Compulsory purchase — Compensation — Limitation period — Reference to Lands Tribunal — Expiration of statutory time-limit — Estoppel by convention — Whether acquiring authority estopped from relying on expiration of time-limit
In Hillingdon London Borough Council v ARC
Ltd [1998] 3 EGLR 18 the Court of Appeal affirmed the decision of the court
below that the claimant’s right to compensation was time-barred, unless, by
reason of the acquiring authority’s conduct in relation to the claim, the
acquiring authority were not entitled to rely on section 9 of the Limitation
Act 1980. No reference had been made to the Lands Tribunal for the
determination of the compensation within six years of the date of entry by the
acquiring authority on the claimant’s property in April 1982. In a further
hearing, the claimant contended that the acquiring authority were estopped by
convention from relying on section 9 because, for many years after the
expiration of the six-year time-limit, the parties had conducted negotiations about
the compensation on the common assumption that no time-limit applied. The
claimant adduced evidence of the course of negotiations between the parties up
to 1995, when the claimant made a reference to the Lands Tribunal, including an
agreement in September 1990 to pay the claimant’s surveyor’s fees and a meeting
in March 1992, when the acquiring authority’s representative said that when
certain detailed aspects of the claim were clarified, the claim could be
decided within two weeks.
on the expiration of the time-limit. Between April 1988, when the limitation
period expired, and March 1989, both parties believed that the claimant had a
valid claim. By September 1990 the inference to be drawn from the whole of the
evidence was that both parties were dealing with the claimant’s claim for
compensation on the basis that it was a valid claim capable of being resolved
by negotiation or referred to the Lands Tribunal if settlement could not be
reached. Nothing happened after September 1990 to undermine the conclusion
that, by that date, an estoppel by convention had been established.
The following cases are
referred to in this report.
Amalgamated Investment & Property Co Ltd v Texas Commerce International Bank Ltd [1982] QB 84; [1981]
3 WLR 565; [1981] 3 All ER 577; [1982] 1 Lloyd’s Rep 27, CA
Co-operative Wholesale Society v Chester-le-Street District Council (1996) 73 P&CR 111;
[1996] 2 EGLR 143; [1996] 46 EG 158
Hillingdon London Borough Council v ARC Ltd [1999] Ch 139; [1998] 3 WLR 754; [1998] 3 EGLR 18; [1998] 39 EG
202; affirming [1998] 1 WLR 174; [1997] 3 All ER 506; 96 LGR 131; [1997]
2 EGLR 21; [1997] 29 EG 125
Indian Endurance (No 2); Republic of India v India Steamship Co Ltd [1997] 4 All ER 380
This was a further
hearing in proceedings by the plaintiffs, Hillingdon London Borough Council,
relating to the validity of a reference by the defendant, ARC Ltd, of a claim
for compensation to the Lands Tribunal.
Joseph Harper QC (instructed by the solicitor to
Hillingdon London Borough Council) appeared for the plaintiffs; Neil King
(instructed by Lawrence Tuckett, of Bristol) represented the defendant.
Giving judgment, JUDGE PRYOR QC said: This is the second round of a
dispute in which ARC Ltd is claiming compensation from Hillingdon London
Borough Council for compulsory purchase of part of its land. In the first round
(see Hillingdon London Borough Council v ARC Ltd [1998] 1 WLR
174*) Mr Stanley Burnton QC decided that ARC’s claim was statute-barred unless,
by reason of their conduct in relation to the claim, Hillingdon were not
entitled to rely on section 9 of the Limitation Act 1980. That decision was
upheld by the Court of Appeal on 7 April 1998: see Hillingdon London Borough
Council v ARC Ltd [1998] 3 WLR 754†.
*Editor’s note: Also reported at [1997] 2 EGLR
21; [1997] 29 EG 125
†Editor’s note: Also reported at [1998] 3 EGLR
18; [1998] 39 EG 202
In answer to that setback, ARC now contends that
Hillingdon are estopped from relying on section 9. Put very shortly, the
contention is that, for many years after the expiry of the relevant six-year
time-limit, the parties conducted negotiations about the compensation claim on
the common assumption that no time-limit applied and that, if they were not
able to reach agreement, the matter could be referred to the Lands Tribunal. It
would now be unfair to allow Hillingdon to go back on that assumption. That
contention is based mainly upon a decision of Judge Bernard Marder QC,
president of the Lands Tribunal, in the case of Co‑operative Wholesale
Society v Chester-le-Street District Council (1996) 73 P&CR
111‡. That case concerned a claim for compensation under the Compulsory Purchase
(Vesting Declaration) Act 1981. Section 10(3) of that Act provides as follows:
the time within which a question of disputed
compensation arising out of an acquisition of an interest in land in respect of
which a Notice to Treat is deemed to have been served by virtue of Part III of
this Act may be referred to the Lands Tribunal shall be six years from the date
at which the person claiming compensation, or a person under whom he derived
title, first knew or could reasonably be expected to have known of the vesting
of the interest by virtue of Part III of this Act. This sub-section shall be
construed as one with Part I of the Limitation Act 1980.
‡Editor’s note: Also reported at [1996] 2 EGLR
143; [1996] 46 EG 158
In relation to that subsection, the president said
at p120 of the report:
the subsection will apply only where an interest
in land has become vested in an acquiring authority in consequence of a general
vesting declaration, a form of procedure first introduced for general use in
1968. Thus where an acquiring authority chooses to proceed in pursuance of a
compulsory purchase order by the more conventional route of a notice to treat
followed by notice of entry, there is no statutory time limit for a reference
of disputed compensation to the Lands Tribunal. On the other hand, where the
acquiring authority proceeds as in this case by way of a general vesting
declaration, then the effect of the case of Royal Bank of Scotland v Clydebank
District Council (1992) SLT 356, on identical Scottish provisions, is that
after the expiry of the six-year period the landowner has no enforceable right
to any compensation for the land taken and
however, that this could be the consequence of any statutory time-bar, for
example in relation to a contractual debt.
