Compulsory purchase – Costs – Reference – Agreement for compensating authority to take temporary possession of claimant’s basement premises to use as working site in connection with Crossrail project – Upper Tribunal determining reference for compensation
In August 2007, the claimant entered into an agreement with the secretary of state for transport pursuant to which the compensating authority took temporary possession of the claimant’s premises in the basement of a property in London EC1 to use as a working site in connection with the Crossrail project. 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. As later enacted as para 1(4) and (5) of Schedule 5 to the Crossrail Act 2008, it provided for issues over compensation to be determined under and in accordance with Part 1 of the Land Compensation Act 1961. The authority took possession of the basement in January 2010 and it was anticipated that possession would be returned to the claimant in 2018.
The claimant sought compensation of £29.75m in respect of the basement premise. Its claim was referred to the Lands Chamber of the Upper Tribunal (UT), which rejected an application by the authority to strike out that reference.
An issue arose as to the UT’s power to award the claimant its costs in the proceedings. The authority contended that neither section 29 of the Tribunals Courts and Enforcement Act 2007 read with r 10 of the Tribunal Procedure (Upper Tribunal)(Lands Chamber) Rules 2010, nor the separate power in section 4 of the 1961 Act, conferred a power to award costs where the proceedings concerned the exercise of only temporary, rather than permanent, rights of possession. In relation to the 2010 Rules, it contended that the basement reference could not be characterised as proceedings for either “for compensation for compulsory purchase” or “injurious affection of land” within the meaning of r 10(6)(a) and (b) respectively. In relation to section 4 of the 1961 Act, it contended that no relevant interest in land was being acquired.
Held: The issue was determined in favour of the claimant.
(1) Section 4 of the 1961 Act provided a freestanding jurisdiction to award costs in the cases to which it applied. At first sight, the expression “acquiring authority” used in section 4 was not particularly apt to refer to a statutory undertaker exercising rights of temporary possession since the definition of that expression in section 39(1) of the 1961 Act was drafted with compulsory acquisition in mind. Nonetheless, the definitions in section 39(1) did not apply “where the context otherwise requires” and, when sections 1 and 4 of the 1961 Act supplied machinery for the resolution of disputes over compensation for the exercise of rights of temporary possession, the context clearly required that a broad approach be taken and “acquiring authority” be understood to mean the nominated undertaker who was obliged to pay that compensation. Likewise, the “land” in question should be understood to comprise rights over land, namely the right, conferred by para 1(1) of Schedule 5 to the 2008 Act, to use and temporarily possess the basement of the property: Padfield v Eastern Electricity Board (1972) 24 P&CR 423; 22 EG 735 and West Midlands Joint Electricity Authority v Pitt [1932] 2 KB 1 applied.
So far as para 1(5) of Schedule 5 to the 2008 Act expressly provided for determination of such disputes “under and in accordance with Part 1” of the 1961 Act, it was apparent that the whole of Part 1 was intended to be applicable and that, in particular, the section 4 costs regime was to apply to the resolution of disputes arising out of the exercise of the power of temporary possession. It followed that the costs regime provided by section 4 of the 1961 Act was available to the parties to the basement reference. That regime functioned independently of the 2010 Rules but did not confer an unrestricted jurisdiction on the UT in relation to costs. In particular, it did not permit the approach, of awarding a successful claimant its costs unless the acquiring authority achieved a more favourable outcome than it had previously offered. 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 UT’s award of compensation subsequently exceeded.
(2) However, the UT was not dependent on section 4 of the 1961 Act for its power to award costs in the instant case. It could also award costs under section 29 of the 2007 Act, which took effect subject to the 2010 Rules. The reference in r 10(6)(a) to proceedings for “compensation for compulsory purchase” was wide enough to include proceedings for compensation where temporary possession of land was taken under statutory powers. As a matter of ordinary language, the authority had exercised a power compulsorily to acquire a right over the claimant’s land for which it was liable to pay compensation. It had purchased that right for the duration of its requirement for the land as a working site, which would exceed eight years. The prolonged length of the period was not in itself relevant and much shorter periods should be treated in the same way for the purpose of the UT’s power to award costs; the nature of the right was more significant than its duration in any individual case. Paragraph 1(1) of Schedule 5 to the 2008 Act authorised the authority to enter on and take possession of the land. While the right to take possession of land did not create a freehold or leasehold title to the land or vest any such interest in the authority, it nonetheless conferred control of the land. The duration of that right did not justify a conceptual distinction between temporary possession and permanent acquisition. Rule 10(6) was intended as a classification of different types of proceedings in the UT, which had numerous statutory jurisdictions many of which shared common features. The classification was intended to be broad rather than narrow and there was no reason of policy for distinguishing, for the purpose of the jurisdiction to award costs, between the taking of possession for a temporary period rather than permanently.
(3) Had the basement reference not concerned compensation for “compulsory purchase” within the meaning of r 10(6)(a), no power to award costs could have arisen under r 10(6)(b) dealing with “injurious affection”. Injurious affection generally connoted damage to land which would have been wrongful but for the existence of statutory powers. Moreover, it generally connoted damage to land caused by activity conducted elsewhere. It was not apt to describe activity which, but for statutory authority, would amount to trespass. A claim for compensation for loss suffered as a result of the exercise of a power to enter on and take possession of land was not properly described as a claim in proceedings for injurious affection of land. The loss which had been sustained was not consequent on damage to land, but was instead the result of the claimant being kept out of its land for the duration of the authority’s works. Rule 10(6)(b) conferred no power to award costs in such proceedings.
Robin Purchase QC and Rebecca Clutton (instructed by Bircham Dyson Bell LLP) appeared for the claimant; Michael Barnes QC and Eian Caws (instructed by Ashurst LLP) appeared for the compensating authority.
Sally Dobson, barrister
