at a price which is inflated by the very project or scheme which gives rise to the acquisition.” (Waters at 1333C). The principle should be applied so as to achieve a fair and reasonable result which did not require a valuation exercise that was unreal (Waters at 1319F-G). Lord Nicholls said in Waters at 1319G that:
“A valuation result should be viewed with caution when it would lead to a gross disparity between the amount of compensation payable and the market values of comparable adjoining properties which are not being acquired.”
59. Mr Honey submitted that the claimant’s case was an example of such a gross disparity. The claimant had allowed NRIL to construct the shaft on his land under a licence that contemplated a transfer of the freehold interest by agreement but had then declined to complete the agreement with the result that NRIL had to obtain compulsory purchase powers to acquire the land where they had already built the shaft. The claimant then sought to hold NRIL to ransom because of this state of affairs which he had created.
60. There was a dispute between the parties about what constituted the scheme for the purposes of applying the Pointe Gourde principle. The claimant argued that the scheme was that which comprised the WCML works authorised under the 2003 order. Mr Honey said that the scheme was that for which the reference land was compulsorily acquired (Waters at 1345A); namely as set out in the 2006 order: “for the purposes of using, maintaining or gaining access to the pressure relief shaft…” Lord Nicholls said in Waters at 1320A that normally the scope of the intended works and their purpose would appear from the formal resolutions or documents of the acquiring authority and that when in doubt a scheme should be identified in narrower rather than broader terms. The acquiring authority’s approach satisfied these criteria. Mr Honey said that the 2003 order was a separate order made years before the valuation date and for a different and very much wider purpose than the 2006 order.
61. Mr Honey submitted that the end result would be the same whichever definition of the scheme applied since the use of plot 11a for the pressure relief shaft and its maintenance was to be disregarded in the valuation exercise in either case. Mr Honey said that in any event there was not a scheme constituted by the “West Coast Main Line Modernisation” as Mr Miller contended. The modernisation of the WCML was a programme and not a scheme, being comprised of a raft of proposals, only some of which required works to be undertaken, and which were authorised in a variety of ways and by a variety of instruments.
Issue (3): what is the special Act for the purposes of section 7 of the 1965 Act?
62. Mr Honey said that under section 1(2) of the 1965 Act “the enactment under which the purchase is authorised and the compulsory purchase order shall be deemed to be the special Act.” This was agreed in paragraph 26 of the statement of agreed facts. He submitted that the special Act in this case was the 2006 order and the relevant enabling provisions of the Transport and Works Act 1992 (sections 1 and 5). The power to acquire the land was contained in article 3 of that order. Those powers did not include the construction of the shaft since that had already been constructed under different and separate powers. The explanatory note to the 2006 order stated in terms that the order did not authorise the construction of works. So construction formed no part of the powers for the purposes of section 7 of the 1965 Act.
63. Mr Honey acknowledged that article 10 of the 2006 order incorporated a number of provisions contained in the 2003 order. But these were all procedural rather than substantive provisions. No substantive provisions in the 2003 order were relevant to the Stowe Hill tunnel and no work was done under that order in that location.
64. The Court of Appeal considered what constituted the special Act in Moto Hospitality v Secretary of State for Transport [2008] 1 WLR 2822. The Court of Appeal agreed with the President of the Lands Tribunal, George Bartlett QC, that it was the entirety of the statutory provisions enabling the works of highway construction and improvement that constituted the enactment. Mr Honey submitted that in the present case article 10 of the 2003 order could not be said to come within the definition of the special Act under section 1(2) of the 1965 Act. Alternatively if the article 10 provisions were incorporated into the special Act it would not, in practical terms, allow Mr Miller to claim for injurious affection due to train noise.