In saying that where the conventional route was
followed there was no statutory time-limit for a reference of disputed compensation
to the Lands Tribunal, the president was expressing what was then a widely held
view: see also the decision of the Court of Appeal in this dispute to which I
have already referred [1998] 3 WLR 754 at p757H. In Chester-le-Street,
of course, there was no dispute about the statutory time-limit. The land in
question in that case became vested in the council on 10 October 1986 and it
was agreed that the six-year time-limit therefore expired in October 1992.
There were negotiations between the parties about compensation, but no
agreement was reached, and a reference was made to the Lands Tribunal on 23
August 1994, nearly two years out of date. I need not refer to the history of
those negotiations, which is fully set out in the report. It is enough to quote
the decision on which ARC now relies, as set out in the headnote at p111 of the
report:
held, deciding the preliminary point of law in
favour of CWS, that the time-limit in section 10(3) of the 1981 Act was capable
of being waived either expressly or by conduct; that the evidence established
estoppel by convention as both parties had been proceeding on the common
assumption that they were negotiating a settlement of a valid claim for
compensation without regard to the statutory limitation period and on the basis
that if agreement could not be achieved the matter could be referred to the
tribunal, and it would now be unconscionable for the authority to seek to rely
on the limitation point; there was also promissory estoppel in that the
authority’s negotiations after the time‑limit had expired amounted to a
representation that the authority would not rely on that limit and CWS had
materially altered its position as a result of that assurance by continuing to
employ a valuer to negotiate on its behalf, the authority must also be taken,
by its actions, to have waived the time-bar.
That decision was upheld by the Court of Appeal on
6 May 1998.
For his decision on estoppel by convention, the
president of the Lands Tribunal had relied principally on a passage from the
judgment of Lord Denning MR in Amalgamated Investment & Property Co Ltd
v Texas Commerce International Bank Ltd [1982] QB 84 at p122 where he
said:
when the parties to a transaction proceed on the
basis of an underlying assumption, either of fact or of law, whether due to
misrepresentation or mistake makes no difference, on which they have conducted
the dealings between them, neither of them will be allowed to go back on that
assumption when it would be unfair or unjust to allow him to do so.
I should also refer to a passage from the opinion
of Lord Steyn in Indian Endurance (No 2); Republic of India v India
Steamship Co Ltd [1997] 4 All ER 380 at p391h, where he said:
it is settled that an estoppel by convention may
arise where parties to a transaction act on an assumed state of facts or law,
the assumption being either shared by them both or made by one and acquiesced
by the other. The effect of an estoppel by convention is to preclude a party
from denying the assumed facts or law if it would be unjust to allow him to go
back on the assumption… it is not enough that each of the two parties acts on
an assumption not communicated to the other. But it was rightly accepted by
counsel for both parties that a concluded agreement is not a requirement for an
estoppel by convention.
Mr Neil King, on behalf of ARC, argues that an
estoppel by convention arises in this case so as to preclude Hillingdon from
relying on the statute of limitations. To see whether that argument can be made
good it is necessary to look at the history of the claim and the negotiations
that have taken place in some detail.
The starting point is a lease dated 23 March 1972
by which ARC (then known as Amey Roadstone Corporation Ltd) became the tenant
for a term of 35 years from 25 December 1970 of premises at West Drayton
Aggregates Depot. On 24 December 1980 Hillingdon made a compulsory purchase
order relating to land that formed part of that depot. The object was to
acquire land on which supports for a single carriageway road were to rest and
the airspace above the land through which the road would pass. On 21 December
1981 the compulsory purchase order was confirmed by the Secretary of State
without any amendment. There followed a notice to treat on 22 March 1982 and a
notice of intention to enter on 7 April 1982 stating that Hillingdon intended
to enter the relevant land on or after 26 April 1982. Entry did in fact take
place on about that date and construction works, later known as the phase I
works, began shortly afterwards. Meanwhile, on 19 April 1982 ARC had served a
claim in answer to the notice to treat. The total sum claimed, under three
separate heads — namely the value of the land taken, injurious affection and
disturbance — was £400,000. Hillingdon replied to that letter on 5 May 1982
pointing out that a detailed breakdown of the sums claimed under each head
would be required.
The next point of significance was a meeting on 12
April 1983 between representatives of Hillingdon and ARC at which, among other
things, Hillingdon proposed that the opportunity should be taken to construct a
second carriageway alongside the single carriageway covered by the compulsory
purchase order. ARC was content that the additional work should be carried out
straight away so as to avoid later disruption and confirmed that, as far as it
was concerned, the situation could continue until it was regularised by
necessary paperwork and agreements. That was subsequently confirmed by a letter
dated 20 April 1983, which included this paragraph:
I believe that the other point of concern was the
Borough’s early entry onto land not covered by the Compulsory Purchase Order to
build the foundation for the second carriageway bridge pier. Whilst in the long
term there will probably be advantages in concentrating the disturbance now,
the Company can only agree to this occupation if the Borough will pay all the
Company’s reasonable costs and expenses whether or not covered by statute,
along the lines we discussed at our meeting.
