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URL: http://www.bailii.org/uk/cases/UKUT/LC/2015/356.html
Cite as: [2015] UKUT 356 (LC)
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UPPER TRIBUNAL (LANDS CHAMBER)
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UT Neutral citation number: [2015] UKUT 356 (LC)
UTLC Case Number: LCA/21/2014
TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007
COMPENSATION – COSTS – temporary possession under Crossrail Act 2008 – whether Tribunal has power to award costs in reference – s.4, Land Compensation Act 1961 – rule 10, Tribunal Procedure (Upper Tribunal)(Lands Chamber) Rules 2010
IN THE MATTER OF A NOTICE OF REFERENCE
BETWEEN
BPP (FARRINGDON ROAD) LIMITED
Claimant
and
CROSSRAIL LIMITED
Compensating
Authority
Re: Caxton House, Farringdon Road, London EC1
Before: Martin Rodger QC, Deputy President and Peter McCrea FRICS
Sitting at: Royal Courts of Justice, Strand, London WC2A 2LL
on
4 June 2015
Robin Purchas QC and Rebecca Clutten, instructed by Bircham Dyson Bell LLP, for the claimant
Michael Barnes QC and Eian Caws, instructed by Ashurst LLP, made submissions in writing for the compensating authority
© CROWN COPYRIGHT 2015
The following cases are referred to in this decision:
English Property Corporation v Royal Borough of Kingston-Upon-Thames (1998) 77 P. & C.R. 1
Purfleet Farms Ltd v Secretary of State of Transport [2003] 1 P. & C.R. 20
Emslie & Simpson Limited v Aberdeen District Council [1995] RVR 159
Padfield v Eastern Electricity Board (1971) 24 P. & C.R. 423
West Midlands Joint Electricity Authority v Pitt [1932] 2 KB 1
Wildtree Hotels Ltd v Harrow LBC [2001] 2 AC 1
re Penny and South Eastern Rly Co 1857 7 E & B 660, 669
Dickinson v Network Rail [2014] UKUT 372 (LC)
Johnston v TAG Farnborough Airport Ltd [2014] JPL 367
Hills (Patents) Ltd v University College Hospital Board of Governors [1956] 1 QB 90
Pye (Oxford) Ltd v Graham [2003] 1 AC 419
Introduction
1. Does the Lands Chamber of the Upper Tribunal have power to award costs in a reference for compensation for the taking of temporary possession of land under the Crossrail Act 2008? If it does not, may the costs incurred in such a reference form part of the compensation payable to the owner of land which has been taken temporarily under the powers conferred by the Act?
2. Those issues arise for consideration following the Tribunal’s decision on 27 April 2015 refusing to strike out this reference by the claimant, BPP (Farringdon Road) Limited, for compensation for the taking of temporary possession of the basement of Caxton House, a building in Farringdon Road, London EC1. The parties agree that, if the Tribunal has power to award costs, the costs of the application should be paid by Crossrail Ltd, the compensating authority, to the claimant. They do not agree whether the Tribunal has such a power, nor whether the Tribunal will be able to make an award of costs in favour of either party at the conclusion of the reference.
3. The claimant anticipates that the costs it will incur in the reference will exceed £1.1m, and we have no reason to doubt that those of Crossrail will be of a similar order. The issue is therefore of considerable importance to the parties, but it is also of importance to others to know the scope of the Tribunal’s jurisdiction in relation to costs under rule 10 of the Tribunal Procedure (Upper Tribunal)(Lands Chamber) Rules 2010, as amended with effect from 1st July 2013 by the Tribunal Procedure (Amendment No.3) Rules 2013.
4. Both parties have made full written submissions which, in the claimant’s case, have been amplified by further oral representations.
The proceedings
5. The relevant background was sketched by the Tribunal in its decision of 27 April. By an agreement entered into between the claimant and the Secretary of State for Transport on 2 August 2007 the Secretary of State became entitled to take temporary possession of the basement of Caxton House for use as a working site in connection with the Crossrail project. The Secretary of State subsequently nominated Crossrail Ltd as the undertaker of that project.
6. It was initially agreed that compensation would be payable to the claimant in respect of the temporary possession of the site as if that temporary possession had been acquired compulsorily under Schedule 5 to the Crossrail Bill which was then passing through Parliament. The Bill provided for the nominated undertaker to pay compensation to the owners and occupiers of land of which possession was taken under paragraph 1(4) of Schedule 5 “for any loss that they may suffer by reason of the exercise in relation to the land of the powers conferred by this paragraph.” As enacted, the Crossrail Act 2008 is to the same effect. The right to compensation conferred by paragraph 1(4) is supplemented by paragraph 1(5) of Schedule 5 which states that:
“Any dispute as to a person's entitlement to compensation under sub-paragraph (4), or as to the amount of compensation, shall be determined under and in accordance with Part 1 of the Land Compensation Act 1961”.
7. Temporary possession of the basement of Caxton House was taken by Crossrail on 6 January 2010 for use as a working site. It is anticipated that possession will be returned to the claimant in 2018.
8. In this reference the claimant claims £29.75m in compensation for the exercise by Crossrail of its statutory power “to enter upon and take possession of” the basement of Caxton House. In a second reference, which is to be heard at the same time as this reference, the claimant also claims compensation for the permanent acquisition of part of the site of Caxton House. The parties agree that the Tribunal has power to award costs in that second reference because it is “proceedings for compensation for compulsory purchase” falling within rule 10(6)(a) of the Rules. Whether the Tribunal has power to award costs in this reference for temporary possession depends on the effect of the adoption of Part I of the Land Compensation Act 1961 as the basis for the determination of disputes over compensation under the Crossrail Act 2008, and on whether the reference can properly be regarded as either “proceedings for compensation for compulsory purchase”, or as “proceedings for injurious affection of land” falling within rule 10(6)(b) of the Rules.