65. Mr Honey then turned to Mr Miller's submissions on issue (3). He rejected Mr Miller's argument that the 2003 order should be regarded as the special Act for the reasons he had given: the 2003 order did not affect his property and the substantive provisions were remote in their application. This had been shown in Mr Mellor's evidence and in a letter from the Department for Transport dated 29 June 2004 which, when commenting upon article 9 of the draft 2006 order, said:
"It is not clear why this article needs to refer to the authorised works, bearing in mind that, as defined in article 2, they comprise all the works authorised by the 2003 Order, none of which are in the vicinity of Stowe Hill."
The 2003 order did not authorise the compulsory purchase of the claimant's land, it was the 2006 order that did that.
66. Mr Miller had supported his argument that the 2003 order was the special Act by reference to the fact that the compulsory purchase provisions of that order in respect of the proposed acquisition of plot 11 had been deferred under section 13(3) of the Transport and Works Act 1992. Mr Honey submitted that this deferral was not enough to bring the matter into the section 1(2) definition of the special Act. The provisions of the 2006 order had not been deferred from 2003. There were new provisions in the 2006 order which differed significantly from the original draft order made in 2000, especially with regard to the much smaller area of land required (some 2% of the original area). There was no longer any requirement for vehicular access and the purpose of the acquisition was not to construct the shaft but to use and maintain it. These powers were very different and it was not a simple deferral. There was now a new order in terms of substance, time and process.
Issue (4): can compensation be based upon the financial gain or cost savings alleged to have been made by NRIL?
67. Mr Honey said that this issue was a repeat of issue (2) because the claimant did not have a free-standing argument for basing his compensation on the alleged financial gain to the acquiring authority of not having to remove the shaft. Section 5 rule (2) of the 1961 Act applied; the compensation payable was the open market value of the reference land with the shaft in situ (this having been agreed by Mr Miller at paragraph 24 of the statement of agreed facts).
68. Mr Honey said that there was no legal basis for the claim as made by the claimant. Mr Miller had relied upon Lambe as an authority to support his claim but that case actually supported NRIL's case and not the claimant’s. In Lambe the Court of Appeal held that the fact that a sitting tenant might be prepared to pay more than an investor, in order to not be turned out of the property, did not clothe the land with a special suitability within rule (3), the value of which would fall to be ignored. In the present reference the special suitability was of the land itself and not the nature of an interest giving rise to marriage value; therefore rule (3) applied.
69. Mr Honey said that Mr Miller was wrong to have said in his skeleton that “In establishing the market value we are entitled to consider the position of the parties." Instead one had to assume a hypothetical purchaser and seller. In Transport for London v Spirerose [2009] 1 WLR 1797 Lord Walker said at 1806B:
"By focusing on a hypothetical sale by a willing vendor without any identification of the hypothetical purchaser, the ‘value to the owner’ principle transports the court into a ‘no scheme’ world."
70. Mr Miller said in his skeleton argument that the motivation of the acquiring authority in seeking to compulsorily acquire plot 11a could be taken into account. He said that NRIL's motivation:
"was simply a commercial decision which would be taken by any company. It is better to re-gain control of an asset even if it was built for no good reason rather than compound the mistake of building it in the first place by going to the expense of removing it."
In making these submissions Mr Miller relied upon the Lands Tribunal decision in Waters and others v Welsh Development Agency [2001] 1 EGLR 185 where the President, George Bartlett QC, said at 193D that the Privy Council decision in Vyricherla Narayana Gajapatiraju v Revenue Divisional Officer, Vizagapatam [1939] AC 302 (the "Indian" case):
"... does, however, give rise to problems in distinguishing between the authority's pressure to buy, which is to be disregarded and its motivation, which is not;"
Mr Honey said that in Waters Lord Nicholls had taken the approach that the Indian case was not to be followed. The appellants before the House of Lords contended that "the law does not require the motivation of the promoter to be left out of account...." Lord Brown went on to say at 1347A that "I would firmly reject that argument." The House of Lords rejected the motivation argument just as the Lands Tribunal had done. Mr Honey concluded that it was wrong to take motive into account.