There was no express answer to that suggestion in
the correspondence, but it seems to have been agreed by implication at least
because the column basis and columns for the proposed second carriageway were
in fact completed, apparently without any complaint from ARC, in about August
or September 1983. Later references in the correspondence show that this
informal approach to the works relating to the second carriageway (the phase II
works) continued throughout. For example, on 22 April 1985 Hillingdon were
writing to ARC in these terms:
Regarding the construction of the second
carriageway for the Yiewsley bypass we are now expecting to be able to make a
start on this work within a few weeks. The main items of accommodation works
for ARC have already been agreed with you, such as the new store building,
payment for the car parking area and the working space required for the bridge
construction. Nevertheless, before work on site commences I will contact you
with a view to arranging a meeting to keep you informed and iron out any minor
points.
ARC seems to have co-operated fully in allowing
the works to be carried out so Hillingdon never needed to invoke compulsory
powers. The land occupied by the second carriageway has never been formally
conveyed to Hillingdon, nor has there been anything in the nature of a vesting
declaration; indeed, no formalities at all. However, the phase II works were
completed by the end of May 1987 and the second carriageway was officially
opened on 2 June 1987. What claims, if any, ARC may have in respect of the
phase II works has not been agreed between the parties; nor, perhaps more
important, has it been agreed when such claims might become timed-barred, but 1
June 1993 (six years after completion) is suggested. These points do not arise
for determination in this case. I mention them only because arguments have been
advanced about the impact of the limitation period in respect of the phase II
works on any common assumption the parties may have had about limitation in
respect of the phase I works. I will come back to those arguments later.
Returning to the history of the claim, I can take
it up at 19 March 1987, when Hillingdon’s principal valuer wrote to ARC saying
that he would like to settle the outstanding matters as soon as possible. Later
that year, on 7 October 1987, he wrote again in these terms: ‘I would now like
to conclude this claim as soon as possible and, if the matter is not going to
be capable of settlement by agreement, I would wish to
that letter was addressed to a Mr Francis Thompson, a surveyor who was then
employed by ARC in its lands department. He left ARC on 30 June 1989 and went
to Strutt & Parker, but came back to the case at the end of 1990 when
Strutt & Parker was instructed by ARC to act on its behalf.
On 21 October 1987 Mr Thompson replied to the last
letter I mentioned saying that, owing to changes in personnel, he would have to
search through the file in order to substantiate ARC’s claims. He also referred
to a possible problem about the means of egress from the site. Hillingdon’s
valuer replied promptly on 27 October offering a meeting to sort out possible
problems. Then there was a gap until 10 March 1988, about six weeks before the
expiry of the limitation period, when he again wrote to Mr Thompson inquiring
whether he was now in a position to finalise the matter. Mr Thompson did not
write back until 13
by the last sentence of his letter, which reads: ‘I understand that the road
access is about to be permanently resolved and the compensation claim should
now be capable of resolution.’ That letter was answered on 10 March 1989 by a
new valuation officer at Hillingdon, who said: ‘I agree with you, it should now
be possible to resolve the compensation payable to your company due to the
Yiewsley bypass works. If you will submit your claim I will endeavour to reach
agreement with you as Mr Douglas has left us for greener pastures.’ This letter
was, of course, written some 11 months after the expiry of the limitation
period. Nevertheless, nothing seems to have happened for more than a year. Then
on 22 June 1990 Hillingdon’s valuer wrote again, referring to the earlier
correspondence and continuing: ‘you will be aware that we are awaiting further
details of your claim. We are near to the point of closing down the accounts
for this scheme and it has become necessary to ask if you intend to pursue your
claim’. That elicited a relatively prompt reply from ARC on 29 June confirming
that the company would be pursuing the claim, but adding the potential
complication that it would be dealt with by the Wessex Area Office at Frome in
Somerset. On 31 July 1990 Hillingdon’s valuer wrote again, reaffirming that the
council’s accounts for the scheme were to be closed and it was important that
some progress be made with respect to ARC’s claim. That letter was answered on
4 September 1990 by Mr Dutson, who had taken the matter over on behalf of ARC,
in these terms:
Further to your letter of 31st July, the only way
I can see to resolve this matter quickly is by appointing an outside agent to
act on behalf of ARC. Please would you confirm that you will bear this agent’s
fee as is normal, and then I will appoint a suitably qualified person to act on
our behalf.
Hillingdon’s valuer replied on 21 September 1990
confirming that the council would meet the cost of ARC’s surveyor’s fees ‘but
only in accordance with Ryde’s Scale’.
Following that exchange, Mr Thompson, now of
Strutt & Parker, was instructed by ARC and on the 15 January 1991 he wrote
to Hillingdon seeking to arrange a meeting to discuss the claim further.
Unfortunately, the council’s principal valuer was about to leave and it was not
until 4
who had by then taken up the post and still holds it. After the meeting, on
20
to Mr Chambers giving general information about ARC’s claim and suggesting a
series of meetings in the near future during which the claim might be resolved.
Mr
17 September 1991. Before doing so, he had referred the matter to Mr Dickinson,
the borough solicitor, in a note dated 13
letters he had received and saying: ‘before I reply, I should be grateful if
you would please confirm that the claim is not statute-barred’. According to
the evidence of both Mr
was given to that question at the time, but both of them thought the point
might be a good one and that, in due course, they would need to take specialist
advice about it. However, it was not raised with ARC at the time. In his letter
of 17 September, Mr Chambers simply noted that the compensation claim was of
the order of £1.2m and said that he looked forward to receiving a detailed
breakdown of the claim. Mr Thompson then sent what he described as a detailed
breakdown on 2
1992, before which Mr Chambers had again taken the precaution, on
8
claim was time-barred, because, as he put it in a contemporaneous note, he did
not want to prejudice the council’s position at the meeting. Again it does not
appear that any definitive advice was given and the meeting duly took place.