The Tribunal’s power to award costs
9. The Tribunal has full power to award costs, subject to restrictions imposed by its procedure rules and, in cases to which it applies, to the effect of section 4 of the Land Compensation Act 1961. The source of the jurisdiction is section 29, Tribunals Courts and Enforcement Act 2007, which provides so far as is relevant that:
“(1) The costs of and incidental to –
(a) [First-tier Tribunal]
(b) all proceedings in the Upper Tribunal,
shall be in the discretion of the Tribunal in which the proceedings take place.
(2) The relevant Tribunal shall have full power to determine by whom and to what extent the costs are to be paid.
(3) Subsections (1) and (2) have effect subject to Tribunal Procedure Rules”.
10. The relevant Tribunal Procedure Rules are the 2010 Rules (as amended), and in particular rule 10. Prior to its amendment with effect from 1 July 2013 rule 10(1) confirmed the breadth of the power to award costs, saying simply that “the Tribunal may make an order for costs on an application or on its own initiative”. This power was curtailed only in the case of appeals from leasehold valuation tribunals by rule 10(7).
11. In its amended form rule 10 adopts a very different approach. An order for costs may now only be made in certain defined circumstances. The relevant parts of rule 10 for present purposes provide as follows:
“(1) The Tribunal may make an order for costs on an application or on its own initiative.
(2) Any order under paragraph (1)—
(a) may only be made in accordance with the conditions or in the circumstances referred to in paragraphs (3) to (6);
(b) must, in a case to which section 4 of the 1961 Act applies, be in accordance with the provisions of that section.
(3) The Tribunal may in any proceedings make an order for costs—
(a) under section 29(4) of the 2007 Act (wasted costs) and for costs incurred in applying for an order for such costs;
(b) if the Tribunal considers that a party or its representative has acted unreasonably in bringing, defending or conducting the proceedings; or
(c) [reimbursement of tribunal fees].
(4) Except in proceedings to which paragraph (5) or (6) apply, the Tribunal may—
(a) with the consent of the parties, or
(b) where there is a disparity of interest or resources between the parties, direct that an order for costs may be made in the proceedings against one or more of the parties in respect of costs incurred following such a direction.
(5) The Tribunal may make an order for costs in judicial review proceedings.
(6) The Tribunal may make an order for costs in proceedings—
(a) for compensation for compulsory purchase;
(b) for injurious affection of land;
(c) under section 84 of the Law of Property Act 1925 (discharge or modification of restrictive covenants affecting land);
(d) on an appeal from a decision of the Valuation Tribunal for England or the Valuation Tribunal for Wales.
(7) Subject to paragraph (3), in proceedings to which paragraph (6) applies, the Tribunal may direct that no order for costs may be made against one or more specified parties in respect of costs subsequently incurred.”
12. It is also appropriate to refer to the overriding objective of the Rules, which as rules 2(1)-(2) explain, is to enable the Tribunal to deal with cases fairly and justly, which includes dealing with cases in ways which are proportionate to their importance, the complexity of the issues, the anticipated costs and the resources of the parties. Rule 2(3) requires that the Tribunal must seek to give effect to the overriding objective when it interprets any rule or practice direction.
13. The 1961 Act referred to in rule 10(2)(b) of the Rules is, of course, the Land Compensation Act 1961, Part 1 of which is applied to disputed claims for compensation under the Crossrail Act 2008 by paragraph 1(5) of Schedule 5 to that Act. Part 1 of the 1961 Act is titled “determination of questions of disputed compensation” and deals with matters of procedure, including costs. Of the original four sections only sections 1 and 4 now survive subsequent repeals.
14. Section 1 of the 1961 Act provides as follows:
“1 Tribunal for assessing compensation in respect of land compulsorily acquired.E+W
Where by or under any statute (whether passed before or after the passing of this Act) land is authorised to be acquired compulsorily, any question of disputed compensation and, where any part of the land to be acquired is subject to a lease which comprises land not acquired, any question as to the apportionment of the rent payable under the lease, shall be referred to the Lands Tribunal and shall be determined by the Tribunal in accordance with the following provisions of this Act.”
“Land” is defined in section 39(1) of the 1961 Act as including “any interest or right in or over land.”
15. Section 4 of the 1961 Act has been amended to take account of the Tribunal’s general power to award costs under the 2007 Act. As amended, and so far as is relevant, it provides:
“4. Costs
(A1) In any proceedings on a question referred to the Upper Tribunal under section 1 of this Act
(a) the following subsections apply in addition to section 29 of the Tribunals, Courts and Enforcement Act 2007 (costs or expenses) and provisions in Tribunal Procedure Rules relating to costs; and
(b) to the extent that the following subsections conflict with that section or those provisions, that section or those provisions do not apply.
(1) Where either—
(a) the acquiring authority have made an unconditional offer in writing of any sum as compensation to any claimant and the sum awarded by the Upper Tribunal to that claimant does not exceed the sum offered; or
(b) the Upper Tribunal is satisfied that a claimant has failed to deliver to the acquiring authority, in time to enable them to make a proper offer, a notice in writing of the amount claimed by him, containing the particulars mentioned in subsection (2) of this section;
the Upper Tribunal shall, unless for special reasons it thinks proper not to do so, order the claimant to bear his own costs and to pay the costs of the acquiring authority so far as they were incurred after the offer was made or, as the case may be, after the time when in the opinion of the Upper Tribunal the notice should have been delivered.
