Compensation — Compulsory Purchase Act 1965, section 10 — McCarthy Rules — Whether compensation limited to direct physical interference to land — Whether compensation payable for all injurious affection — Whether compensation payable for temporary interference
Pursuant to a
compulsory purchase order confirmed in 1986, the respondent council undertook a
complex road improvement scheme on land near to the hotel owned by the
appellants for a period of five years between 1989 and 1994. The appellants
claimed compensation under section 10 of the Compulsory Purchase Act 1965 in
respect of nuisance by noise, dust, vibration, obstruction of access to and
from the public highway and obstruction of the public highway. The claimants
and the council appealed and cross-appealed the decision of the Lands Tribunal
by case stated. The following questions were considered by the Court of Appeal:
(1) whether the Lands Tribunal erred in deciding that compensation is not
payable under section 10 where an interference to some legal right, public or
private, is not a direct interference to land or rights appurtenant to land;
(2) whether the Lands Tribunal erred in law in deciding that where there has
been interference with some legal right, public or private, which is capable of
giving rise to a claim for compensation under section 10, the quantum of
damages recoverable as compensation does not include all injurious affection
attributable to and caused by the execution of the works; and (3) whether the
Lands Tribunal erred in law in holding that compensation is payable under
section 10 where the interference with a legal right in respect of land or an
interest in land is only temporary and where, after such temporary
interference, the value of the land or the interest in the land has ceased to
be affected at the valuation date.
Peter Gibson and Pill LJJ: (1) No claim can be made under section 10 of the
1965 Act unless there has been direct physical interference with the land or a
right appurtenant to the land. (2) Section 68 of the Lands Clauses Act 1845
(and section 10 of the 1965 Act) does not allow a wider measure of compensation
than that allowable in an action in tort. (3) Compensation under section 68 is
based upon a permanent devaluation of or damage to land, and no further sum is
payable for temporary disturbance not affecting the value of land when the
works are complete.
The following
cases are referred to in this report.
Andreae v Selfridge & Co Ltd [1938] Ch 1; [1937] 3 All ER 255,
CA
Argyle
Motors (Birkenhead) Ltd v Birkenhead Corporation
[1975] AC 99; [1974] 2 WLR 71; [1974] 1 All ER 201; (1973) 27 P&CR 122; 72
LGR 147, HL
Beckett v Midland Railway (1867) LR 3 CP 82
Caledonian
Railway Co v Walker’s Trustees (1882) 7 App
Cas 259
Caledonian
Railway v Ogilvy (1856) 2 Macq 229
Chamberlain v West End of London & Crystal Palace Railway Co (1863)
2 B&S 617; 2 New Rep 182; LJQB 173; 8 LT 149; 9 Jur(NS) 1051; 11 WR 472
Cowper
Essex v Acton Local Board (1889) 14 App Cas
153; [1886–90] All ER Rep 901, HL
Director
of Buildings and Lands v Shun Fung Ironworks Ltd
[1995] 2 AC 111; [1995] 2 WLR 404; [1995] 1 All ER 846; [1995] 1 EGLR 19;
[1995] 19 EG 147; [1995] RVR 124, PC
Ford v Metropolitan District Railway (1886) 17 QBD 12
Hammersmith
and City Railway Co v Brand (1869) LR 4 HL
171
Horn v Sunderland Corporation [1941] 2 KB 26; [1941] 1 All ER
480; 39 LGR 367, CA
Horton v Colwyn Bay and Colwyn Urban District Council [1908] 1 KB
327; 24 TLR 220; 6 LGR 211
Hosmer v Republic Iron & Steel Co (1913) 60 South 801
Hughes v Doncaster Metropolitan Borough Council [1991] 1 AC 382;
[1991] 2 WLR 16; [1991] 1 All ER 295; (1991) 89 LGR 257; [1991] 1 EGLR 31;
[1991] 05 EG 133, HL
Hunter v Canary Wharf Ltd; Hunter v London Docklands Development
Corporation [1997] AC 655; [1997] 2 WLR 684; [1997] 2 All ER 426, HL
Khorasandjian v Bush [1993] QB 727; [1993] 3 WLR 476; [1993] 3 All ER 669
Leonidis v Thames Water Authority (1979) 77 LGR 722; [1979] 2 EGLR 8;
[1979] EGD 893; 251 EG 669; [1979] JPL 831
Lingke v Christchurch Corporation [1912] 3 KB 595
London,
Tilbury and Southend Railway and Gower’s Walk School, Re (1889) 24 QBD 326; 6TLR 120
Metropolitan
Board of Works v McCarthy (1874) LR 7 HL
243; 31 LT 182, HL
Ricket v Metropolitan Railway Co (1867) LR 2 HL 175
St
Helens Smelting Co v Tipping (1865) 11 HL
Cas 642
This was an
appeal by the claimants, Wildtree Hotels Ltd, and a cross-appeal by the
council, Harrow London Borough Council, by way of cases stated by the Lands
Tribunal (Judge Rich QC) in a reference by the claimants for the determination
of compensation under section 10 of the Compulsory Purchase Act 1965.