Both Mr Chambers and Mr Thompson made notes at the meeting and they were put in
evidence. Both notes record that Mr
application for an advanced payment of compensation under section 52 of the
Land Compensation Act 1973. Mr Chambers’ note records his reaction as follows:
I told him I was in no position to make any
estimate for anything other than the land taken element since I have not yet
been provided with anything on which to base an opinion, eg certified accounts
over the period plus receipts etc.
The corresponding entry in Mr Thompson’s note
reads as follows:
KC (Mr Chambers) responded that without proof, he
would be compelled to make a nil valuation or at best a nominal valuation and
the whole matter would proceed to the Lands Tribunal. FJT (Mr Thompson) thought
the matter would proceed to the Lands Tribunal in any event.
Neither party sent his note to the other for
agreement, but on the whole of the evidence including oral evidence given by
both Mr
of the notes was other than accurate. I think it is quite clear that Mr
was assuming that the claim would be taken to the Lands Tribunal if it could
not be settled. In evidence he said that there was obviously a question about
the staleness of the claim but he was not aware of any set legal time-limit. He
said it would have been a complete surprise to be told that the claim had
become statute-barred in April 1988. Mr Chambers was, of course, aware of the
possibility of a statutory time-limit, because he had already raised it with
Mr
any other representative of ARC, partly because he had received no clear advice
about it and partly because he took the view that ARC had not provided enough
detailed information to substantiate its claim. That remained his view
throughout. As he said in his written witness statement: ‘so far as I was
concerned, and in so far as I can determine my predecessors were concerned, we
adopted a ‘wait and see’ attitude; there was no negotiation because there was
nothing to negotiate about’. That is an important piece of evidence because it
is part of Hillingdon’s case that ARC has never put forward a valid claim that
could ever be the subject of a submission to the Lands Tribunal. There can
therefore have been no common assumption between the parties that they were
negotiating a settlement of a valid claim, such as that advanced in the CWS
case.
Whether or not the parties could properly be
described as negotiating, they certainly continued to communicate about a
possible claim. Mr Thompson wrote to Mr Chambers on 24 January 1992 about their
earlier meeting and then there was a further meeting on 5 March 1992, attended
by Mr Chambers, on behalf of Hillingdon, and Mr
Smith on behalf of ARC. Again, separate notes of the meeting were made on each
side, Mr Thompson’s being much the longer. ARC’s claim was discussed under
several different heads and in a certain amount of detail, but, as Mr Chambers
appears to have pointed out from time to time, no contemporaneous records such
as accounts, auditor’s reports, invoices, receipts or other records were
available to support it. Indeed, in his own note made after the meeting, he
said: ‘they will go away and restructure their claim in conjunction with
Certified accounts, receipts etc’. After the meeting, on 10 April 1992 he wrote
to Mr Thompson in these terms:
Further to our recent meeting and subsequent
telephone conversation I write to confirm that in view of the need to avoid
‘double counting’ I feel that this matter is best dealt with as one claim
rather than attempting to deal with the ‘land taken’ elements first and the
injurious affection etc at a later date. The
liabilities having regard to the Landlord/Tenant relationship with BWB. As
mentioned I am not sure as to the correct method of dealing with some of these
issues and to avoid the risk of some wasted effort I am trying to obtain
appropriate legal advice during this period whilst ARC are assembling accounts
and receipts etc prior to finalising the details and basis of their claim.
That letter was headed ‘Without Prejudice’. The
reference to BWB relates to the fact that ARC had held its lease of the land
from British Waterways Board, whose interest had also been acquired by
Hillingdon to enable the road to be built. BWB’s claim had been relatively
small and straightforward and had been settled by Hillingdon as long ago as
June 1985.
Thereafter, on 1 July 1992 Mr Thompson, on behalf
of ARC, made a formal request for an advance payment under section 52 of the
1973 Act. That was answered on 30 July 1992 with a request for further detailed
information and records, which elicited a fairly detailed answer on 8 August
1992 enclosing ‘a summary statement of profits for each element of the
operations on the land during the period 1972 to 1985’.
The claim under section 52 was still under
consideration on 3
Chambers on that date that deals with that point among others. Mr Chambers said
in evidence that he had no very clear recollection of precisely what that note
was about, though he thought it was concerned solely with the section 52 point.
On its face, the note seems to suggest that there had been some conversation
between Mr Thompson and Mr Chambers about the claim, but it is far from clear
whether the whole of the note relates to that conversation or whether the bulk
of it (the last two paragraphs) is simply a record of what Mr Chambers thought
about the claim. However, whichever it is, Mr Chambers was clearly aware that
ARC was contemplating the possibility of taking its claim to the Lands
Tribunal.
Mr Thompson wrote again on 13 October 1992 asking
for an early settlement of claim and on 20 November 1992 Lawrence Tucketts,
solicitors who had recently been instructed, took up the matter on behalf of
ARC. There followed further correspondence, which I need not refer to in
detail, in which Lawrence Tucketts asked for various documents and pieces of
information, most of which were in due course supplied, and Mr Thompson
continued to press for the claim to be settled. It seems that there were also
several telephone calls, because on 6 April 1993 Mr
Thompson in these terms:
I am at a loss to understand this plethora of
correspondence since we have had numerous telephone conversations (for example
on 1st February following your letter of 29th January) explaining clearly why
we feel your claim is, as yet, unsubstantiated.