(2) The notice mentioned in subsection (1) of this section must state the exact nature of the interest in respect of which compensation is claimed, and give details of the compensation claimed, distinguishing the amounts under separate heads and showing how the amount claimed under each head is calculated.
(3) Where a claimant has delivered a notice as required by paragraph (b) of subsection (1) of this section and has made an unconditional offer in writing to accept any sum as compensation, then, if the sum awarded to him by the Upper Tribunal is equal to or exceeds that sum, the Upper Tribunal shall, unless for special reasons it thinks proper not to do so, order the acquiring authority to bear their own costs and pay the costs of the claimant so far as they were incurred after his offer was made.”
16. Subsections (1) to (3) therefore require the Tribunal to make an award of costs in the terms provided in each of three circumstances unless there are special reasons not to do so. Where the acquiring authority has made an unconditional offer of settlement which the Tribunal’s award does not exceed, or where the claimant has failed to give adequate details of the amount claimed to enable the acquiring authority to make an offer, in the absence of special reasons the claimant will be ordered to bear its own costs and to pay the costs of the acquiring authority incurred after the offer was made or after notice of the claim should have been delivered. Where the claimant has given notice of the claim and has made an offer of its own specifying the sum which it is prepared to accept in compensation, which offer has not been accepted by the acquiring authority, but which is equalled or exceeded by the award subsequently made by the Tribunal, the acquiring authority will be ordered to bear their own costs and to pay the claimant’s costs.
17. A number of matters should be noted concerning section 4 of the 1961 Act.
18. The first is that section 4 provides a free-standing jurisdiction to award costs in the cases to which it apples. Subsection 4(A1)(a) states expressly that the remainder of the section applies in addition to section 29 of the 2007 Act and the Rules.
19. Secondly, to the extent that there is any conflict between the provisions of section 4 and those of section 29 or the Rules, the latter provisions are disapplied by section 4(A1)(b). The potential for conflict may exist because rule 10(2)(a) restricts the circumstances in which the Tribunal may make an order for costs to those referred to in paragraphs (3) to (6) of rule 10. If section 4 of the 1961 Act applied to proceedings which were not of a type described in rule 10(6), and was engaged in such a way that it was appropriate for the Tribunal to make an order for costs, the Tribunal would not be prevented from doing so by rule 10(2)(a) which in those circumstances would be disapplied by section 4(A1)(b) of the 1961 Act. Rule 10(2)(b) also requires that in a case to which section 4 applies any order for costs under rule 10(1) must be in accordance with the section. In order to determine whether (in the absence of circumstances falling within rule 10(3) or (4)) the Tribunal has jurisdiction to make an order for the payment of costs it is therefore necessary first to consider whether the proceedings in question fall within rule 10(6), and if they do not, then to consider whether the Tribunal is nonetheless required by section 4 of the 1961 Act to make an order for costs.
20. Thirdly, although section 4 contemplates that, in cases to which it applies, a claimant may make an offer identifying the compensation which will be accepted, in practice such offers are very rare. Prior to the coming into force of the new rule 10 there was no particular incentive for such an offer to be made. When the Tribunal’s jurisdiction to award costs rested on section 29 of the 2007 Act, or before that on section 3(5) of the Lands Tribunal Act 1949, unconstrained in either case by the rules in their current form, the practice was to allow the claimant its costs whether or not it had made an offer unless the acquiring authority could rely on section 4(1) of the 1961 Act. Provided the reference was conducted reasonably (and advanced only claims for which there was a statutory basis) a claimant who made no offer but who recovered more in compensation than the acquiring authority was prepared to offer, could still expect to recover the costs incurred in securing that compensation. In English Property Corporation v Royal Borough of Kingston-Upon-Thames (1998) 77 P. & C.R. 1 the Court of Appeal upheld a decision of the Lands Tribunal which took as its starting point the proposition that the costs of determining disputed compensation should fall on the acquiring authority to whose use of compulsory powers the need to determine that compensation was attributable. In Purfleet Farms Ltd v Secretary of State of Transport [2003] 1 P. & C.R. 20 the Court of Appeal again endorsed that practice, which it found to be consistent with the approach taken in Scotland. Chadwick LJ explained at paragraph 42:
Continuing in paragraph 43:
21. Finally, although section 1 of the 1961 Act (and thus Part 1 as a whole) is couched in terms of the compulsory acquisition of interests in land, Part 1 is very commonly adopted as supplying sufficient machinery for the resolution of disputes over compensation for the temporary possession and use of land. Paragraphs 1(4) and 1(5) of Schedule 5 to the Crossrail Act 2008 are in the model form derived from the Transport and Works (Model Clauses for Railways and Tramways) Order 2006, and in substantially the same form they appear in similar primary and secondary legislation authorising temporary possession (for example the Channel Tunnel Rail Link Act 1996).
22. It is convenient to deal at this stage with the application of section 4 of the 1961 Act to this reference, a matter on which the parties disagreed.
Does section 4 apply to this reference?
23. In their written submissions on behalf of Crossrail, Mr Barnes QC and Mr Caws contended that section 4 of the 1961 Act had no application to this reference. They gave two reasons. First, because in the present case no interest in land is to be acquired by Crossrail, but rather it has taken temporary possession of Caxton House, to which section 4 does not apply at all. Secondly, they submit that it would be strange if there were a power to award costs in a claim for temporary possession under the Crossrail Act, as they put it, “because of some side wind arising from the particular provisions of that Act, which does not apply or may not apply in other cases where temporary possession is taken”. The purpose of paragraph 1(5) of Schedule 5 to the Crossrail Act is to confer on the Tribunal jurisdiction to determine claims for compensation for the taking of temporary possession. Its purpose is not to apply any other provision of the 1961 Act, and in particular it is not to apply section 4.
