Appellants purchasing house after inspecting search certificate — Respondents failing to register land charge — Appellants suffering damage — Appellants unable to mitigate damage between dates of breach and hearing for assessment of compensation — Appellants claiming that date of compensation hearing appropriate date for assessment of compensation — Appeal allowed
In February 1995, the appellants purchased a property for £150,000. Although they were shown the official certificate of search in respect of the property, it failed to show an occupancy condition that should have been registered in the respondent council’s local land charges register.
The appellants renovated the property at considerable expense. In November 1998, they discovered the existence of the land charge, ceased work on the property, sought advice from a planning consultant, and instructed a solicitor in an unsuccessful bid to have the occupancy condition lifted.
The appellants claimed compensation under section 10(1) of the Local Land Charges Act 1975. In December 2000, the judge at first instance found in their favour. The amount of the compensation was left to be assessed at a further hearing. The council made no attempt to pay compensation to the appellants until immediately prior to the assessment hearing in September 2001.
At the hearing, it was common ground that the date at which the appellants’ cause of action accrued (namely February 1995) was not an appropriate date for the assessment of the compensation. The appellants claimed that the appropriate date was that of the compensation hearing in 2001, at which time the property was valued at £357,500. The respondents argued that the appropriate date was 1998, when the existence of the charge was discovered, at which time the property was valued at £277,500.
The judge found in favour of the respondents, and ordered that they should pay the sum of £197,500 in respect of the diminution in value of the property, plus interest, at 8%, up to the date of the judgment. The appellants were granted permission to appeal on the issue of the valuation date.
Held: The appeal was allowed.
Although the action was akin to an action in tort, the general rule being that damages should be assessed at the date of the breach of duty, such application of the general rule would have been manifestly unjust in the circumstances of the case. No authorities existed that illustrated the particular circumstances of the case, but the general principles were addressed in Alcoa Minerals of Jamaica Inc v Broderick [2002] 1 AC 371. In that case, the appellant’s impecuniosity had meant that he was unable to repair damage caused by the respondent’s breach until such time as the court had ordered compensation. The court had held that such conduct had been reasonably foreseeable in the circumstances and that the appellant had not been in breach of his duty to mitigate his damage.
In the present case, the appellants had acted reasonably in taking the steps they did at the point of discovering the existence of the charge. The substantial rise in house prices over the period, and the fact that all the appellants’ assets were tied up in the property, meant that they had been unable to purchase another suitable property until the amount of compensation had been settled, and it had not been unreasonable of them to delay the sale of the property accordingly. In the circumstances, it had been reasonably foreseeable by the respondents that, without adequate compensation, the appellants would have been unable to sell the property. The only just remedy, therefore, was to adopt the date of the compensation hearing as the correct date of assessment.
Stephen Jourdan (instructed by Burges Salmon, of Bristol) appeared for the appellant; Richard Lynagh QC and Daniel Shapiro (instructed by Wansbroughs, of Devizes) appeared for the respondents.
Vivienne Lane, barrister