Joseph Harper
QC and Barry Denyer-Green (instructed by Caplans) appeared for the claimants;
David Mole QC and Paul Stinchcombe (instructed by the solicitor to Harrow
London Borough Council) represented the council.
Giving the
first judgment, PILL LJ
said: This is an appeal by way of case stated from a decision of Judge Rich QC,
sitting as a member of the Lands Tribunal, on December 10 1996. The member had
agreed to consider legal issues arising under section 10 of the Compulsory
Purchase Act 1965 (the 1965 Act) as preliminary points.
While
ownership is more complex, Wildtree Hotels Ltd (the appellants) can for present
purposes be treated as the owners of hotel premises known as The Harrow Hotel,
in Harrow. Exercising powers under the Highways Acts and a compulsory purchase
order confirmed in March 1986, Harrow London Borough Council (the respondents)
undertook a complex road improvement scheme on land near the hotel for a period
of five years between 1989 and 1994. No land was taken from the appellants.
In their
amended points of claim, the appellants submit that the respondents interfered
with public or private legal rights of the appellants as owners of the premises
‘which said interferences were the consequence of the carrying out of the
works’. Particulars are
(£310,500); (2) ‘Nuisance by erection of hoardings’ (£124,000); (3) ‘Nuisance
by obstruction of access to and from public highway’ (£248,400); and (4)
‘Nuisance by obstruction of public highways’ (£434,700). The claim is made
under section 10 of the 1965 Act.
The questions
posed, at the request of the appellants, for the opinion of this court are:
1. Whether the
Lands Tribunal erred in deciding that compensation is not payable under section
10 of the 1965 Act where an interference to some legal right, public or
private, is not a direct interference to land.
Following
comments in this court, the words ‘or a right appurtenant to land’ have been
added.
2. Whether the
Lands Tribunal erred in law in deciding that where there has been interference
with some legal right, public or private, which is capable of giving rise to a
claim for compensation under section 10 of the 1965 Act, the quantum of damages
recoverable as compensation does not include all injurious affection
attributable to and caused by the execution of works, whether or not caused by
an interference, physical or otherwise, with some public or private legal
right.
A third
question has been posed at the request of the respondents:
3. Whether the
Lands Tribunal erred in law in holding that compensation is payable under
section 10 of the 1965 Act, where the interference with a legal right in
respect of land or an interest in land is only temporary, and where, after such
temporary interference, the value of the land or the interest in the land has
ceased to be affected at the valuation date.
The valuation
date has been agreed as the date when the relevant works were complete, the
respondents accepting that, if the answer to question 3 is adverse to them,
compensation for temporary damage which comes to an end on the completion of
work must also be assessed.
The appellants
claim the sum of £1,242,000. In the amended points of claim, precise claims are
made under each of the four headings mentioned above, and these sums form the
bulk of the sum claimed. The court was told that the sum claimed is based on a
capitalisation of the loss of rental value over the period of the works. In his
report, the appellants’ expert witness stated ‘that the temporary loss in value
to the land and buildings which can be claimed under section 10 of the 1965 Act
is in the region of £1,242,000’. No explanation was given as to how the precise
sums claimed under the four headings mentioned above arise from the global sum
or how they are otherwise calculated.
Section 10 of
the Compulsory Purchase Act 1965, under the heading ‘Further provision as to
compensation for injurious affection’, provides:
(1) If any
person claims compensation in respect of any land, or any interest in land,
which has been taken for or injuriously affected by the execution of the works,
and for which the acquiring authority have not made satisfaction under the
provisions of this Act, or of the special Act, any dispute arising in relation
to the compensation shall be referred to and determined by the Lands Tribunal.
(2) This
section shall be construed as affording in all cases a right to compensation
for injurious affection to land which is the same as the right which section 68
of the Land Clauses Consolidation Act 1845 has been construed as affording in
cases where the amount claimed exceeds fifty pounds.