Illegality
71. Mr Honey addressed the suggestion made by Mr Miller that the acquiring authority had acted illegally by obtaining compulsory purchase powers by misrepresenting their operational requirements. Mr Honey said that this was a serious and outrageous allegation made worse by its repetition in Mr Miller's closing submissions. The allegation was baseless and Mr Miller had produced no evidence to support it. On the other hand Mr Mellor's evidence had shown that the allegation was untrue. Mr Miller's persistence with the allegation in the light of the acquiring authority's detailed closing submissions and analysis of the relevant case law was, said Mr Honey, inexcusable and constituted behaviour that was "far beyond misguided."
Without prejudice correspondence
72. During the course of the proceedings the claimant sought to rely upon five letters written to him by Brown & Co on behalf of NRIL in 2005. Mr Miller referred to this correspondence, and quoted from it, several times in his skeleton argument. Mr Honey objected to the admission of this correspondence on the grounds that it was privileged. He said that the letters were marked “without prejudice” and were written in the course of negotiations to resolve a dispute.
73. On 13 January 2014 the acquiring authority wrote to Mr Miller saying “you are not entitled to rely on these documents as a matter of law” and stating that the correspondence would not be included in the trial bundle. Mr Miller replied on 23 January 2014 that “I do not believe that they are privileged.” In a further letter dated 23 January 2014 the acquiring authority said “you cannot refer to the documents because they are privileged from disclosure to the Tribunal by reason of being ‘without prejudice’. We do not agree to waive privilege”. Mr Honey said that NRIL had bent over backwards to accommodate the claimant’s requests but it drew the line at the disclosure of this correspondence. NRIL’s position on this point had been communicated to Mr Miller before he submitted his skeleton argument. Mr Miller knew about the acquiring authority’s objections to admitting these letters. NRIL wrote again to Mr Miller on 3 February 2014 saying that it would object to his skeleton argument because “there are repeated references in the document to without prejudice letters, despite our explicit prior notification that you should make no such references.”
74. Mr Miller wrote to the Tribunal on 23 January 2014 enclosing copies of the relevant correspondence. On 26 January 2014 Mr Miller wrote to the Tribunal giving the reasons why he did not believe the correspondence was privileged.
75. On 3 February 2014 the Tribunal wrote to Mr Miller, copied to the acquiring authority, saying:
“The Member understands that the correspondence that you now wish to include was marked ‘without prejudice’. The ‘without prejudice’ rule has been described ‘as a rule governing the admissibility of evidence and is founded upon the public policy of encouraging litigants to settle their differences rather than litigate them to a finish…. The rule applies to exclude all negotiations generally aimed at a settlement whether oral or in writing from being given in evidence’ (per Lord Griffiths in Rush & Tompkins Limited v Greater London Council [1989] AC 1280 at 1299C).
If the correspondence to which you refer forms part of negotiations where the parties were seeking to compromise the reference it will not be admissible at the hearing and cannot be used to establish such an admission. You cannot unilaterally waive the privilege attaching to any such exchange of correspondence.”
76. Mr Miller responded to the Tribunal’s letter on 5 February 2014 and gave more detailed reasons why the correspondence should be admitted. In summary he argued that (i) there was no dispute at the time the letters were written and they were essentially advising the claimant’s surveyor about NRIL’s proposals; (ii) the letters were informative and could not be regarded as an admission made to achieve a settlement; (iii) the letters were relevant to show, contrary to NRIL’s position, that no agreement existed between the parties; and (iv) “the exclusion of these letters would act as a cloak for Network Rail’s abuse of the privilege of having compulsory purchase powers, protect them from ‘their fundamentally dishonest defence’ and mitigate [sic] against the public interest of full discovery.”
