Town and Country Planning Act 1971, section 177 — Compensation for loss due to stop notice — Appeal from Lands Tribunal — Basis of assessment of compensation challenged; liability to compensate not in issue — Planning authority after granting permission for development served an enforcement notice, followed by a stop notice, on the appellant on the ground that plans submitted had been inaccurate — Authority were wrong in taking this action — Appellant, who appeared in person, claimed compensation amounting to £426,000 — Lands Tribunal awarded £1,976 and appellant appealed
assessed compensation under two heads, (1) interest on expenditure incurred on
the development which had been stopped, and (2) deferment of the profit which
would have been made if the development had not been stopped — Appellant
submitted that the compensation should be measured by the sum which would put
the injured party in the same position as if he had not suffered the wrong done
to him; that the wrongdoer should take the victim as he finds him; and that the
wrongdoer cannot excuse himself by pointing to another cause of the loss or
injury — Appellant put forward a number of items expressed in somewhat general
terms, such as ‘damage by embarrassment and loss of credibility generally’ —
Tribunal rejected most of these claims on the grounds that they arose from the
appellant’s own impecuniosity (the Liesbosch principle) or were too remote
tribunal’s decision was correct in principle — A point had been raised below
which might have been relevant, namely, whether the land should have been
valued at the date of imposition of the stop notice at its then market value or
by historic cost — However, there was no evidence as to whether the land was in
fact then marketable and there were no grounds for criticising the tribunal’s
calculations or conclusion — Comment by Balcombe LJ that it was unfortunate
that a number of obvious errors in the figures in the case stated had not, ‘in a
document of this formality’, been corrected — Appeal dismissed
The following
cases are referred to in this report.
Liesbosch
Dredger v Edison [1933] AC 449
Livingstone v Rawyards Coal Co (1880) 5 App Cas 25, HL
This was an
appeal by case stated against the decision of the Lands Tribunal (the
President, Sir Douglas Frank QC: REF/114/1986 dated April 6 1987) by George
Thomas Graysmark, who challenged the basis of the compensation determined by
the tribunal under section 177 of the Town and Country Planning Act 1971. The
planning authority from whom the appellant claimed compensation was the South
Hams District Council.
The appellant
appeared in person; Brian Ash (instructed by Sharpe Pritchard, agents for
Windeatts, of Totnes, Devon) represented the respondents, South Hams District
Council.
Giving the
first judgment at the invitation of Kerr LJ, SIR ROUALEYN CUMMING-BRUCE said:
This is an appeal from a decision of the President of the Lands Tribunal, Sir
Douglas Frank QC, on his determination of the compensation to which the
appellant was entitled pursuant to his rights under section 177 of the Town and
Country Planning Act 1971.
It is
convenient to begin by reciting the relevant words of that section:
A person who,
when a stop notice under section 90 of this Act is first served, has an
interest in or occupies the land to which the stop notice relates shall, in any
of the circumstances mentioned in subsection (2) of this section, be entitled
to be compensated by the local planning authority in respect of any loss or
damage directly attributable to the prohibition contained in the notice . . .
There is no
issue in this case upon the facts, as has been held by the president in a
preliminary hearing; the planning authority were liable to compensate the
applicant for the loss or damage directly attributable to the relevant
prohibition, which was a stop notice issued pursuant to an enforcement notice
served on the applicant.
The background
of the matter can, in the circumstances, be very briefly summarised. The appellant,
who at the material time was engaged on an adventure by way of development of
land, applied for planning permission in respect of two contiguous parcels of
land, and planning permission was granted for development in accordance with
the plan annexed to the application for planning permission. As it turned out,
the local authority decided that the plans for which permission had been
granted were themselves inaccurate in relation to the dimensions of certain
boundaries and for that reason, although the development upon which the
appellant had embarked was development in accordance with the deposited plans,
the local planning authority purported to serve an enforcement notice upon the
appellant prohibiting him from continuing with the development, and they
followed that with a stop notice which remained in force for a period of 289
days. In the event it emerged that the local planning authority were not
entitled to take the course which they did and the consequence, when they came
to the question of compensation under section 177, was that the learned
president decided that the appellant would be entitled to be compensated for
any loss or damage directly attributable to the prohibition in the stop notice.
The learned
president determined that the amount of compensation payable to the claimant
was £1,976. Against that award the appellant appealed, first with an
application for a case stated, which he made to the president and which case is
now before us.
So one begins
by looking at the basis of compensation taken by the learned president, which
he describes as follows:
It
— the correct
basis of compensation —
falls under
two heads, namely, (1) the continuing interest on expenditure incurred on the
development prohibited by the stop notice and (2) the deferment of the profit
which would have been made on it. I believe I have sufficient evidence before
me to make an assessment under both heads.