24. At first sight the expression “acquiring authority” used in section 4 is not particularly apt to refer to a statutory undertaker exercising rights of temporary possession. The definition of the expression in section 39(1) of the 1961 Act is also drafted with compulsory acquisition in mind (the acquiring authority “in relation to an interest in land, means the person or body of persons by whom the interest is, or is proposed to be, acquired”).
25. Nevertheless, the definitions in section 39(1) are stated to apply “except where the context otherwise requires” and when sections 1 and 4 of the 1961 Act supply machinery for the resolution of disputes over compensation for the exercise of rights of temporary possession, the context clearly requires that “acquiring authority” be understood to mean the nominated undertaker who is obliged to pay that compensation. In this case the “land” in question comprises rights over land, namely the right to use and temporarily possess the basement of Caxton House as a working site, which is conferred by paragraph 1(1) of Schedule 5 to the Crossrail Act. Crossrail is the acquiring authority in relation to that land. The same broad approach to the statutory language was taken by the Lands Tribunal in Padfield v Eastern Electricity Board (1971) 24 P. & C.R. 423 (a case concerning compensation payable for the retention of electricity lines over the land of the claimant) and by the Court of Appeal in West Midlands Joint Electricity Authority v Pitt [1932] 2 KB 1 (a wayleave case under the Acquisition of Land (Assessment of Compensation) Act 1919).
26. Moreover, paragraph 1(5) of Schedule 5 to the 2008 Act expressly provides for determination of such disputes “under and in accordance with Part 1” of the 1961 Act. It is obvious that the whole of Part 1 of the 1961 Act is intended to be applicable and that, in particular, the section 4 costs regime is to apply to the resolution of disputes arising out of the exercise of the power of temporary possession. Given its derivation from the Transport and Works Order we do not consider the manner of incorporation of section 4 either to be improbable or aptly to be described as being achieved by “a side wind” arising from the Crossrail Act alone, as Mr Barnes and Mr Caws suggested.
27. We are therefore satisfied that the costs regime provided by section 4 of the 1961 Act is available to the parties to this reference. It functions independently of the Tribunal’s Rules and the restrictions imposed by rule 10(2)(a) do not apply to it. It does not, however, give the Tribunal an unrestricted jurisdiction in relation to costs. In particular, if it provides the only basis on which costs may be awarded in this reference, section 4 does not permit the Tribunal to adopt the practice approved by the Court of Appeal in Purfleet Farms Ltd v Secretary of State of Transport of awarding a successful claimant its costs unless the acquiring authority achieves a more favourable outcome than it had previously offered. Section 4 was not inconsistent with the Tribunal’s former practice, but it was not the basis of that practice; the power to award costs which underpinned the practice was found in section 29 of the 2007 Act, and before that in section 3(5) of the Lands Tribunal Act 1949.
28. Section 29 of the 2007 Act has effect subject to the Tribunal’s Rules. If, in its amended form, rule 10 no longer permits costs to be awarded in a claim for compensation for the temporary possession of land, the Tribunal’s only relevant costs power in this case will derive from section 4 of the 1961 Act. In those circumstances when considering whether an award of costs could be made in favour of a claimant it would be necessary to apply section 4 in accordance with its terms and, specifically, in accordance with section 4(3). To be entitled to an award of costs a claimant would first have had to have made an unconditional offer in writing to accept a sum as compensation which the Tribunal’s award of compensation subsequently exceeded. We therefore turn now to the question whether this reference falls within any of the categories of proceedings in rule 10(6) so as to confer a much wider jurisdiction in relation to costs.
Does rule 10(6)(b) apply to this reference?
29. Mr Robin Purchas QC, who appeared on behalf of the claimant with Ms Rebecca Clutten, submitted that the costs of proceedings for the recovery of compensation for loss suffered by reason of the exercise by Crossrail of its powers to enter upon and take possession of and use the basement of Caxton House as a working site for the purpose of constructing the Crossrail works, were costs incurred either “in proceedings…for injurious affection of land” falling within rule 10(6)(b) or “in proceedings … for compensation for compulsory purchase” within rule 10(6)(a). Mr Purchas placed greater emphasis in his submissions on the first of these alternatives, injurious affection.
30. The term “proceedings…for injurious affection of land” is not used elsewhere and “injurious affection” is not defined for the purpose of the compensation legislation as a whole.
31. Section 7 of the Compulsory Purchase Act 1965 (which is derived from section 63 of the Lands Clauses Consolidation Act 1845) provides for the payment of compensation to the owners of land compulsorily acquired for damage sustained by them by reason of the severance of the lands taken from other land belonging to them, “or otherwise injuriously affecting that other land by the exercise of the powers conferred by this or the special Act”. Damage caused to land by its severance from other land can therefore be seen to be included within the concept of injurious affection. Where no land of a claimant has been compulsorily acquired section 10 of the 1965 Act (like section 68 of the 1845 Act) confers a right to compensation for injurious affection suffered by the claimant’s land not held with land compulsorily acquired.
32. The meaning of “injurious affection”, as used in section 10 of the 1965 Act, was considered by the House of Lords in Wildtree Hotels Ltd v Harrow LBC [2001] 2 AC 1 to which we were referred by both parties. Lord Hoffmann, giving the leading speech, said at paragraph 2:
‘The term “injuriously affected” connotes “injuria”, that is to say, damage which would have been wrongful but for the protection afforded by the statutory powers. In re Penny and South Eastern Rly Co 1857 7 E & B 660, 669 Lord Campbell said: “unless the particular injury would have been actionable before the company had acquired their statutory powers, it is not an injury for which compensation can be claimed.” In practice this means that a claimant has to show that but for the statute he would have had an action in damages for public or private nuisance.”