77. The acquiring authority responded on 7 February 2014 to Mr Miller’s letter to the Tribunal dated 5 February 2014. They denied the allegation of dishonesty which NRIL said was utterly baseless and entirely unsupported by any evidence. They then pointed out that NRIL had not said there was a binding agreement for the sale of the reference land. All of the disputed correspondence was marked “without prejudice” and NRIL said that such material was inadmissible. It relied in this respect upon Ofulue v Bossert [2009] 1 AC 990 and also Unilever v Procter and Gamble [2000] 1 WLR 2436. NRIL said the letters dealt with the dispute that then existed about the value of the land to be acquired and compensation for injurious affection which were the subject matters of the reference. NRIL then analysed each of the five disputed letters individually and concluded that “the letters clearly dealt with the settlement on a general basis and contained genuine offers to settle the dispute that existed at that time and are therefore privileged.”
78. Both parties developed their respective arguments on this point during closing submissions.
Conclusions
Without prejudice correspondence
79. I deal firstly with the question of the admissibility of the five letters that the claimant wishes to rely upon but which the acquiring authority says are privileged. I have now read the relevant correspondence in order that I may place it in the context of the parties’ submissions.
80. I conclude that the five letters are privileged and should not be admitted. I have therefore placed no weight upon the claimant’s references to, and quotations from, that correspondence.
81. The purpose of the “without prejudice” rule (to encourage the settlement of disputes) was explained in Rush & Tompkins. In Ofulue Lord Hope said at 996G:
“Sometimes letters get headed ‘without privilege’ in the most absurd circumstances, … But where the letters are not headed ‘without prejudice’ unnecessarily or meaninglessly, …. the court should be very slow to lift the umbrella unless the case for doing so is absolutely plain.”
82. In Schering Corporation v Cipla Limited and Another [2004] EWHC 2587 (Ch) Laddie J said at paragraph 14 that:
“The court has to determine whether or not a communication is bona fide intended to be part of or to promote negotiations. To determine that, the court has to work out what, on a reasonable basis, the intention of the author was and how it would be understood by a reasonable recipient. If a document is marked ‘without prejudice’, that is some indication that the author intended the document so to be treated as part of a negotiating process, and in many cases a recipient would receive it understanding that that marking indicated that that was the author’s intention.”
83. In Unilever Robert Walker LJ gave a number of examples where, despite the existence of without prejudice negotiations, the without prejudice rule does not prevent the admission into evidence of what one or both of the parties said or wrote. He said at 2444G:
“… one party may be allowed to give evidence of what the others said or wrote in without prejudice negotiations if the exclusion of the evidence would act as a cloak for perjury, blackmail or other ‘unambiguous impropriety’. … but this court has … warned that the exception should be applied only in the clearest cases of abuse of a privilege occasion.”
At 2448H Robert Walker LJ said in his conclusions about the without prejudice rule:
“[The principles stated in the modern cases] show that the protection of admissions against interest is the most important practical effect of the rule. But to dissect out identifiable admissions and withhold protection from the rest of without prejudice communications (except for a special reason) would not only create huge practical difficulties but would be contrary to the underlying objective of giving protection to the parties, …”
This passage was endorsed by Lord Neuberger in Ofulue at 1021 [89].
84. In my opinion the five disputed letters were not marked “without prejudice” either unnecessarily or meaninglessly. I am satisfied that the author of each of the five disputed letters intended them to be part of or to promote the negotiations relating to the acquisition of the reference land and the assessment of compensation. The letters formed a part of the negotiating process and would have been understood by the claimant to be so. The exception to the without prejudice rule identified by Robert Walker LJ in Unilever at 2444G is not engaged and I find Mr Miller’s comments that the exclusion of the correspondence would cloak NRIL from “their fundamentally dishonest defence” (see paragraph 76 above) to be gratuitous and unfounded.
The claimant’s conduct of the case
85. Before turning to the four preliminary issues I wish to make some general observations about the claimant’s approach in these proceedings. Mr Miller has a grievance about the way in which NRIL obtained its compulsory purchase powers. He feels misled and misinformed and thinks that NRIL has acted fraudulently (a word he used more than once). That is a serious allegation as Mr Honey pointed out. It is not one that should be made without the strongest evidence even by a litigant in person. The allegations were made generally against NRIL rather than against specific individuals and focused upon NRIL’s case for the operational necessity for the pressure relief shaft. But Mr Miller produced no evidence to support his allegations and, in my opinion, they are unfounded and his grievance is imaginary.
