Disturbance payments — Compulsory acquisition of business premises — Compensation — Proper construction of provisions for disturbance payments where personal lessee in occupation but company engaged in business — Whether loss of service agreement a consequential loss — Sum awarded as loss of goodwill — Council appealing against award — Appeal dismissed
Leasehold interests in offices at Lambpit Street, Wrexham, were compulsorily acquired by the appellant council on March 2 1990 for office and retail development. At those premises the respondent, M, had a lease for five years from 1987 where since 1972 he operated a business of life insurance and pensions (“Crest Life”) and other insurance business (“Crest”). M held three-quarters of the share capital in both companies and his wife held the other quarter.
He had a service agreement with Crest from 1979 which dealt with salary, expenses and his personal insurances. M moved Crest and Crest Life to alternative premises at Chirk, 10 miles south of Wrexham where the business of Crest was wound down and extinguished and Crest Life continued. He was awarded £9,000 for the leasehold interest on the premises in Wrexham and no issue arose on that part of the award. M was also awarded £61,068 as consequential loss in respect of the loss of his service agreement with Crest. It was held that Crest’s business started to be extinguished on the date when the council took possession in March 1990 and was finally extinguished at the new office premises at Chirk in October 1991. The value of the good will of that part of Crest’s business which was extinguished was assessed at £263,000 under section 37 of the Land Compensation Act 1973. The council appealed.
Held The appeal was dismissed.
1. M was himself the lessee of the offices and the only person with any obvious basis of claim as an expropriated owner. The businesses however which earned the living of M and his wife were those of Crest and Crest Life. There had been no formal arrangement of any sort regarding the use of the premises by Crest. The rent had been paid by Crest to the landlord out of the profits of the business and Crest obviously and to the knowledge of the landlord had been in occupation of the offices.
2. Under section 37 of the 1973 Act, where a person was displaced from any land in consequence of compulsory acquisition, he would be entitled to receive a disturbance payment from the acquiring authority provided, inter alia, he was in lawful possession of the land from which he had been displaced. In the context of the statutory provision, it seemed clear that “possession” meant physical occupation with the intention to exclude unauthorised intruders. It was expressly required to be lawful. To have lawful possession without a legal interest whether freehold or leasehold required that the person in possession had the permission of the owner who did have the legal right to possession. Crest and Crest Life had exclusive occupation from M who had been “possession” for the purposes of the section 37.
3. With regard to the service agreement, the council maintained that there was no such claim as the loss was too remote and was not shown to be the reasonable and natural consequence of the dispossession by the council. It only came about because of the extinguishment of Crest’s business. The question whether the loss of earnings suffered by M was caused by the compulsory acquisition was a question of fact for the tribunal, which had been decided in favour of M. The council had failed to identify any error of law in the holding that M was entitled to claim in respect of the loss of the service agreement and such a claim was not excluded merely because M had not been in occupation. It was not a claim excluded as being too remote in law.
Elizabeth Appleby QC and Robin Campbell (instructed by the solicitor to Wrexham Maelor Borough Council) appeared for the appellant; Michael Barnes QC and Kevin Barnett (instructed by Boote Edgar Esterkin, of Manchester) appeared for MacDougall.