Lord Hoffmann continued, at paragraph 4:
“Compensation is payable only for damage to the plaintiff’s land or interest in land. He is not entitled to any compensation for loss caused to him in a personal capacity.”
33. For Crossrail Mr Barnes QC submitted that the root meaning of the expression “injurious affection” is injury to land, and it was used in that sense in sections 63 and 68 of the Lands Clauses Consolidation Act 1845 and their modern equivalents, section 7 and 10 of the Compulsory Purchase Act 1965. This meaning is specific and technical. It is obvious that a technical expression used in delegated legislation (such as procedural rules) should be given the same meaning as the same expression used in the primary legislation which confers power on the Tribunal to determine issues in accordance with those rules. Those responsible for drafting the rules cannot have intended to use a familiar expression in some novel sense. It follows, Mr Barnes submitted, that where the expression “injurious affection” is used in the Tribunal’s Rules to identify a category of proceedings it must be taken to relate to the entitlement to compensation for what the relevant statutes describe in terms as injurious affection.
34. Mr Barnes also identified the essential nature and characteristics of all claims for compensation for injurious affection. The “injuria” or damage was, in every case caused by activity taking place outside the land which was damaged and not by the effect of things done on the land itself or by the taking of possession of that land. Thus in section 7 of the 1965 Act the distinction is drawn between compensation for the value of the land acquired, the first limb, and severance or some other form of injurious affection to the retained land of the landowner whose other land has been acquired. Under section 10 of the 1965 Act compensation is payable for injurious affection where no land is taken, and the same distinction is maintained between compensation in respect of any land, or any interest in land which has been taken and in respect of any land, or any interest in land, which has been injuriously affected by the execution of the works.
35. Mr Barnes therefore advanced an alternative submission. If, contrary to his primary submission, rule 10(6)(b) is not restricted to compensation claims identified in terms as claims for “injurious affection” in the relevant statute, it must nevertheless be confined to claims having the essential nature of injurious affection, i.e. claims for damage to land where no interest in the land in question is acquired and possession of that land is not taken. Mr Barnes gave as an example a claim under Part 1 of the Land Compensation Act 1973 for compensation for the depreciation of the value of an interest in land caused by public works outside that land. In such a case no interest in the land affected is acquired and possession is not taken of that land, and the claim for compensation might be said to share the essential attributes of cases where injurious affection is expressly mentioned as the basis of compensation.
36. It was simply impossible, Mr Barnes suggested, to read the expression “injurious affection” in rule 10(6)(b) as meaning damage to land which arises in any circumstances and without any limitations. Had it been intended to include all forms of damage to land a specific technical expression with historic provenance and a well understood meaning would not have been employed. Used in such an imprecise sense there would be no logical boundaries to the meaning of injurious affection other than that land is harmed in some way. Claims which would never be referred to as being for injurious affection, such as a claim under the Coal Mining Subsidence Act 1991 initiated by a damage notice after there had been mining subsidence would come within rule 10(6)(b) since obviously the removal of support by mining has an adverse effect on land. Mr Barnes even suggested that a claim for the discharge or modification of a restrictive covenant under s.84 of the Law of Property Act 1925 would be capable of falling within the scope of injurious affection if harm to land was the only necessary requirement. If that were correct the power to award costs in such cases would be conferred by rule 10(6)(b) so that rule 10(6)(c) would be redundant.
37. Mr Purchas invited us to adopt a much broader approach to the scope of rule 10(6)(b). He submitted that it was consistent with Lord Hoffmann’s formulation in Wildtree Hotels that injurious affection of land should be understood to connote damage to land or to an interest in land as a result of what would otherwise be wrongful interference with that land or interest. When asked to comment on the significance of Lord Hoffmann’s reference to public or private nuisance Mr Purchas acknowledged that there was a distinction between wrongful interference with the enjoyment of land by activities conducted on other land, which would be classified as the tort of nuisance, and wrongful interference by activities on the affected land itself, which would be trespass. There were nonetheless examples of nuisance causing a physical encroachment on neighbouring land (as where the eaves of a house are constructed over a boundary, causing rainwater to be cast on to the neighbouring land) where nuisance closely resembled trespass, and Lord Hoffmann cannot be taken to have intended to exclude such cases.
38. Mr Purchas submitted that section 10(1) of the 1965 Act covers rights affecting land with which there is interference which would otherwise be unlawful but which does not involve the acquisition of land or an interest in land. In the case of entry onto land and its use for authorised works without the acquisition of a permanent right in the land, he suggested there would prima facie be a claim under section 10 for injurious affection which would appear to fall within rule 10(6)(b).
39. Mr Purchas referred to the wide range of statutes which provide for compensation for injurious affection of land through the exercise of statutory powers and where disputed compensation is to be determined by the Tribunal (including for the revocation of planning permission under section 117, Town and Country Planning Act 1990, for injury caused by the exercise of operators rights under paragraph 16 of Schedule 2 to the Telecommunications Act 1984, for mining subsidence under the Coal Mining Subsidence Act 1991, or for stopping up of a means of access under section 126 of the Highways Act 1980). The basis of compensation in these different contexts is variously described including as deprecation in value, loss and damage and disturbance. Where rule 10(6)(b) refers to injurious affection of land it ought, Mr Purchas suggested, to be read as including all such claims. There was no principled basis on which the expression ‘proceedings for injurious affection of land’ could be limited to statutory provisions which expressly refer to ‘injurious affection’, such as section 10 of the 1965 Act. Moreover, there would be great practical difficulty in adopting a precise technical interpretation of the expression as applying only where it was used in terms in the relevant statute, since claims for injurious affection were often combined with claims for other heads of loss.