86. Mr Miller’s approach in these proceedings is characterised by his unwavering belief that NRIL has duped him and in so doing has breached his human rights, thereby denying him the level of compensation to which he feels he would otherwise have been entitled. Unfortunately I think that this belief has clouded Mr Miller’s objectivity and has prevented him from judging NRIL’s case fairly. It has also led him into a contradiction that undermines his argument on the preliminary issues. Mr Miller accepts that NRIL cannot be required to remove the shaft given that he granted them a licence for consideration to construct it. But this agreement “assumes that Network Rail had proceeded in a legal manner” (paragraph 43 of Mr Miller’s skeleton). Mr Miller argues – wrongly in my opinion – that NRIL obtained the licence through fraudulent misrepresentation and therefore “but for the CPO they would have been required to remove the shaft as it was constructed contrary to my legal and Human Rights” (paragraph 87 of Mr Miller’s skeleton). Given that no such fraudulent misrepresentation has been shown, NRIL, by Mr Miller’s own admission, cannot be required to remove the shaft and his argument that compensation should reflect the cost to NRIL of such removal is a non-sequitur.
Issue (1): what was the purpose of the acquisition?
87. I do not accept the claimant's argument that the purpose of the acquisition of plot 11a was to enable NRIL to avoid having to remove the pressure relief shaft. The shaft was constructed under two licences, neither of which gave NRIL any right to use, maintain or gain access to the shaft. It is accepted by the claimant that, in the absence of fraudulent misrepresentation, NRIL could not be required to remove the shaft once constructed. But in the absence of any provision in the licences NRIL could not assume that they would be able to use the shaft. Montague can be distinguished on the facts and it was necessary for NRIL to seek compulsory purchase powers in order to ensure that having constructed the shaft they could use, maintain and gain access to it.
88. I find Mr Honey's submissions on this point, (see paragraphs 46 to 56 above) to be persuasive and I agree with them.
Issue (2): enhanced value
89. At the start of the hearing I indicated to Mr Miller that the Tribunal had no authority to consider whether the Secretary of State was wrong to have confirmed the 2006 order. This reference (made by Mr Miller) is to determine the compensation payable following the exercise by NRIL of its powers of compulsory purchase under that order. Mr Honey said that under section 22 of the Transport and Works Act 1992 a person aggrieved by an order made under that Act has six weeks to apply to the High Court on the ground specified in section 22(1). Subject to that provision section 22(3) states that: “an order … shall not, either before or after it has been made, be questioned in any legal proceedings whatever.” As I understand his closing submissions Mr Miller accepts that position but he nevertheless maintains that NRIL’s motive in seeking compulsory purchase powers is relevant and that NRIL sought such powers to avoid having to remove the shaft under the cloak of an argument for its operational necessity. He contended that there was, and never had been, any operational need for the shaft. I consider that argument to be unfounded. The Secretary of State received further submissions from both parties about the need for the pressure relief shaft and he found that there was an operational requirement for it, contrary to Mr Miller’s submissions, and confirmed the 2006 order (see paragraph 22 above).
90. I have already accepted under issue (1) that the purpose for which the land was acquired was as defined in article 3 of the 2006 order. The special suitability of the land for that purpose shall not be taken into account under rule (3) and it is not necessary to consider the further arguments under the Pointe Gourde principle developed in Mr Honey's submissions.
Issue (3): what is the special Act for the purposes of section 7 of the 1965 Act?
91. The "special Act" is defined under section 1(2) of the 1965 Act to be "the enactment under which the purchase is authorised and the compulsory purchase order." This is acknowledged in paragraph 26 of the statement of agreed facts. There is no dispute about the enactment under which the purchase was authorised, namely the Transport and Works Act 1992. But the parties do not agree about what constitutes the compulsory purchase order.