He then referred back to his letter of 30 July
1992 and continued:
According to my file notes, you thought you would
probably be in a position to submit a fully detailed claim during March but I
note that this has not yet been received. I would be interested therefore to be
informed as to what progress you may be making in this matter.
Mr Thompson replied to that letter on 15 April
1993 saying that he would consult ARC’s records further and respond with an
amended claim as quickly as possible, but it was not in fact until 25 October
1993 that the final detailed version of ARC’s claim was submitted under cover
of a letter that stated, among other things, that ARC was anxious to see the
matter settled without having to resort to the Lands Tribunal. In fact there
were two letters: one to Hillingdon’s managing director, Mr Rippingdale, and
one to the head of the estates and valuation department. Mr Rippingdale replied
on 28 October 1993 in these terms:
I understand that the claim is long outstanding
due to the inability of your Company to provide sufficient details for the
claim to be properly proven and if these matters have now been adequately dealt
with there should be no significant obstacle to its resolution.
Mr Chambers replied on 9 November 1993, asserting
once more that, in his view, much of the claim was insufficiently proven and
that, in any event, any loss that ARC could prove was exceeded by betterment
that had accrued to ARC as a result of works already carried out by Hillingdon
in the course of the road construction. He ended his letter by saying that, in
view of the size of the claim (which had reached nearly £790,000 without
interest), he had decided to take counsel’s opinion and would contact ARC again
when it was available.
Lawrence Tucketts took the matter up again on 28
January 1994, asking whether counsel’s opinion had been received and suggesting
a ‘without prejudice’ discussion early in March. Mr Dickinson replied on behalf
of Hillingdon on 18 March 1994 in a letter headed ‘without prejudice’, in which
he said that the counsel was currently considering whether ARC’s claim was out
of time. He went on to invite ARC to confirm that a number of works, which he
listed in the letter, had been carried out for its benefit when the road was
being constructed. Those matters were the subject of further correspondence,
but I need not refer to it in any detail because Mr King on behalf of ARC does
not rely on anything that happened after October 1993 to found an estoppel.
However, to complete the history, I should perhaps mention that on
19
counsel, Mr Joseph Harper QC, had advised that the six-year limitation period
‘most probably’ applied and that the claim made in October 1993 was therefore
well out of time. He also reiterated the council’s other grounds for resisting
ARC’s claim. ARC also instructed counsel and on 14 June 1995 Lawrence Tucketts
wrote to Mr Dickinson, saying that ARC had received clear advice that the claim
was not statute-barred and suggesting a ‘without prejudice’ meeting. On 27 July
1995 Lawrence Tucketts wrote again, saying that they had been instructed to
refer the matter to the Lands Tribunal but would not do so before
18
positively’. No such response having been forthcoming, ARC referred the matter
to the Lands Tribunal on 6 September 1995. The limitation point was then
referred to the High Court and, as I indicated right at the beginning of this
judgment, decided in favour of Hillingdon on 12 June 1997. The estoppel point
on which ARC now relies was first raised in a skeleton argument put before the
court on 11 April 1997. It was not dealt with before Mr Burnton QC because both
parties wanted the Limitation Act point determined without delay. When he gave
judgment on 12 June 1997 Mr Burnton QC gave directions for pleadings to be
filed in relation to the estoppel point and that was done while the appeal on
the limitation point was being pursued.
I need only refer to one other point, which I
should, perhaps, have mentioned when going through the history, and it is this.
In relation to the meeting on 5 March 1992 to which I have already referred, it
is alleged by ARC that, after seeking clarification on a number of detailed
aspects of the claim, Mr Chambers stated that: ‘if the defendants were able to
satisfy him on all points of claim and provide documentary evidence, the claim
could be decided within two weeks’. ARC relies on that statement as establishing
the common understanding relied on as the basis for the alleged estoppel by
convention.
As I have already recorded, Mr Thompson and Mr
Chambers both produced notes of this meeting. Mr Thompson’s note contained a
reference to the evidence that would be needed to prove ARC’s claim and then
goes on: ‘[Mr Chambers advised] that if ARC satisfy him on all points of claim,
together with documentary evidence, it would be possible to decide the claim
within two weeks’.
Mr Thompson said in evidence that the note
confirmed his recollection of the discussion he had had with Mr Chambers and in
that he was supported by Mr Robert Smith and Mr Lee, both of whom also attended
on behalf of ARC. Mr Smith said in his written statement that he recalled Mr
Chambers saying that the claim could be settled within two weeks and repeated
that when he gave evidence before me and was cross-examined about it. Mr Lee in
his written statement said that Mr
ARC could put together evidence in support of a claim for compensation to the
satisfaction of the plaintiff, the claim could and would be settled. When
cross-examined, he referred back to a manuscript note of the meeting, which
appears to record Mr Lee asking what would be the minimum time for settlement
of the claim and Mr Chambers answering two weeks. Mr Lee said he remembered
that question and answer. Mr Chambers’
certainly could not remember saying that the claim could be settled in two
weeks though he did recall, as I have already noted, reiterating the need for
accounts and other records if ARC’s claim was to be accepted. Looking at this
specific point in the context of the meeting as a whole, I believe that Mr Chambers
probably did make the remark attributed to him, although it is very possible
that he did not attribute any great significance to it at the time.
I have dealt with that issue of fact in a little
detail because it is the only specific issue raised on the pleadings.