Section 68 of
the Lands Clauses Consolidation Act 1845 (the 1845 Act) provides:
If any party
shall be entitled to any compensation in respect of any lands, or of any
interest therein which shall have been taken for or injuriously affected by the
execution of the works, and for which the promoters of the undertaking shall
not have made satisfaction under the provisions of this or the special Act, or
any Act incorporated therewith,…such party may have the same settled…
Section 7 of
the 1965 Act deals with the measure of compensation in cases of severance where
land is taken from the claimant. It provides:
In assessing
the compensation to be paid by the acquiring authority under this Act regard
shall be had not only to the value of the land to be purchased by the acquiring
authority, but also to the damage, if any, to be sustained by the owner of the
land by reason of the severing of the land purchased from the other land of the
owner, or otherwise injuriously affecting that other land by the exercise of
the powers conferred by this or the special Act.
It has long
been established that different considerations apply under section 7 of the
1965 Act, where land is taken from the claimant, and section 10, where it is
not. In Horn v Sunderland Corporation [1941] 2 KB 26 Scott LJ
considered, at p42, the difference between the two equivalent sections in the
1845 Act, sections 63 and 68. Scott LJ considered the rights of the owner
compelled to sell land. He stated, at p42:
That Act …
possesses two leading features. The first is that what it gives to the owner compelled
to sell is compensation … In other words, he gains the right to receive a money
payment not less than the loss imposed on him in the public interest, but, on
the other hand, no greater. The other is that the legislation recognizes only
two kinds or categories of compensation to the owner from whom land is taken:
(1) the fair value to him of the land taken, and (2) the fair equivalent in
money of the damage sustained by him in respect of other lands of his, held
with the lands taken, by reason of severance or injurious affection. For
compulsory acquisition those are the only two kinds of statutory compensation.
There is a third kind given by the Act, namely, by s 68, but that has nothing
to do with compulsory acquisition. It is a remedy for injuries caused by the
works authorized by the Act to the lands of an owner who has had none of his
land taken in that locality. The remedy is given because Parliament, by
authorizing the works, has prevented damage caused by them from being
actionable, and the compensation is given as a substitute for damages at law.
The rights conferred by s 68 have no direct or positive relevance to the
question we have to decide, but negatively the section is important, just
because there is nothing in it, in my opinion, which bears on our question.
Whether the words ‘taken for or’ in the second line of s 68 have any meaning or
were a mere clerical error, it is unnecessary in the present case to speculate,
for it is notorious that s 68 has always been construed as applying only to
lands not held with lands taken.
It is well
established that under section 63 (and now section 7) compensation is payable
for loss due to the acquisition described as disturbance. Different principles
have evolved upon section 10 from those upon section 7, and the right to, and
the assessment of, compensation where land is taken does not assist in
considering the principles to be applied under section 10. The distinction was
recognised in Cowper Essex v Acton Local Board (1889) 14 App Cas
153. Lord Halsbury LC stated, at p161:
But a second
proposition is, it appears to me, not less conclusively established, and that
is, that where part of a proprietor’s land is taken from him, and the future
use of the part so taken may damage the remainder of the proprietor’s land,
then such damage may be an injurious affecting of the proprietor’s other lands,
though it would not be an injurious affecting of the land of neighbouring
proprietors from whom nothing had been taken for the purpose of the intended
works.
It may seem
at first sight a little strange that what is injurious affecting in one case
should not be in the other. But it is possible to explain that apparent
contradiction by the consideration that the injurious affecting by the use, as
distinguished from the construction, is a particular injury suffered by the
proprietor from whom some portion of the land is taken different in kind from
that which is suffered by the rest of Her Majesty’s subjects.
Lord
Macnaghten stated, at p177:
it may be
said that an adjoining lessee or owner from whom no land is taken might suffer
in the same way, and that he would be without redress. That is true. But I
cannot see why a person whose case is within the spirit and within the very
letter of the Act should be deprived of the full measure of compensation
because his neighbour, who is not within the Act at all, is perhaps hardly
dealt with.
Four
propositions upon section 10 are commonly stated to emerge from decisions of
the House of Lords, to which I will refer, of long
first, that under section 10 the injurious affection must be the consequence of
the lawful exercise of statutory powers; second, that the injurious affection
must arise from that which, if done without statutory authority, would give
rise to a cause of action; and, third, that when damage arises, not out of the
execution, but only out of the subsequent use of the work, there is no case for
compensation.
