Compulsory purchase – Compensation – Agreement – Claimant’s land subject of compulsory purchase by acquiring authority – Reference to determine compensation payable to claimant compromised by agreement – Agreement providing for authority to pay fixed sum and all “pre reference costs” – Whether pre-reference costs confined to costs of preparing compensation claim – Whether other pre-reference costs included in fixed sum on proper construction of agreement – Preliminary issue determined
In March 2012, the claimant made a reference to the Upper Tribunal to determine the compensation due to him for the compulsory purchase of his land by the acquiring authority. In September 2013, the reference was compromised after mediation on terms that the authority agreed to pay, in full and final settlement of the reference claim, the sums listed in three following paragraphs, namely: (1) the sum of £475,000; (2) all the claimant’s “costs of and incidental to the reference”, with such costs to be assessed if not agreed; and (3) “all his pre-reference costs”, with such costs again to be assessed if not agreed.
A dispute arose as to whether the claimant was entitled to recover professional fees incurred up to February 2012, as set out in a schedule served as part of his statement of case in the reference; those costs primarily consisted of legal and other professional fees which were consequent on the compulsory purchase but which had been incurred prior to the actual referral to the Upper Tribunal. A preliminary issue was tried to determine whether such costs were included within the £475,000 compensation figure under para 1 of the compromise agreement or whether the claimant was entitled to recover them separately under para 3.
The claimant submitted that he was entitled to all of his pre-reference costs on the natural meaning of the compromise agreement. The authority argued that he was only entitled to his costs of preparing his claim, not to other costs conventionally referred to as “pre-referral costs”, because such costs were included within the main compensation payment under para 1 and so did not properly fall within the “pre reference costs” referred to in para 3.
Held: The preliminary issue was determined in favour of the claimant.
As a general rule, legal and other professional fees incurred in preparing a reference were recoverable as part of the compensation award, rather than being treated as part of the cost of the referral itself: London County Council v Tobin [1959] 1 All ER 649 applied. However, where parties reached a negotiated settlement or compromise, they were free to reach whatever agreement or terms they wished and to describe what they had agreed in any manner they wished. They could refer to the several heads of compensation separately or collectively as one global sum. There was no law controlling the meaning of words used within a negotiated compromise or how it was expressed. It was then a matter of construing the written compromise objectively.
As a matter of construction, the fact that pre-referral or pre-reference costs were in law regarded as part of awardable and recoverable “compensation” before the Upper Tribunal did not mean that the parties could not, or did not, agree to structure their compromise in a way which treated those pre-referral costs separately from other sums payable under their compromise agreement. Where such costs were itemised as a separate, unquantified but readily assessable item, the inexorable conclusion was that the parties meant what they said and that such costs should be assessed and payable separately from any other item payable under the agreement.
On the proper construction of the compromise agreement, the parties had agreed that, in addition to the £475,000 payable under para 1 and the post-referral costs payable under para 2, the acquiring authority was to pay the claimant’s costs prior to the referral in March 2012. That was what the agreement said. If the parties were to be treated as knowing and understanding that pre-referral costs were generally just one part of the “compensation for disturbance or dispossession” which the tribunal could have assessed, it was apparent that they had agreed, for whatever reason, that that element would be quantified separately from the elements of compensation on which the parties could agree. Moreover, the figure of £475,000 in para 1 was not defined as “compensation” but merely one of the sums which the authority had to pay as part of the “full and final settlement” of the claimant’s reference. It was therefore reasonable and proper to infer that the parties were unable to reach agreement as to the amount or quantum of pre-referral costs and had accordingly left it for later assessment. It would have been open to the parties to quantify both pre- and post-referral costs but they had chosen not to do so and had instead agreed to a mechanism, namely assessment, to resolve those issues. Had the parties intended that the pre-referral costs be limited to the preparation costs of the action or claim itself, the agreement would have so stated.
There was no reason why, as a matter of practicality, the tribunal could not assess pre-referral costs where that was what the parties had agreed. Had the matter proceeded to trial, the tribunal would have had to assess those costs as one of the elements of awardable “compensation”. It followed that the authority was to pay to the claimant his pre-referral costs, to be assessed by the tribunal as a question of fact, and dependent on their reasonableness, unless the parties reached agreement beforehand.
The claim was determined on the written representations of the parties.
Sally Dobson, barrister
Read a transcript of Bolton v Tameside Metropolitan Borough Council here
