Compulsory purchase – Compensation – Limitation – Section 9(1) of Limitation Act 1980 – Claimant’s land compulsorily acquired – Negotiations taking place regarding amount of compensation payable by acquiring authority – Negotiations continuing after limitation period for bringing compensation claim expiring – Authority also making advance payment towards compensation after that date – Whether authority entitled to rely on limitation defence to compensation claim –Whether estopped by their conduct from doing so – Appeal dismissed
In July 2000, the acquiring authority entered and took possession of the claimant’s land pursuant to compulsory acquisition powers that it exercised in connection with the extension of the Tyne & Wear Metro. The land comprised a strip on which there were three garages, forming part of a yard which the claimant used for his scrap metal business.
Negotiations took place concerning the compensation payable to the claimant but the matter was not resolved. Despite repeated urging from the authority, the claimant was for a long time unsuccessful in appointing a surveyor to assist him in calculating the amount of his compensation claim. The authority made successive offers, culminating in an offer of £85,000 in October 2009. That offer included an advance payment of £15,000 which the authority had already made to the claimant in February 2007. The claimant did not accept any of those offers. In August 2011, the authority wrote to the claimant indicating that the time limit for bringing a compensation claim had expired and that it now had no offer to make.
In July 2013, more than 13 years after the entry onto his land, the claimant referred a claim for compensation to the Upper Tribunal. The acquiring authority argued that the claim was time-barred under section 9(1) of the Limitation Act 1980 since the claimant had failed to bring the proceedings within the six years of the date when his cause of action accrued.
The claimant contended that the authority were estopped from raising the limitation defence by reason of their actions in continuing negotiations, and making an advance payment in respect of compensation, after the limitation period had expired, in particular between 2008 to 2010. He contended that the negotiations had continued on a common understanding that the claimant had a valid claim for compensation to be agreed or determined by reference to the Upper Tribunal and that, in reliance on that understanding, he had altered his position by instructing new surveyors and solicitors and by making a reference in respect of his claim. In the alternative, he argued that the same conduct of the authority amounted to a waiver of its entitlement to rely on section 9 of the 1980 Act.
Held: The claim was dismissed.
The right to compensation for the compulsory purchase of an interest in land arose under the Compulsory Purchase Act 1965 at the date of entry by the acquiring authority onto that land. The cause of action for the purpose of section 9 of the Limitation Act 1980, namely the right to bring a claim for compensation, arose on the date of entry and expired six years later: Hillingdon London Borough Council v ARC Ltd [1999] Ch 139; [1998] 3 EGLR 18; [1998] 39 EG 202 applied. The limitation period applicable to the claimant’s compensation claim had therefore expired in July 2006.
On the facts of the case, the acquiring authority was not barred from relying on the limitation point as a defence to the compensation claim. That was so notwithstanding that the claimant had, at all times until August 2011, believed that the authority intended him to receive compensation. While the authority had not alerted the claimant to the impending expiry of the limitation period, nor had it said anything to the claimant to suggest specifically that it would not rely on a defence of limitation if the negotiations between the parties failed to reach a successful conclusion. In order to establish an estoppel by convention so as to defeat a limitation defence, it was not sufficient to establish the existence of a shared assumption that compensation would be payable. There had to be a common assumption that no defence of limitation would be relied on, and that assumption had to be communicated between the parties. In the instant case, there had been no assumption of the necessary kind and no communication: Hillingdon London Borough Council v ARC Ltd (No 2) [2001] CP Rep 33; [2000] 3 EGLR 97 and Bridgestart Properties Ltd v London Underground Ltd [2004] EWCA Civ 793; [2004] PLSCS 157 applied.
The fact that the acquiring authority had done more than just negotiate, but had also made advance payments to the claimant after the expiry of the limitation period, was not inconsistent with the authority reserving the right to rely on a defence of limitation if agreement was not ultimately reached on the fair level of compensation. An advance payment was a reflection of the acquiring authority’s assessment of the value of the claim and of its willingness to compensate the land owner for what he had lost. The expiry of the limitation period did not affect the power of an acquiring authority to agree and pay compensation. Accordingly, neither a willingness to negotiate after the expiry of a limitation period, nor a willingness to pay compensation up to the level which the acquiring authority considered fair, could be taken as representations that an authority would not rely on a defence of limitation, especially in response to a claim made many years after the payment.
Further, even if a convention were established to the effect that limitation would not be relied on, such a convention would at best be temporary. As with estoppels generally, either party could resile from a convention if to do so would not be unconscionable. If a prospective claimant was later given a clear warning by an acquiring authority that his claim for compensation was liable to be defeated by limitation, the effect of a former estoppel would soon dissolve. If no reference was then commenced within the time reasonably required for the claimant to seek advice and take corrective action, it could no longer be said to be unconscionable for the acquiring authority to take advantage of the defence available to it under the general law. The claimant’s delay in making a reference to the Upper Tribunal, for a period of almost two years after the dissolution of any possible convention by the acquiring authority’s letter of August 2011, would have been fatal to any estoppel claim even if the other ingredients had existed.
The claimant’s entitlement to compensation could not be rescued by reference to any estoppel by representation. There had been no express representation that the acquiring authority would not rely on a defence of limitation if agreement was not reached by negotiation, and, for the reasons give above, neither the continuance of negotiations nor the making of payments could amount to such a representation. Nor was there anything that could amount to a waiver of the right to plead a limitation.
The claimant appeared in person; Jeremy Pike (instructed by Ward Hadaway, of Newcastle upon Tyne) appeared for the acquiring authority.
Sally Dobson, barrister
Click here to read transcript: Khan v Tyne & Wear Passenger Transport Executive t/a Nexus