What is in
issue is the scope of the remaining proposition:
where by the
construction of works there is a physical interference with any right, public
or private, which the owners or occupiers of property are by law entitled to
make use of, in connection with such property, and which right gives additional
market value to such property, apart from the uses to which any particular
owner or occupier might put it, there is a title to compensation, if, by reason
of such interference, the property, as a property, is lessened in value.
(Proposition of
counsel, Mr Thesiger QC, in Metropolitan Board of Works v McCarthy
(1874) LR 7 HL 243, as stated by Lord Cairns LC, at p253, and substantially
accepted by the House.)
For present
purposes, it is common ground that the interference claimed to have occurred
under the four headings in the amended points of claim was the inevitable
consequence of the carrying out of the works, and that requirement is
satisfied. In summary, the appellants’ case on question 1 is to rely upon the
principle that injurious affection arises from acts which, if done without
statutory authority, would give rise to a cause of action, and to submit that
the principle applies to such matters as noise, dust and vibration, which are
capable of being actionable wrongs or a nuisance. The test is whether the
injurious affection is attributable to interference which is capable of being
an actionable wrong, and not whether the interference capable of being an
actionable wrong is physical interference. The value of land may be affected by
the works without there being direct physical interference.
The submission
on the second question goes further and it is that compensation is payable for
all injurious affection whether or not attributable to what would otherwise be
an actionable wrong. Once it is established that there would have been a cause
of action if the work had been done without statutory authority, the appellants
are entitled to compensation for all the damage resulting from the works,
whether particular items of damage would or would not have been actionable. The
principle in Andreae v Selfridge & Co Ltd [1938] Ch 1 does
not apply to public works, it is submitted.
As to the
third question, on which the member found in the appellants’ favour, it is
accepted by the appellants that diminution in the value of the land resulting
from the works must be established, but submitted that compensation is payable
for temporary diminution in value during the works and not only upon a
valuation when works are completed. The member relied upon the decision of the
Court of Appeal in Ford v Metropolitan District Railway (1886) 17
QBD 12. Question 3 raises a fundamental question, which must be considered with
question 1, on the scope of section 10 of the 1965 Act.
For the
appellants, Mr Joseph Harper QC submits that in its approach to section 10 the
court should have regard to the principle of equivalence stated by Lord
Nicholls in Director of Buildings and Lands v Shun Fung Ironworks Ltd
[1995] 2 AC 111*, at p125C, a case where land was acquired:
*Editor’s
note: Also reported at [1995] 1 EGLR19; [1995] 19 EG 147
No allowance
is to be made because the resumption or acquisition was compulsory; and land is
to be valued at the price it might be expected to realise if sold by a willing
seller, not an unwilling seller. But subject to these qualifications, a
claimant is entitled to be compensated fairly and fully for his loss.
Mr Harper
submits that the court should take the opportunity to end the confusion which
he says has existed in the law on injurious affection for a century. He accepts
that section 10 is concerned with diminution in the value of land. He submits
that the rational construction of section 10 is that the owner of an interest
in land is entitled to compensation under the section whenever the value of
land is adversely affected by the execution of the works, however that adverse
effect occurred. A temporary diminution of value during the execution of the
works is also to be reflected in the compensation payable.
Before
considering the mid- and late 19th century cases, and it will be necessary to
do so, it is appropriate to refer to Argyle Motors (Birkenhead) Ltd v Birkenhead
Corporation [1975] AC 99. The plaintiff company was a tenant from year to
year of premises in which it carried on a car dealing business. In the course
of local authority works, access to the premises was obstructed. The company
sought compensation under the local Act, into which section 68 of the 1845 Act
was incorporated, in respect of loss of profit of the business. It was held in
the House of Lords that compensation under section 68 could be obtained only in
respect of some loss of value of land or damage to land and not for a loss
which was personal to the owner or related to some particular use of the land.
Giving the
leading speech, Lord Wilberforce confirmed that section 68, by the force of
judicial interpretation, was a compensation section and not merely procedural.
