Estoppel by convention – Compulsory purchase – Parties negotiating amount of compensation six years after expiry of relevant limitation period for bringing Lands Tribunal claim – Whether acquiring council estopped from relying on limitation defence
In early April 1982 the claimant highway authority (the council), having served a notice to treat, entered land belonging to the defendant (ARC) pursuant to a compulsory purchase order that had been confirmed in December 1981. In April 1982 ARC returned a claim for compensation. In October 1988 the council wrote to ARC indicating that they wished to finalise the amount of compensation as soon as possible. Letters in a similar vein were sent by the council in March 1989 and in June and July 1990. In August 1991 ARC submitted a revised claim for compensation, following which the council took legal advice as to whether the claim was statute-barred. In January 1992, following correspondence and discussions on the amount claimed, ARC sent a further revised claim for £83,487.
Over the following two years, there was further correspondence between the parties, towards the close of which the council complained of “the inability of your company to provide sufficient details for the claim to be properly proven”. ARC formally reserved its right to refer the matter to the Lands Tribunal.
In March 1994 the council sent a letter (the first 1994 letter) stating that they were considering whether ARC’s claim was out of time. By a letter of October 1994 (the second 1994 letter), the council formally rejected ARC’s claim on the ground that the six-year period imposed by section 9 of the Limitation Act 1980 (sums recoverable by statute) had expired. In September 1995 ARC referred its claim to the Lands Tribunal, which declined to deal with a preliminary point on limitation.
In April 1998 the parties obtained a preliminary ruling from the Court of Appeal (see Hillingdon London Borough Council v ARC Ltd [1998] 3 EGLR 18; [1998] PLSCS 123) that, unless the council’s conduct was subsequently shown to lead to a different outcome, the relevant limitation period for an application to the Lands Tribunal expired in April 1988. In subsequent High Court proceedings, the trial judge accepted ARC’s submission that the communications between the parties had given rise to an estoppel by convention, which had disabled the council from asserting a limitation defence. The council appealed.
Held: The appeal was allowed.
1. While a party could, in certain circumstances, be estopped from raising a time-bar (see, for example, Co-operative Wholesale Society Ltd v Chester-le-Street District Council [1998] 3 EGLR 11; [1998] EGCS 76), it was clear that the necessary common assumption (whether as to a fact or a proposition of law) had to have been the subject of a communication that had “crossed the line” between the parties. There was no scope for the doctrine where the parties had made the assumption independently of each other: see K Lokumal v Lotte Shipping Co Pt (The August Leonhardt) [1985] 2 Lloyds Rep 28; Norwegian American Cruises A/S v Paul Mundy Ltd (The Vistafjord) [1988] 2 Lloyds Rep 343; and Republic of India v India Steamship Co Ltd (The Indian Endurance) [1988] AC 878 per Lord Steyn at p913.
2. There was no authority for the proposition that a party was disentitled from relying upon a limitation defence merely because he had continued to negotiate after the expiry of the limitation period, without anything being said about how the claim was to be resolved if negotiations broke down.
3. The evidence did not support the judge’s conclusion that the only sensible explanation of the correspondence in 1989 was that both parties believed that ARC had a valid compensation claim. From February 1989 the council had consistently taken the view that the claim was invalid for insufficiency of evidence. ARC could not show that the basis upon which negotiations proceeded, post-April 1988, was a shared assumption, communicated one to another, that no limitation defence would be relied upon.
4. If there had been such an assumption, the effect of the first 1994 letter would have been to give ARC a reasonable time (measured in weeks, rather than days or months) to react to the disappearance of the assumption. On any basis, a delay of eleven months after the second 1994 letter was too long.
Joseph Harper QC (instructed by the solicitor to Hillingdon London Borough Council) appeared for the appellants; Neil King QC (instructed by Lawrence Tucketts, of Bristol) appeared for the respondent.
Alan Cooklin, barrister
