Acquisition of land by compulsory purchase for highway purposes — North-bound side of M5 — Compensation — Lands Tribunal holding compensation calculated on assumption that surrendered leasehold interest was interest with immediate right to vacant possession of surrendered premises — Secretary of State appealing on ground that compensation should have been calculated under Land Compensation Acts and Compulsory Purchase Act 1965 in relation to acquisition by compulsory purchase of company’s leasehold premises at time of entry — Appeal allowed
The land formed part of the Strensham Motorway Service Area, which was in the freehold ownership of the Secretary of State for Transport. It was demised to TKM’s predecessor until 2032 by a lease dated July 26 1982. By an underlease part of the land demised was sublet to Shell UK Ltd until 2008. In order to widen the M5 the Secretary of State made a compulsory purchase order in respect of part of the land. He then entered into an agreement whereby Shell and TKM surrendered their respective interests in return for payment to each of the compensation payable had the land been compulsorily acquired. Clause 4 of the deed of surrender provided that the consideration to be paid to TKM “shall be the amount of compensation…appropriate at the date of entry on the premises…”.
The Lands Tribunal held that such consideration was to be calculated on the assumption that the surrendered interest was an interest with an immediate right to vacant possession. The Secretary of State was required to pay compensation to Shell for the surrender of its interest; and to TKM for its interest assessed on the assumption that Shell’s interest did not exist. The Secretary of State appealed.
Held The appeal was allowed.
1. The consideration to be given for the surrender of TKM’s leasehold interest was the amount of compensation payable had it been compulsorily acquired and which was appropriate at the date of the Secretary of State’s entry on the premises.
2. At the time of his entry the interests of both Shell and TKM subsisted, as entry preceded surrender in each case.
3. The court in construing the deed of surrender was concerned with a sequence of events which occurred on the same day. As a general rule the law pays no regard to parts of a day. That was true for the calculation of a period of time but not for a sequence of events happening on the same day: see Eaglehill Ltd v J Needham Builders Ltd [1973] AC 992.
4. The principle of compensation for compulsory acquisitions was “equivalence”, ie the value of the acquired land. Compensation was assessed at the time of entry, ie the moment when the land was taken.
John Howell QC (instructed by the Treasury Solicitor) appeared for the Secretary of State for Transport; Christopher Cochrane QC (instructed by Davies Arnold Cooper) appeared for the company.