It authorised the payment of compensation both in respect of any lands or any
interest therein which shall have been injuriously affected by the execution of
the works. Of section 68, Lord Wilberforce said, at p129A:
The relevant
section … has, over 100 years, received through a number of decisions, some in
this House, and by no means easy to reconcile, an interpretation which fixes
upon it a meaning having little perceptible relation to the words used. This
represents a century of judicial effort to keep the primitive wording — which
itself has an earlier history — in some sort of accord with the realities of
the industrial age. The local Act, as is common with land acquisition and works
legislation, contains a farrago of sections, loosely pinned from various
precedents, which have neither internal clarity nor mutual consistency. In face
of this, the normal tools of interpretation fail to operate: attempts to
construe the Act as a whole lead to perplexity: to attribute a consistent
meaning to particular words (‘works’, or ‘subsidiary’) leads to absurdity: to try
to ascertain the intention of Parliament leads to conflicting conclusions. In
fact, golden rules must yield to instruments of baser metal. One can only
search for the occasional firm foothold and cautiously proceed from there.
Lord
Wilberforce referred to Ricket v Metropolitan Railway Co (1867)
LR 2 HL 175, Metropolitan Board of Works v McCarthy (1874) LR 7
HL 243 and Caledonian Railway Co v Walker’s Trustees (1882) 7 App
Cas 259. He made these statements of principle. At p129G he stated:
by a series
of judicial observations of high authority it is well established that the only
compensation which can be obtained under this section is ‘in respect of …
lands,’ ie in respect of some loss of value of land, or (what is a branch under
this same heading) in respect of some damage to lands, and that compensation
cannot be obtained for any loss which is personal to the owner, or which is
related to some particular user of the land.
At p130H Lord
Wilberforce stated:
if the right
to compensation in the present case depends upon section 68 the appellants
cannot succeed in obtaining compensation for business losses as such. I make it
clear, as did the Court of Appeal, that if they can prove that a loss of
profitability affects the value of their interest in the land they can recover
compensation for this loss of value.
In the course
of considering Ricket, Lord Wilberforce stated, at p130F:
As a matter
of language, though language is an uncertain guide in this statute, it must be
said that the words I have quoted ‘in respect of any lands, …’ support the
exclusion of claims for personal loss. And, though it might be said that a
generous policy of compensation would favour compensation for losses caused to
individuals through works of social benefit, a policy to this effect, however
just it might appear in a particular case, involves too great a shift in
financial burden and too many adjustments or qualification (if it were to be
workable) to be suitable for introduction by judicial decision.
Near the end
of his speech, Lord Wilberforce repeated that, in his opinion, ‘the word
‘damage’ must be read in the sense in which it has come to be used over the
years during which section 68 has been applied and interpreted, viz,
damage to land’.
Agreeing with
Lord Wilberforce, Viscount Dilhorne stated, at p134G:
It may well
be that the execution of the authorised works has inflicted a loss on the
appellants which far exceeds the amount of compensation obtainable by them for
injurious affection to their interest in the land on which they conduct their
business. If that be so, they will suffer a hardship for which the law as it
now stands does not provide a remedy. Extension of the right to compensation is
a matter for Parliament and not for judicial decision.
It is
noticeable that the members of the House of Lords in Argyle Motors
showed no inclination to depart from the late 19th century cases or adopt the
radical approach to section 10 and section 68 which the court is invited by the
appellants to adopt. Further, in relation to question 3, no attempt was made
either by the appellants or by members of the House, clearly uneasy about the
limited scope, as it had been found to be, of section 68, to suggest conversion
of the loss of business profits during the work into a claimable loss of land
value. This is probably of limited significance, because the case was fought
entirely on the loss of profit claim.
The decision
in Argyle Motors provides the signpost to guide the court through the
earlier cases. Lord Wilberforce stated, at p130E:
it is fair
comment that Ricket v Metropolitan Railway Co LR 2 HL 175 was
really decided on remoteness, and that in the two other cases it does not
appear that a claim for loss of profits was actually in issue. But the
pronouncements by the eminent members of this House are in such explicit terms
that a clear conviction of their error or, possibly, the most powerful
considerations of policy would need to be present before so strong a current of
authority could be turned back.
It is with
that encouragement that I cite Lord Cranworth’s analysis, at p198 in Ricket,
of the injury which establishes injurious affection where no land is taken:
Both
principle and authority seem to me to shew that no case comes within the purview
of the statute, unless where some damage has been occasioned to the land
itself, in respect of which, but for the statute, the complaining party might
have maintained an action. The injury must be actual injury to the land itself,
as by loosening the foundation of buildings on it, obstructing its light, or
its drains, making it inaccessible by lowering or raising the ground
immediately in front of it, or by some such physical deterioration. Any other
construction of the clause would open the door to claims so wide and indefinite
a character as could not have been in the contemplation of the Legislature.