40. Reference was also made to Part 1 of the Land Compensation Act 1973 (LCA 1973), which provides for the payment of compensation for depreciation in the value of land caused by public works, which has recently been considered by the Tribunal in Dickinson v Network Rail [2014] UKUT 372 (LC), and subsequently in Johnston v TAG Farnborough Airport Ltd [2014] JPL 367. In both of these cases, however, it had been agreed that rule 10(6)(b) was engaged and the Tribunal had not been asked to make a decision on the point now in issue. Nonetheless, Mr Purchas submitted, the Tribunal must have been satisfied that the absence of a reference, in terms, to injurious affection, was not an obstacle to the exercise of its costs jurisdiction in those cases and that Part 1 claims were properly within the scope of rule 10(6)(b).
41. Prominent in Mr Purchas’s argument were the reports of the bodies whose deliberations gave rise to the amendment to the Rules. These had been referred to by the Tribunal (The President, Sir Keith Lindblom) in Dickinson v Network Rail and properly form part of the material to which reference could be made as an aid to the interpretation of the Rules. Mr Barnes acknowledged that the legislative background and explanatory material relating to delegated legislation may be used as an aid to its meaning but submitted that this was only possible where there was a genuine ambiguity in the meaning of the expression in the delegated legislation and where it is clear from the materials relied on that one possible meaning is to be preferred to another. We agree that reference to such material is unlikely to be necessary or useful if either of those requirements is not satisfied.
42. In December 2011 the Costs Review Group published a report to the Senior President of Tribunals on "Costs in Tribunals". The CRG Report deals principally with the question of the extent to which the principle of costs-shifting should operate in tribunals (i.e. the power to order one party to pay another party’s costs of preparing and presenting a case). In considering the costs regimes of different tribunals the CRG Report proceeded on the basis that “the underlying principle of the tribunals – at least where the issue in question relates to relations between the citizen and the State - is that there should be no costs-shifting absent unreasonable conduct and that departure from that principle should only occur if a clear case for it is made out” (see paragraph 31).
43. At paragraph 85 of the CRG Report the Group categorised the large number of first instance jurisdictions of the Lands Chamber under six headings, of which the first two were:
“ a. Compensation for the compulsory purchase of land.
b. Compensation where land is adversely affected by the exercise of statutory powers (e.g. through noise arising from a new road or a new runway at an airport, mining subsidence, the laying of pipelines, the revocation of planning permission).”
The remaining four jurisdictions were: blight notice and purchase notice cases, land valuation issues in tax appeals, the discharge or modification of restrictive covenants (category e), and finally, references by consent. Having discussed the operation of section 4 of the Land Compensation Act 1961 and the Tribunal’s simplified procedure in which no costs are awarded, the CRG Report went on at paragraph 90 to recommend “a standard no-cost regime in all jurisdictions other than categories a and e, qualified by provisions allowing for an award of costs in the case of unreasonable conduct and subject to a power for the tribunal to order that costs-shifting should apply in an individual case – either two-way (e.g. because of complexity or the amount in issue) or one-way (e.g. because of imbalance between the parties in terms of resources or the significance of the outcome, for instance where … the claim is essentially a test case”. This recommendation, if implemented, would have removed the Tribunal’s general power to award costs in cases of injurious affection, which would appear to fall into the CRG Report’s category (b), but would have left open the possibility of its exercise on a case by case basis.
44. The recommendations of the CRG Report were considered by the Tribunal Procedure Committee, the body that makes rules governing the procedure of tribunals, which published a consultation report of its own in 2012. In paragraph 48 of its report the TPC said that it intended to reduce the existing scope of the Tribunal’s power to make two-way costs shifting awards. It considered that its proposals were consistent with the recommendations in the CRG Report. Nevertheless in paragraph 96 of its report the TPC referred specifically to proceedings for compensation for injurious affection, stating its own view that:
“… there is no reason to exclude such proceedings from two-way costs shifting. They presently form part of the UTLC’s first instance jurisdiction, and the TPC is not aware of any reason to change the present costs regime as applied to such cases."
45. The TPC consultation report included two versions of draft rules intended, as it had said in paragraph 48, to be consistent with the recommendations in the CRG Report. The final conclusions of the TPC were contained in its Replies from the Tribunals Procedure Committee (June 2013). At paragraph 6.39 it referred again to proceedings for compensation for injurious affection of land, and stated:
“It appeared to [the Committee that there was no reason to exclude such proceedings from two-way costs shifting. They presently form part of the [Lands Chamber’s] first instance jurisdiction and [the Committee] was not aware of any reason to change the present costs regime as applied to such cases.”
46. Although we have considered this material carefully we have not found it of great assistance in determining the quite specific question of whether a claim for compensation for the taking of temporary possession of land should be regarded as “proceedings (a) for compensation for compulsory purchase [or] (b) for injurious affection of land.” In particular we do not think it can be assumed, as Mr Purchas submitted, that the categorisation of certain types of proceedings in rule 10(6) was taken directly from the categories identified by the CRG in paragraph 85 of its Report. The term “injurious affection” may have been intended by the TPC to cover the same ground as the much more general language of the CRG’s category (b) (“compensation where land is adversely affected by the exercise of statutory powers”), but we cannot say with any assurance that it was not intended to be narrower. It is particularly difficult to treat “injurious affection” as used in rule 10(6) simply as shorthand for the CRG’s category (b) when it is remembered that the CRG’s proposal was for category (b) not to be included within the scope of the Tribunal’s general costs power. The TPC departed from that proposal in the case of injurious affection and we therefore believe it would be unsafe to draw conclusions about the scope of that derogation by reference to the different language in which the original proposal was framed.