Otherwise, Hillingdon’s position was summarised in a single sentence, namely
that they had ‘never by words or conduct or otherwise expressly or impliedly
represented to [ARC] that they would not rely on such rights as they might have
when confronted by a claim from [ARC]’.
As to that contention, there was no evidence that
Hillingdon had expressly represented to anyone on behalf of ARC that they would
not rely on any rights they might have. As to what, if anything, should be
implied as to the attitudes of the parties and any underlying assumptions they
may have entertained, the oral evidence really added very little to the history
to be gleaned from the correspondence I have already gone through. Both Mr
Smith and Mr Thompson said, in effect, that it never occurred to them until the
point was raised by Hillingdon that there was any relevant time-limit to their
claim. They thought they were involved in negotiations, however desultory, of
what they regarded as a genuine claim for compensation which, if it was not
settled, could be taken to the Lands Tribunal. I accept that evidence. I can
see nothing in the history I have outlined to suggest that anybody on behalf of
ARC was trying to negotiate a claim that they knew could be defeated at any time
by Hillingdon invoking the statute of limitations.
Mr Lee played very little part in this whole
matter. Indeed, he said that, in terms of direct negotiations, the meeting of 5
March 1992 was his only involvement. In answer to a suggestion that ARC had
not, by that stage, given sufficient particulars of its claim to enable any
serious negotiation to take place, he said that the meeting was largely
concerned with the evidence that would be required to prove ARC’s claim, but
added that he understood they were there because there was a claim to be
discussed.
The only witnesses called on behalf of Hillingdon
were Mr
indicates, did not become involved until he took over as Hillingdon’s principal
valuer in July 1991. Mr Dickinson had been employed as a solicitor by
Hillingdon since March 1978 but, apart from knowing about the formalities of
the compulsory purchase in its early stages, neither he, nor, apparently, his
legal department, had any detailed involvement until about the end of 1991 or
beginning of 1992, when he was consulted by Mr Chambers.
Mr Chambers maintained in evidence that, so far as
he was concerned, ARC had never succeeded in putting forward a valid claim that
deserved to be treated seriously in negotiation. By reference to the
correspondence that had taken place before he came on the scene, and his own
experience thereafter, he said that, in his view, ARC had never given
sufficient particulars of its claim or provided acceptable contemporaneous
evidence to support it. Furthermore, he considered that accommodation works
undertaken by Hillingdon had provided ARC with betterment sufficient to exceed
any claim they might have. He also pointed out, as I think was the case, that
ARC’s claim did not differentiate clearly, if at all, between phase I of the
works, which was covered by the original compulsory purchase order, and phase
II, which was dealt with quite informally.
Dealing with limitation, he said that, right from
the beginning of his involvement, and this is again born out by the
correspondence, he thought there might be a time-bar applying to this claim.
Unfortunately, perhaps, he did not get any firm advice about that point until
counsel’s opinion was forthcoming in the autumn of 1994, and there was no
reference to it in any communication between him and ARC before it was raised
in Mr Dickinson’s letter to Lawrence Tucketts on 18 March 1994. Mr Chambers was
also aware, as he made clear in his evidence, that ARC’s claim, if any, in respect
of the phase II works was probably not statute-barred when he first came on the
scene. I do not think I need refer to the evidence of Mr Dickinson in any
detail. He could not really do more than explain his involvement and the advice
he had given by reference to the correspondence. From his own point of view, at
least from about the autumn of 1991, he did not share any assumption with ARC
as to the application of the Limitation Act but he, of course, agreed that his
doubts were not communicated to ARC until March 1994.
It is against that background that Mr King, on
behalf of ARC, contends that an estoppel by convention has arisen to preclude
Hillingdon from relying on the limitation period. He invites me to find, on the
facts I have outlined, that there have been dealings between the parties,
whether properly described as negotiations or not, relating to this claim, that
those dealings were conducted on the basis of a mistaken assumption shared and
communicated between the parties that no limitation period applied to the
claim, and that it would be unfair to allow Hillingdon to go back on that
assumption. Mr King also relies on promissory estoppel and waiver arising out
of the same facts.
Mr Harper QC challenges Mr King’s argument at
every stage. No valid claim supported by evidence was ever put forward by ARC.
There were, therefore, no negotiations. If there were negotiations, they were
not on the basis of a shared assumption that no limitation period applied. What
happened was that ARC took a mistaken view of the law and persisted in it as
far as the Court of Appeal. Hillingdon made no contribution to that mistaken
view nor communicated any shared assumption to the same effect. There was
nothing ‘close to the formation of a contract’ on which both parties negotiated
on the basis of the same mistaken assumption. Finally, in view of ARC’s delay
in referring the matter to the Lands Tribunal and subsequently advancing the
argument based on estoppel, it would not be unconscionable to allow Hillingdon
to take the limitation point.
I hope I have summarised Mr Harper’s arguments
accurately because, on the view I take on the facts, I feel bound to reject
them. Going back to the beginning, it is clear that ARC had a claim, with a
reasonable prospect of success, for compensation. Before the limitation period
expired on 26 April 1988 there was no doubt about it: see Hillingdon’s letter
of 7 October 1987 suggesting a reference to the Lands Tribunal as soon as
possible if agreement could not be reached. Hillingdon took the matter up again
on 10 March 1988, still assuming there was a valid claim that needed to be
finalised. Nearly a year later, several months after the expiry of the
limitation period, there is the important exchange of letters on 13 February
and 10 March 1989. The only sensible explanation I can see for those letters is
that both parties believed that ARC still had a valid claim, capable of being
resolved, notwithstanding that the limitation period had expired. ARC did
nothing for more than a year but it is plain from the letter of 22 June 1990
that Hillingdon still regarded the claim as capable of being pursued. Later
that year Hillingdon agreed to pay the fees of a surveyor appointed by ARC to
negotiate the claim: see letters dated 4 and 21
could be no reason for ARC to appoint the surveyor, nor for Hillingdon to pay
his fees, other than that there was an outstanding claim for compensation that
needed to be resolved.
