Compensation – Compulsory Purchase Act 1965 – Respondent constructing outer harbour pursuant to statutory powers – Claimant alleging that works changing tidal flow so as to cause collapse of cliff including part of claimant’s land – Claim for compensation for injurious affection pursuant to section 10 of 1965 Act – Whether such claim available – Whether cost of works to remedy damage and improve sea defences recoverable under section 10 – Preliminary issues determined in favour of claimant
The claimant owned a holiday village at Hopton-on-Sea, Norfolk. The holiday park comprised roughly 962 holiday caravans with recreational and other facilities and was located close to a beach known as Hopton Beach. Between 2007 and 2008, the respondent harbour authority constructed an outer harbour at Great Yarmouth, about 3.5km away from Hopton Beach, pursuant to powers conferred by the Great Yarmouth Outer Harbour Act 1986.
In 2013, a timber revetment forming part of the sea defences at Hopton Beach failed and part of the cliff collapsed, including part of the claimant’s land. The claimant carried out works to make good the damage and to repair and improve sea defences to provide longer-term protection. It brought a claim against the respondent for compensation under section 10 of the Compulsory Purchase Act 1965, claiming that the damage had been caused by the construction of the outer harbour. It alleged that completion of the outer harbour had changed the tide-flow patterns in the vicinity, increasing erosion in such a way as to cause the failure of part of the sea defences at Hopton Beach and resulting in a loss of beach and damage to and loss of cliff, including part of the claimant’s land. The claimant sought to recover the cost of carrying out the works, losses associated with the maintenance and monitoring of the works, operational losses and diminution in the value of the reference land as a result of the loss of beach.
Preliminary issues were tried as to whether, on the proper construction of the 1986 Act, section 10 of the 1965 Act applied to the claim at all and, if so, whether compensation under that section could extend to the types of losses claimed by the claimant or was limited to the diminution in the open market value of land or interests in land. There was also a preliminary issue as to when the claimant’s cause of action arose for the purposes of section 9 of the Limitation Act 1980.
Held: The preliminary issues were determined in favour of the claimant.
(1) On the proper construction of the 1986 Act, section 10 of the 1965 Act applied in principle to the construction of the outer harbour. Section 10 of the 1965 Act provided a substantive right to compensation and did not depend on the land said to be injuriously affected having been compulsorily acquired. All that was required was that land or an interest in land had been injuriously affected by the construction of the depend on the existence or use of compulsory purchase powers. So far as section 4 of the 1986 Act provided that section 10 of the 1965 Act “shall apply to the compulsory acquisition of land under this Act”, that did not mean that Part I of the 1965 Act only applied where land was actually compulsorily acquired. Since section 10 applied where there had been no compulsory purchase, the inclusion of those words was not determinative. Instead, a broad and purposive approach should be adopted, and section 4 contained a clear indication that compensation should be payable under section 10 of the 1965 Act. Moreover, section 4 specifically stated that Part I of the 1965 Act was to apply “as if this Act were a compulsory purchase order”. It did not matter that the land on which the works were executed had originally been acquired pursuant to a different Act (the Great Yarmouth Port and Haven Act 1866) from the one that authorised the compulsory acquisition of land for the outer harbour and the construction of that harbour: Moto Hospitality Ltd v Secretary of State for Transport [2007] EWCA Civ 764; [2008] 1 WLR 2822 applied.
(2) To allow a claim in compensation would not be inconsistent with the provisions of the Outer Harbour Act or cut across the mechanism set out in the Act. The 1986 Act did not impose a statutory duty to prevent increased coastal erosion and provided only a partial remedy where that did occur. While it made extensive provision for remedial works where coastal protection structures were adversely affected, whether those are in public or private ownership, no provision at all was made for remedying any damage to other land. Instead, the relevant statutory duty was that imposed by section 4 to pay compensation for injurious affection. There was no conflict between the statutory duty to carry out works and the interests of a landowner claiming compensation for damage to land from the same cause. So far as that gave rise to the possibility of the respondent having to pay twice for the same thing, it would be for the respondent and other authorities as to what work was undertaken and any claim for compensation would be determined on that basis: Glossop v Heston and Isleworth Local Board (1878) 12 Ch D 102 considered; Marcic v Thames Water Utilities Ltd [2003] UKHL 66; [2004] 2 AC 42 distinguished.
(3) A claim for compensation under the 1965 Act could only arise if the claimant would have had a claim in nuisance but for the statutory authority for construction of the outer harbour. The relevant claim would be that the construction of the outer harbour, by altering the coastal drift with consequent erosion to Hopton Beach, had caused direct physical injury to the claimant’s land and materially interfered with the enjoyment of easements. If that was the foreseeable consequence of construction of the outer harbour, then there was no reason in principle why it would not be an actionable nuisance in the absence of the statutory authority: Hunter v Canary Wharf Ltd [1997] AC 655; [1997] PLSCS 108 distinguished.
(4) The compensation that could be claimed under section 10 of the 1965 Act might not always be the same as the measure of damages for nuisance. Although personal losses, whether related to a business or otherwise, were not recoverable under section 10 of the 1965 Act, business losses which affected the value of land value were recoverable: Argyle Motors (Birkenhead) Ltd v Birkenhead Corporation [1975] AC 99 and Wildtree Hotels Ltd v Harrow London Borough Council [2001] 2 AC 1; [2000] 2 EGLR 5 applied. Section 10 granted a claim for compensation for damage to land or any interest in land and there was no reason why, in an appropriate case, the compensation should not include the cost of remedial work: Clift v Welsh Office [1999] 1 WLR 796 applied. It made no difference that the works to abate the nuisance might have to be carried out on another’s land. However, a landowner was entitled to no more than fair and reasonable compensation and was under an obligation to mitigate his loss, such that, if the cost of remedial works exceeded the diminution in value of the land, the court might find that the latter was the proper measure of compensation, unless there were other relevant considerations that made the remedial works reasonable. The claimant asserted that, in carrying out the remedial works, it had acted reasonably to protect its land from the consequences of the erosion and to prevent further damage. It would be a matter for evidence at the full hearing as to whether the claimant could substantiate those claims. If it was reasonably foreseeable that the effects of the outer harbour would continue to cause damage to the claimant’s land in the future, and that the sea defence works were reasonably necessary to protect against such future loss, then was no reason in principle why the cost of those works was not recoverable as compensation, subject to the claimant being able to demonstrate that it acted reasonably to mitigate such future loss.
(5) No claim could be brought under section 10 until loss had actually been suffered. A claim could not arise under section 10 unless and until a claim would have arisen in nuisance, but for the statutory authority. A claim in nuisance did not arise until direct physical damage was suffered or there was substantial interference with enjoyment of an easement. It followed that the claimant’s right to compensation arose on proof of physical damage to its land or substantial interference with an easement. Accordingly, its cause of action therefore did not accrue, for limitation purposes, until physical damage to the reference land or substantial interference with an easement was caused.
John Howell QC and Matthew Reed (instructed by Hill Dickinson LLP) appeared for the claimant; Gregory Jones QC and Richard Honey (instructed by Burges Salmon LLP) appeared for the compensating authority.
Sally Dobson, barrister
Click here to read transcript: Bourne Leisure (Hopton) Ltd v Great Yarmouth Port Authority