47. On the other hand we do draw some general assistance from the material relied on by Mr Purchas. The underlying principle of the CRG Report was that in citizen -v- state tribunals there should generally be no costs-shifting unless there was a clear case for an exception. The TPC was satisfied that there was such a case both in claims for compensation for compulsory purchase and injurious affection (based presumably on the value and specialist nature of such claims, and the need for proper compensation to include costs) and there was felt to be no reason to change the existing approach. There was no further discussion of the intended boundaries of the exception. The absence of such discussion or of any justification for a wholesale change in the former practice is surprising if (subject to the narrow exceptions in rule 10(3) and (4)) the intention was to remove the Tribunal’s power to award costs in proceedings involving substantial claims for compensation for the exercise of statutory powers other than in the fields of compulsory purchase and injurious affection strictly so called.
48. Having summarised the rival submissions at considerable length we can state our conclusions more briefly.
49. We do not accept Mr Purchas’s argument that injurious affection should be given a meaning wide enough to connote any damage to land or to an interest in land as a result of what would otherwise be wrongful interference with that land or interest. Had that been the intention we can see no reason why the rule should employ the well understood expression “injurious affection” rather than some much broader term free of the misleading weight of statutory provenance.
50. On the other hand, while we agree with Mr Barnes that “injurious affection” should be used in a manner consistent with its usage in the compensation statutes, we do not consider that rule 10(6)(b) can be taken to refer exclusively to proceedings in which the statutory right to compensation refers expressly to “injurious affection” or its cognate terms.
51. To confine rule 10(6)(b) effectively to claims under section 10 of the 1965 Act (claims under section 7 would be covered by rule 10(6)(a)) would be to leave outside its scope claims under Part I of the Land Compensation Act 1973. Part I of the 1973 Act confers a right to compensation for depreciation of the value of interests in land caused by the use of highways, aerodromes and other public works. The expression “injurious affection” is not used at all in Part I but the depreciation in value for which compensation is payable is nevertheless depreciation consequent on the injurious effect of the works in question. The same public works as are within the scope of Part I (defined in section 1(3)) are also within the scope of Part II (section 20(12)) which confers powers on local authorities to take certain steps, such as insulation against noise, under the general heading “mitigation of injurious effect of public works”. We can see no reason for drawing a distinction, for the purpose of conferring a power to award costs, between injurious affection arising in very similar circumstances simply because that expression is used in one statute but not in another.
52. It would have been possible for the drafters of the Rules to include a comprehensive list of all the Tribunal’s statutory jurisdictions intended to come within rule 10(6). Had the intention been to confine rule 10(6)(b) to proceedings for injurious affection under sections 7 and 10 of the 1965 Act and their equivalents in the 1845 Act that could readily have been done (as it was in section 44 of the Land Compensation Act 1973). Had it been intended to include all forms of compensation for injurious affection, whether described as such or not, the rule would have become unwieldy and would require regular review as new statutory powers for specific public works are created. We consider the former intention would have been unprincipled and arbitrary, whereas the latter is coherent and boundaried.
53. We therefore consider that “injurious affection” in rule 10(6)(b) should be given a wider meaning which does not depend on the use of that expression in the statute giving rise to the claim for compensation. Without exhaustively defining the scope of sub-paragraph (b), we are substantially in agreement with Mr Barnes’ alternative submission, and we consider that injurious affection generally connotes damage to land which would have been wrongful but for the existence of statutory powers. Moreover, it generally connotes damage to land caused by activity conducted elsewhere. We do not consider that it is apt to describe activity which, but for statutory authority, would amount to trespass. As Lord Hoffmann explained in Wildtree Hotels:
“In practice … a claimant has to show that but for the statute he would have had an action in damages for public or private nuisance.”
While that cannot be taken to be an exhaustive statement for the purpose of construing the Tribunal’s Rules it does identify the essence of injurious affection and we would expect that claims for compensation which share those characteristics would fall within the scope of rule 10(6)(b).
54. It follows that we do not consider that a claim for compensation for loss suffered as a result of the exercise of a power to enter upon and take possession of land is properly described as a claim in proceedings for injurious affection of land. The loss which has been sustained is not consequent on damage to land, but is the result of the claimant being kept out of its land for the duration of Crossrail’s works. Rule 10(6)(b) gives the Tribunal no power to award costs in such proceedings.
55. The Claimant’s alternative case is that costs may be awarded in this reference because it involves “proceedings for compensation for compulsory purchase” within the scope of rule 10(6)(a). We now turn to that argument.
Does rule 10(6)(a) apply to this reference?
56. The claimant’s submissions on this aspect of the dispute focused on paragraph 1(5) of Schedule 5 to the Crossrail Act 2008 which provides that any dispute over entitlement to compensation payable under paragraph 1(4) where possession of land is taken under for use a working site "shall be determined under and in accordance with Part I of the Land Compensation Act 1961".
57. Section 1 of Part I of the 1961 Act has already been set out in paragraph 14 above. It is concerned with the resolution of claims for disputed compensation "where by or under any statute … land is authorised to be acquired compulsorily." As also previously noted, “land” for this purpose is defined as including “any interest or right in or over land”.