The learned
president referred to a valuation which had been in evidence before him, which
was made by a surveyor who was a witness on behalf of the local planning
authority, as to which the learned president stated in his case that it was a
valuation which, after making certain adjustments, he adopted ‘in the following
form’; then there are set out the calculations which, under the two heads, led
to the amount determined by the president in the sum of £1,976.
It will be
seen that the basis of the calculation made by the learned president was an
attempt to consider what compensation fell under the head of ‘the continuing
interest on expenditure incurred on the development prohibited by the stop
notice’ and, second, ‘the deferment of the profit which would have been made on
it’. The appellant in this court, if I may say so, has made his submission
concisely and with great courtesy; if he will forgive my saying so, he is a
gentleman who is manifestly of substantial business experience who is well
capable of propounding the propositions he sought to make in this court. These
propositions are set out in writing in the notice of his contentions which we
have before us, dated June 5 1987, in which he has concisely summarised the
submission that he made before this court this morning. The substantial
contention that he has raised is set out in those contentions as follows:
The statement
of the general rule from which one must always start in resolving a problem as
to the measure of damages, a rule equally applicable to tort and contract, has
its origin in the speech of Lord Blackburn in Livingstone v Rawyards
Coal Co.* He there defined the
measure of damages as ‘that sum of money which will put the party who has been
injured, or who has suffered, in the same position as he would have been in if
he had not sustained the wrong for which he is now getting his compensation or
reparation’.
It has always
been the law of this country that a tortfeasor takes his victim as he finds
him. The work of the courts for years and years has gone on on that basis . . .
Where the
wrong is a tort, it is clearly settled that the wrongdoer cannot excuse himself
by pointing to another cause. It is enough that the tort should be a cause and
it is unnecessary to evaluate competing causes and ascertain which of them is
dominant.
*Editor’s
note: (1880) 5 App Cas 25.
It was that
approach that the appellant, as applicant, put forward for the consideration of
the learned president.
On the second
page of the decision of the Lands Tribunal annexed to the case stated, the
learned president sets out in eight items the heads of damage and the resultant
figures which the applicant pressed on him as being the appropriate approach
and the appropriate figures.†
† Editor’s
note: The eight items were as follows:
|
(1) Loss due to the additional costs in |
£84,101 |
|
(2) Damage and Loss due directly to the effect |
£115,500 |
|
(3) Damage due to loss of credibility with |
£48,000 |
|
(4) Damage by embarrassment and loss of credibility |
£20,000 |
|
(5) Damage due to worry and stress. |
£40,000 |
|
(6) Damage due to loss of a normal way of |
£52,500 |
|
(7) Damage due to loss of profit by sale of |
£56,000 |
|
(8) Cost of proceedings in the High Court. |
£10,000 |
The learned
president rejected the approach of the applicant on the ground that all the
figures in the eight items which were pressed upon him were founded on a
misunderstanding of the proper construction of the measure of damages enacted
in section 177, in that they were indirect rather than direct causes of damage.
In particular, the applicant, in his submission as to the relevant principle,
had not taken into account the familiar qualification of Lord Blackburn’s proposition
which is usually described as the principle in the Liesbosch*, that is
to say that loss which substantially arises by reason of impecuniosity, or
difficulty in raising finance for commercial adventure, is not damage which,
for the purposes of the law of damages, is to be regarded as directly flowing
from the tort, or in this case from the breach by the local authority which
gave rise to a section 177 claim. So the learned president applied the critique
of the Liesbosch to the items of damage alleged by the applicant, with
the result that he rejected altogether items 3, 4, 5, 6 and 7 and held that
item 8 was clearly too remote.
*Editor’s
note: The Liesbosch [1933] AC 449.
As to items 1
and 2, the learned president preferred the approach submitted on behalf of the
local planning authority, subject to certain adjustments which he made. Instead
of the eight items submitted by the applicant, the learned president set out
the effect of an attempt to calculate continuing interest on expenditure
incurred on the development prohibited by the stop notice and the deferment of
the profit which would have been made on it.
May I say, for
myself, that taking the matter of principle I have no hesitation in accepting
that the approach of the learned president was right and that the heads of
damage claimed in the eight items propounded by the applicant were not the
appropriate basis for compensation, both because of the operation of the Liesbosch
principle and because of the criticism that the items, in so far as they were
not covered by the principle, were too remote.