This was, in effect, the last important exchange
between the parties before Mr Chambers took up the reins on behalf of
Hillingdon, and I think it is useful to consider exactly where the parties
stood, as a matter of law, in relation to this claim at that stage. Suppose,
for example, Mr
and it had been answered by the estoppel that I am now considering. In my view,
estoppel by convention would clearly have been established. It is true that
there had not been any serious negotiation, but the works had been completed
relatively recently (see the letter dated 13 February 1989) and, with the
appointment of a surveyor to act for ARC at Hillingdon’s expense, it is plain
that serious negotiations were contemplated. Neither party was taking any
notice of the fact that the limitation period had expired, at least in relation
to the phase I works, and the only explanation for that which, in my view, can
be seriously entertained, is that neither party was aware of the position. It
seems that both must have taken the mistaken view that, to quote the president
of
for a reference of disputed compensation to the Lands Tribunal’. The
overwhelming probability, I think, is that both parties had made the same
mistake. It is theoretically possible that someone on the Hillingdon side might
have known (or suspected) better, but, if that had been the case, I would have
expected some inquiry to have been made and a record kept, as indeed happened
in September 1991 when Mr
In short, I cannot believe that anyone acting for Hillingdon can have thought
that there was a serious possibility that ARC’s claim might be statute-barred
when they agreed to pay surveyor’s fees on 21 September 1990.
At that date, in my view, the only sensible
inference to draw from the whole of the evidence is that both parties were
dealing with ARC’s claim on the basis that it was a valid claim, capable of
being resolved by negotiation or referred to the Lands Tribunal if settlement
could not be reached. It is true that the only express mention of the Lands
Tribunal, up to that date, had been before the expiry of the limitation period
(7
thereafter.
As I have said, if this issue had been raised in
September 1990 I think the estoppel by convention would have been established.
The question then arises, if that is right, whether anything has happened since
to undermine that conclusion. In my view, nothing has. In particular, although
Mr Chambers was considering the possibility of a time-bar in the autumn of
1991, it was not raised with ARC until 18
Thompson had written his letter dated 20 August 1991, headed ‘without prejudice’,
in an obvious attempt to get negotiations going, even though Mr Chambers may
have considered that the information provided in that letter was inadequate.
Thereafter the correspondence continued, admittedly not at a very brisk pace,
and there were meetings between the parties until ARC finally sent its detailed
claim on 25 October 1993.
Looking at that period from the autumn of 1990 to
25 October 1993, there is nothing in the matters that passed between the
parties, whether at meetings or in correspondence, to indicate any change of
stance on either side from that which had existed before the autumn of 1990. In
those circumstances, I do not think it is open to Hillingdon to argue that Mr
Chambers’ uncommunicated reservations about the time-bar could have the effect
of bringing to an end the shared assumption that, in my view, had previously
existed. Indeed, if anything, I think the argument in favour of an estoppel was
strengthened, because I am satisfied that Mr Thompson was still discussing the
claim on the basis that there was no time-bar and Mr Chambers must have
realised that he was: see, for example, Mr Chambers’ note of a meeting on
3
Tribunal was mentioned. In the context of estoppel by convention, Hillingdon
could not be in a better position if Mr Chambers consciously allowed Mr
Thompson to continue negotiations on the mistaken assumption than it would have
been if he had shared the same mistaken assumption.
There are two other points I should mention in
relation to the continuing discussions. First, the phase II works in respect of
which the limitation period probably expired at about the beginning of June
1993. Mr Thompson was presenting only one claim, lumping the phase I and phase
II works together, from which it could be argued that, because the limitation
period in respect of the phase II works had not expired, it would be wrong to
conclude that the parties were negotiating on the basis that the limitation
period in respect of phase I had not expired. I do not think that argument
carries any weight. As I understand it, phase
of the claim and was subject to a limitation period that could be calculated
with precision. Again, if anything, I think this point tells in favour of ARC
because, whatever may have been the position in relation to the phase II works,
the discussions about phase I were continuing in a way that only made sense if,
ultimately, in the absence of agreement, there could be a reference to the Lands
Tribunal.
The second point relates to the heading ‘without
prejudice’, which first appeared on Mr Thompson’s letter dated 20 September
1991. Thereafter it appears on other letters and probably covers the whole of
the continuing negotiations. Mr Harper argues that that puts an end to any
claim by ARC because that heading means what it says, namely without prejudice
to any possible argument that may be raised, which would include the statute of
limitations now relied on. I do not accept that argument for two reasons.
First, as I have already held, it is plain that Mr Thompson believed the claim
could still be referred to the Lands Tribunal and I think the phrase ‘without
prejudice’ must be construed in that context as meaning simply ‘without
prejudice to any arguments that can be raised on an effective reference to the
Lands Tribunal’.
Second, it is always possible to accept an offer
made ‘without prejudice’, thereby bringing the privilege conferred by that
phrase to an end. I see no reason why such an agreement should not also be
inferred and, depending on the context, be of limited effect. In other words,
in this case, the parties could have made an express agreement to refer the
matter to the Lands Tribunal if it could not be settled, ‘without prejudice’ to
any arguments (apart from limitation) that might then arise. The same result
can, in my view, be arrived at where estoppel by convention applies. The
relevant considerations are similar to, but not identical with, those that may
lead to the conclusion that a contract must be implied on certain terms.