58. Mr Purchas submitted that a reference to determine the compensation for loss suffered by the taking of temporary possession under the power conferred by paragraph 1 of Schedule 5 to the 2008 Act is therefore treated as a reference for compensation for land acquired compulsorily. He recognised that no interest had been acquired by Crossrail in the basement of Caxton House, but in substance the power exercised by Crossrail was a power of compulsory acquisition of a right to possess and use the land for the authorised works. The proceedings in which compensation for the exercise of that power was claimed were properly regarded as proceedings for compensation for compulsory purchase.
59. The contrast between sub-paragraph (a) and (b) in rule 10(6) was also relied on. The latter referred specifically to injurious affection “of land”, whereas the former made no reference to land. This was consistent, Mr Purchas suggested, with there being a wider meaning to the phrase “compulsory purchase” which included the exercise by compulsion of a power to possess land for a temporary period in return for a payment of compensation.
60. Mr Purchas therefore invited us to apply a broad interpretation to the expression ‘proceedings for compensation for compulsory purchase’ so as to include proceedings which concern the exercise of a statutory power compulsorily to acquire the right of the possession and use of land.
61. Mr Barnes was dismissive of these arguments describing them as “desperate” and “without substantial justification”. In his submission compulsory purchase is the permanent acquisition by compulsory process of a proprietary corporeal interest in land or of an existing or newly created proprietary incorporeal right over land. No such interest or right has been acquired which is relevant to this reference. The Crossrail Act 2008 draws the clear distinction between a compulsory purchase under section 6 and a right to take temporary possession under section 5 and Schedule 5. The land to which the respective rights related was precisely specified. The right to acquire land was vested in the Secretary of State by section 6, whereas the right to take temporary possession was for the nominated undertaker. In short, the use of the power to take temporary possession under Schedule 5 is not a compulsory purchase but is the use of different powers.
62. Mr Barnes emphasised that the right exercised by Crossrail was a right to take possession only for a limited period. The exercise of the right was neither permanent nor did it involve the taking or acquisition of any interest in land. It could not be described as compulsory purchase.
63. Although Mr Purchas placed rule 10(6)(a) in the second rank of his argument, and despite Mr Barnes’ submissions to the contrary, we are satisfied that this reference can properly be regarded as involving proceedings for compensation for compulsory purchase. As a matter of ordinary language Crossrail has exercised a power compulsorily to acquire a right over the claimant’s land for which it is liable to pay compensation; it has purchased that right for the duration of its requirement for the land as a working site (which will exceed 8 years).
64. That the temporary possession in this case is for so prolonged a period is not in itself relevant, and much shorter periods ought to be treated in the same way for the purpose of the Tribunal’s power to award costs. Of more significance than the duration of the right in any individual case is the nature of the right. Paragraph 1(1) of Schedule 5 to the 2008 Act authorises Crossrail to enter upon and take possession of the land. Possession is the physical, single and exclusive control of land. It is more than occupation, as Denning LJ pointed out in Hills (Patents) Ltd v University College Hospital Board of Governors [1956] 1 QB 90:
“Possession in law is, of course, single and exclusive, but occupation may be shared with others or had on behalf of others.”
In Pye (Oxford) Ltd v Graham [2003] 1 AC 419 Lord Hope of Craighead explained:
“The general rule, which English law has derived from the Roman law, is that only one person can be in possession at any one time. Exclusivity is of the essence of possession.”
Thus, although we agree with Mr Barnes that the right to take possession of land does not create a freehold or leasehold title to the land or vest any such interest in Crossrail, it nonetheless confers control of the land and we do not consider that the duration of that right justifies the conceptual distinction between temporary possession and permanent acquisition which Mr Barnes relies on.
65. Nor do we consider that clues to the proper interpretation of rule 10(6) are to be found in the manner in which the draftsman of the 2008 Act has distinguished between temporary possession and permanent acquisition. Rule 10(6) is clearly intended as a classification of different types of proceedings in the Tribunal, which has numerous statutory jurisdictions many of which share common features. No attempt has been made comprehensively to list those jurisdictions in the rule, which suggests to us that the classification was intended to be broad rather than narrow. No reason of policy can be detected for distinguishing, for the purpose of the jurisdiction to award costs, between the taking of possession for a temporary period rather than permanently. In the same way no principled justification can be seen for distinguishing between different types of what can broadly be described as injurious affection. No such justification was attempted by the CRG or the TPC in their reports, the effect of which was that in the fields of compulsory purchase and injurious affection the former costs regime should be retained. We agree with Mr Purchas that an interpretation of rule 10(6) which required a fragmented and arbitrary division between and within proceedings generally concerned with the same subject matter is impossible to justify.
66. We therefore consider that the reference in rule 10(6)(a) to proceedings for compensation for compulsory purchase is wide enough to include proceedings for compensation where temporary possession is taken of land under statutory powers.
67. These conclusions make it unnecessary for us to consider the third ground on which Mr Purchas maintained an entitlement to the costs of the application to strike out the temporary possession reference. That alternative argument was that the costs incurred should fall within the scope of the claimant’s losses suffered by reason of the exercise by Crossrail of its powers under paragraph 1 of Schedule 5 to the 2008 Act. In any event, as Mr Barnes pointed out, if the claimant wishes to include the costs of the reference as part of the compensation to which it is entitled it should plead that as an additional head of loss which can be considered at an appropriate time.
68. In their letter to the Tribunal of 25 May 2015 Ashurst, Crossrail’s solicitors, confirmed that, should the Tribunal find that it has power to make an award of costs in relation to the reference, then it was agreed that the costs of the application to strike out the reference should be paid by Crossrail to the claimant. We are satisfied for the reasons given that the Tribunal has the necessary jurisdiction, and we so order.
Martin Rodger QC P D McCrea FRICS
Deputy President Member
18 June 2015