Appellant owning and letting property – Council exercising compulsory purchase power and acquiring property – Appellant claiming compensation and advance payment – Delay – Compensation received five years after vesting date – Whether additional compensation or interest on compensation to be paid – Application rejected – Appeal dismissed
The appellant was the freeholder owner and occupier of 12 Devonshire Road, Liverpool. He lived in part of the premises and let out the remainder as 15 residential furnished tenancies. His gross rental income from the property was £18,284 pa, which he relied upon to pay his mortgage commitments. Subsequently, Liverpool City Council, the respondents, exercised their compulsory purchase power to acquire the property by a general vesting declaration. The vesting date and, accordingly, the date for the determination of the market value of the land acquired, was 30 January 1989. On 13 March 1989 the appellant submitted his claim for compensation and requested an advance payment on account, under section 52 of the Land Compensation Act 1973. Since the parties had not agreed on an amount of compensation, section 52(3)(b) of the Act applied, which provided that the advance payment was to be 90% of the compensation as estimated by the acquiring authority, and paid within three months of demand. Eleven months later, on 8 February 1990, £27,900 was paid. The amount took into account a sum that the council considered would be required for securing the release of the interest of the mortgagee.
The land was ultimately valued at £80,000, and the balance of the award was finally paid on 14 October 1993, nearly five years after the vesting date. The applicant made a disturbance claim based on the late payment of compensation, claiming extra compensation for the loss of his income from the property. He submitted that if he had received compensation of £80,000 on the date the council took possession of the property, he would have been able to reinvest the money in purchasing a similarly property, which he would have let and thereby received a similar income in return for his investment. It was argued that he was prevented from doing so because he could not afford a suitable property until he received his compensation. The Lands Tribunal rejected the claim. The applicant appealed by way of case stated to the Court of Appeal.
Held: The appeal was dismissed.
1. The applicant had been compensated under r 2 of section 5 of the Land Compensation Act 1961 on the extinguishment basis, namely the loss to him of his business as a going concern. That had been the only realistic basis of compensating him, since by 1993 it was clear that the 1989 business was over. It would be incompatible with that award to award the appellant further compensation for the loss of profits in relation to a venture never risked. Therefore, the Lands Tribunal had been right to find that the basis on which compensation had been claimed and awarded precluded a further claim for loss of profits: Director of Buildings and Land v Shun Fung Ironworks Ltd [1995] 1 EGLR 19, considered.
2. The provisions for advance payment of compensation and interest on that compensation provided a statutory scheme intended to deal with delay in all cases. Although the success of the scheme depended on the section 52(3) estimate being realistic and both parties proceeding with proper dispatch with the valuation process, parliament had not intended that in all cases there would remain the possibility of claiming compensation (and consequently interest) for allegedly underestimating the value of the property or for delay in reaching a proper value. There was nothing to suggest that the council themselves were at fault in either their initial low estimate under section 52(3) of the compensation payable, or in the long period of delay before payment was made. Accordingly the tribunal had been right to find that any delay in the payment of compensation awarded in the 1993 decision could only be compensated for by the payment of interest at the prescribed Treasury rate.
Robin Green (instructed by Jacobs & Co, of Ellesmere Port) appeared for the appellant; Graham Sellers (instructed by the solicitor to Liverpool City Council) for the respondents.
Thomas Elliott, barrister