Having stated
that, there is little that can be said by way of elaboration. One point has
been argued by the appellant, in particular relating to an error of approach by
the learned president in relation to the interest charges on the value of the
land. Mr Graysmark has submitted, and submitted accurately, that, although
described as estimated value of land purchased in 1974, the relevant value of
the land is its value at the date of the stop notice, he having decided to put
the land on the market at that date. That, of course, is a far greater figure
than any value to be collected in the use of an historic costs assessment.
There might
have been something in that submission — I hope that is not an impolite way of
putting it — that in fact the land in question at the date of the stop notice
was being put on the market; but the whole approach is completely hypothetical
because in fact the appellant, having first decided to put the land at that
time on the market, thereafter, in spite of the extreme difficulties to which
he must have been put when the enforcement notice followed by the stop notice
was put on the development, decided to continue as best he could with such
development as he could. He was then encumbered and in grave difficulties in
obtaining the potential development value of the land because of his own
difficulties in obtaining financial facilities for the purpose of the work
which he then contemplated as otherwise practicable. His submission is that all
this flowed from the notice. The learned president rejected that, in my view
clearly rightly, because that kind of approach to the calculation of his damage
flies immediately in the face of the principle which I have, in shorthand,
described as the Liesbosch principle. For that reason the attempt of the
learned president to base the interest charge on historic cost as compared with
any hypothetical selling value at any given moment was clearly right.
I hope I have
done sufficient justice to the submission of the appellant. As I see it, it is
a question of principle. The principle applied by the learned president was, in
my view, the correct principle, and there is no ground shown for attacking the
calculations or inferences of fact which the learned president made, having
regard to the acceptance of that principle.
For those
reasons I would dismiss the appeal.
Agreeing,
BALCOMBE LJ said: This is an appeal by way of case stated, and the only question
before this court is whether the method of assessing compensation which the
learned president adopted was correct in law.
The appellant
before us, the applicant before the Lands Tribunal, had put in a claim under
the eight heads to which Sir Roualeyn Cumming-Bruce has referred, amounting in
all to a figure of £426,000-odd. Some of those heads, such as ‘Damage due to
loss of credibility with bankers’, ‘Damage by embarrassment and loss of
credibility generally’, ‘Damage due to worry and stress’ and ‘Damage due to
loss of a normal way of family life’, have only to be stated to make clear the
way in which the applicant was putting his case. This is unfortunate, because
there was one point below which may have been a relevant point, namely the
question whether the
notice should be valued by its then market value or by historic cost. In all
other respects I agree entirely with what has been said, namely that the
president was correct in rejecting the applicant’s claim on the basis that it
was his financial position, and not the stop notice, which prevented him from
carrying out his building programme.
In relation to
the question of the market value of the land as opposed to historic cost, all I
can say is that I know not whether the president had any evidence before him
which would have enabled him to reach a figure for the market value. As Sir
Roualeyn has said, there appears to have been no evidence at all that the land
was indeed then marketable. In those circumstances it seems to me that neither
the overall basis nor the particular basis of the method on which the president
assessed compensation can be attacked in any way.
I would not,
however, wish to leave this case without expressing my regret that the figures
in the case stated are in a number of particulars so clearly wrong that there
is an obvious error. It is unfortunate that errors of that nature — I refer in
particular to the calculation of interest and the date given for the estimated
cost of work on site — should not be corrected in a document of this formality.
Having said
that, I agree that this appeal must be dismissed.
Also agreeing,
KERR LJ said: I do not think that the errors which can be seen in the figures
have prejudiced Mr Graysmark. Indeed, approaching the assessment of loss on the
basis on which Sir Douglas approached it, Mr Graysmark may in some respects
have done better than he would have done otherwise.
As regards the
alternative way in which the case might have been put, by taking the value of
the whole site at the date of the stop notice and taking a loss of interest on
that value over the 289 days during which the notice operated, I doubt whether
this basis would have been appropriate or produced a better result for Mr
Graysmark. It would not have been appropriate because, as my lord has
mentioned, there was no evidence that Mr Graysmark intended to dispose of the
property in its then state at the time when the stop notice was wrongfully
imposed; nor indeed that the effect of the notice was to prevent him from
selling the site in its then condition.
Second, if the
matter had been approached in that way instead of making the calculation of
loss on the basis of the expenditure invested in the project, then Mr Graysmark
might well have been met with the point that at the end of the 289 days the
value of the site had in fact increased. Accordingly, there was no better way,
as far as I can see (and this may be a comfort to Mr Graysmark) in which his
claim could have been presented, and there is certainly no way in which this
court can interfere within the four corners of the case stated.
I would like
to echo what Sir Roualeyn has said by congratulating the appellant on the way
in which he has presented his case. Nevertheless, I agree that this appeal must
be dismissed.
The appeal
was dismissed with costs.