92. Mr Miller argues that the 2006 order resulted from a deferral of a decision by the Secretary of State on the original WCML order application and that therefore the 2003 order should be taken as the special Act. Mr Honey says that it is the 2006 order that is relevant since it is that order which authorised the acquisition of the reference land.
93. In my opinion the special Act for the purposes of this reference is the 2006 order. It is that order which is the compulsory purchase order for the purposes of section 1(2) of the 1965 Act. It authorised the acquisition of the reference land and, in article 3, defined the purposes for which that acquisition could be made.
94. I make three observations about this conclusion:
(i) It is the entirety of the 2006 order which, together with the 1992 Act, comprises the special Act. It therefore includes article 10 which applies certain provisions of the 2003 order. I accept Mr Honey's submission that these are procedural rather than substantive provisions. But that in itself does not mean, as submitted by Mr Honey, that article 10 cannot be said to come within the definition of the special Act.
(ii) The 2006 order did not authorise the construction of any works and therefore it is not open to the claimant to submit a claim for compensation for injurious affection caused by the construction of the pressure relief shaft. Such construction was authorised under licence for which consideration was paid.
(iii) The significance of the dispute between the parties on this issue appears to be whether or not the claimant can, when claiming for injurious affection, have regard to train noise. That is a matter for evidence and submissions at a substantive hearing but, the parties having raised the point, I would make a provisional comment. The claimant may claim compensation for injurious affection caused by the use (but not the construction) of the pressure relief shaft. The use of the pressure relief shaft is a function of the movement of the trains in the tunnel. Its purpose is to allow the movement and release of air that is compressed by the trains. It is arguable that the airborne transmission of train noise through the pressure relief shaft is a concomitant of the use of the shaft for which a claim for compensation for injurious affection can, at least in principle, be made.
Issue (4): can compensation be based upon the financial gain or cost savings alleged to have made by NRIL?
95. I accept Mr Honey's submissions that this issue is a reiteration of issue (2) for which there is no free-standing argument. It is agreed by the claimant that this land should be valued with the shaft in place (paragraph 24 of the statement of agreed facts) and, in the absence of fraudulent misrepresentation, that NRIL cannot be required to remove it. In my opinion there is no sustainable argument that the cost savings to NRIL of not having to remove the shaft can be reflected in the compensation payable under section 5 rule (2) of the 1961 Act. Lambe does not assist the claimant in this regard for the reasons given by Mr Honey (see paragraph 68 above).
Determination
96. I determine the four preliminary issues as follows:
Issue (1)
In terms of section 5(3) of the Land Compensation Act 1961 the purpose for which plot 11a was acquired was using, maintaining or gaining access to the pressure relief shaft, as defined in article 3 of the (Network Rail West Coast Main Line) (Stowe Hill) Order 2006.
Issue (2)
An enhanced value due to NRIL's special interest in purchasing the land cannot be given to plot 11a over and above the amount the land would have fetched if sold in the open market.
Issue (3)
For the purposes of section 7 of the Compulsory Purchase Act 1965, the "special Act" in relation to the compulsory acquisition of plot 11a comprises the Network Rail (West Coast Main Line) (Stowe Hill) Order 2006 (together with sections 1 and 5 of the Transport and Works Act 1992).
Issue (4)
There is no basis in law for the claimant to claim compensation for part of the financial gain or cost saving alleged to have been made by NRIL as a result of the making of the Network Rail (West Coast Main Line) (Stowe Hill) Order 2006.
97. This decision is final on all matters raised by the preliminary issues other than costs. The parties may now make submissions on the costs and a letter giving directions for the exchange of submissions accompanies this decision. Further directions for the conduct of the reference will be made following the issue of the costs addendum to this decision.
Dated: 8 July 2014
A J Trott FRICS