Estoppel by convention requires something very close to the creation of a
contract, though falling short of the strict legal requirements for such a
relationship. Approaching the matter in that way, I think the right inference
to draw from the whole of the evidence is that there was a common understanding
between the parties (Mr Chambers’ reservations not having been communicated)
that the matter could be referred to the Lands Tribunal.
Mr Harper also argues that, if my conclusion is
right in this case, it follows that the parties to the potential litigation
will be inhibited from trying to settle their claims because of the risk that
an estoppel of this kind might arise. I cannot attach any weight to that
argument. There is clear authority that a time-bar can be waived by the party
entitled to rely on it and the CWS case shows that such reliance can be
defeated by an estoppel. This creates no difficulty in the vast bulk of cases
in which parties embark on negotiations, because both parties normally know, or
can be assumed to know, that a limitation period will apply. It will often be
difficult to be sure when that period starts to run, but that does not inhibit
anyone from deploying it in negotiation. All that the party in whose favour
time is running needs to do is to avoid conducting the discussions or
negotiations in such a way as to justify the other party in assuming that
limitation can safely be ignored. The very unusual feature of this case is
that, during the early part of the negotiations both before and after the
limitation period expired, it was generally assumed by those concerned with
this type of claim, including the president of the Lands Tribunal, that no
limitation period applied. That has now been shown to be a mistaken view of the
law, but at the relevant time it was a mistaken view held by both parties.
Presumably, the mistake is much less likely to be made in future. I cannot
accept that a finding of estoppel in this case will have the alarming
consequences that Mr Harper predicts.
Finally, there is the period of delay from March
1994, when the question of limitation was first raised, until September 1995,
when the reference was made to the Lands Tribunal. I am sure Mr Harper is right
when he says that the suspensory effect of an estoppel by convention can be
brought to an end by notice in the same way as a promissory estoppel. When a
party becomes aware that he has been negotiating on a mistaken assumption as to
the law, he must be entitled to assert the true position, thereby bringing an
end to the shared assumption, but the other party must, in fairness, be given
time to take appropriate action before the first party can be allowed to rely
on his change of stance. If one treats Hillingdon’s letter of 18 March 1994 as
an effective notice, bringing the shared assumption to an end, then it may be
said that ARC had more than enough time to make the reference to the Lands
Tribunal much earlier and should not, therefore, be allowed to rely on the
estoppel. I do not accept that argument for a number of reasons.
The letter is by no means unequivocal. In view of
the general understanding of the law up to that time, I think it was reasonable
for ARC to wait for a clear indication that Hillingdon no longer shared the
same assumption before embarking on the expense of a formal application to the
Lands Tribunal. I think it fair to infer from the correspondence and from the
evidence that that was also Hillingdon’s view. Both Mr Chambers and Mr
Dickinson wanted to have counsel’s advice before taking the matter further. In
this context, it is perhaps worth noting that Hillingdon could have referred
the matter to the Lands Tribunal in any event. I think it is also relevant, in
considering this time lapse of 18 months, to note that it was not until the
letter of 19 October 1994 that Hillingdon was able to report leading counsel’s
opinion that the limitation period ‘most probably’ applied. Thereafter ARC, too
took counsel’s advice, which was forthcoming in June 1995 and supported the
accepted view that no limitation period applied. After a final inquiry as to
whether settlement was possible, the reference was duly made. Assuming the
letter of 19 October 1994 amounted to clear notice by Hillingdon that it was no
longer prepared to negotiate and would rely on the statutory time-limit, then,
bearing in mind the way in which the negotiations had been conducted over the
previous six or seven years, I do not think the time taken by ARC to take its own
advice before finally referring the matter to the Lands Tribunal can be said to
have been so unreasonable as to preclude any further reliance on the estoppel.
Once the reference had been made, I do not think the further lapse of time
before the estoppel argument was raised, just before the hearing on 17 April
1997, makes any difference. In so far as prejudice had been caused by the
delay, then I think it must have arisen before the question of a statutory
time-limit was first raised in March 1994. This claim will not depend on the
recollection of witnesses but on accounts and other records, will establish
what land was actually taken and what effect the disruption of the work may
have had upon ARC’s business. The burden of proving the claim will rest on ARC
and, if the records are incomplete or cannot now be adequately interpreted, the
prejudice will surely fall upon ARC rather than Hillingdon. In those
circumstances, I do not think it unfair, even after this long lapse of time, to
allow the claim to proceed.
There remain the two subsidiary arguments put
forward by ARC based on promissory estoppel and waiver. In view of the
conclusion I have reached about estoppel by convention, I do not think I need
deal with those arguments in detail. If the concept of estoppel by convention
did not exist then I think it would be possible to spell out a promissory
estoppel or waiver on the basis that Mr Chambers allowed the negotiations to
continue, in the sense that he attended meetings and sought further details of
ARC’s claim after he became aware of the possibility at least of a defence of
limitation being available. However, I think that is a somewhat artificial
approach, bearing in mind all that had gone before, and I do not propose to go
into any further detail. I think ARC was right to rely primarily on estoppel by
convention and, for the reasons I have given, its claim succeeds.
I hope that on receipt of this judgment the
parties will be able to agree an appropriate form of order including an order
as to how the costs should be allocated. If they cannot, then they should give
notice to the court as soon as possible and preferably within 28 days, so that
a further hearing can be arranged.