Lord
Wilberforce also cited Lord Chelmsford’s statement, at p256, in McCarthy:
It may be
taken to have been finally decided that in order to found a claim to
compensation under the Acts there must be an injury and damage to the house or
land itself in which the person claiming compensation has an interest. A mere
personal obstruction or inconvenience, or a damage occasioned to a man’s trade
or the goodwill of his business, although of such a nature that but for the Act
of Parliament, it might have been the subject of an action for damages, will
not entitle the injured party to compensation under it.
Lord
Chelmsford continued:
The learned
counsel for the Respondent (Mr Thesiger) proposed the following rule as a guide
to the decision of each case. Where by the construction of works authorized by
the Legislature there is a physical interference with a right, whether public
or private, which an owner of a house is entitled by law to make use of, in
connection with the house, and which gives it a marketable value apart from any
particular use to which the owner may put it, if the house, by reason of the
works, is diminished in value, there arises a claim to compensation. I think
the rule as thus stated may be accepted with this necessary qualification, that
where the right which the owner of the house is entitled to exercise is one
which he possesses in common with the public, there must be something peculiar to
the right in its connection with the house to distinguish it from that which is
enjoyed by the rest of the world.
When Lord
Cranworth in Ricket referred to ‘actual injury to the land itself’ and
Lord Wilberforce in Argyle Motors referred to ‘damage to land’, they
also had in mind physical interferences with rights used in connection with
land. That is confirmed by the adoption of Mr Thesiger’s submission in McCarthy
and the fact that examples used by Lord Cranworth included obstruction of light
and making land inaccessible.
Walker, like Ricket, involved interference with a right of access.
Lord Selborne LC (at p276) considered it established that ‘the obstruction by
the execution of the work, of a man’s direct access to his house or land,
whether such access be by a public road or by a private way, is a proper
subject for compensation’. Lord Blackburn (at p293) stated that the statute is
‘confined to giving compensation for an injury to land or an interest in land’,
and held (at p299) that ‘the right of access by a public way to land is a right
attached to the land and that if an obstruction to the public right of way
occasions particular damage to the owner or occupier of that land by
diminishing its value, the action which he might bring for that particular
damage would be an action for an injury in respect of the land’. He added that
‘an obstruction to a highway may be so distant from land that no one could
reasonably find that the lands were appreciably damaged by the obstruction’
(p299), but confirmed (at p302) that ‘the deterioration of land from the
obstruction of a public way is an action for an infringement of a right
attached to the land’.
Reference
should also be made to Beckett v Midland Railway (1867) LR 3 CP
82 where Ricket was considered and which was approved in McCarthy
(per Lord Chelmsford and Lord Hatherley) and cited with approval in Walker.
A railway company erected an embankment on a part of the highway opposite the
plaintiff’s house, thereby narrowing the road from 50 to 33 ft and materially
diminishing the value of the house. Ricket was distinguished, and it was
held that this was such a permanent injury to the estate of the plaintiff in
the premises as to entitle him to compensation under the Lands Clauses
Consolidation Act and the Railways Clauses Consolidation Act 1845.
Willes J
stated, at p103:
The apparent
character of the work done seems to me to furnish another and a conclusive
reason for holding that here was a sufficient cause of action and sufficient
damage. The road has been permanently narrowed. We are not to imagine the
possibility of the railway being abandoned, and the road restored to its
original state. Indeed, by the mere fact of the embankment being made on it,
the road is pro tanto destroyed by act of parliament. We must, therefore,
assume that the obstruction complained of will continue until the end of time.
Willes J
stressed that the interference was permanent and distinguished the case from
others where the obstruction was temporary only.
Considering Caledonian
Railway v Ogilvy ((1856) 2 Macq 229), Willes J stated, at p104:
there was no
permanent taking away of the road but a mere occasional obstruction on the
passing of a train, to the temporary inconvenience of those who wished to use
the road. The noble Lords there held that the estate was not damaged; or, at
all events, the injury to the estate, if any, formed no element in the judgment
of the House. Here, the jury, upon evidence which was properly presented to
them, and warranted their conclusion, have found that the plaintiff’s estate in
the house was actually damaged.
Bovill CJ (at
p92) also distinguished Ricket‘s case on the ground that the injury in Beckett:
is permanent
and the plaintiff’s premises are found by the jury to be diminished in value
quite irrespective of the particular person and of the trade carried on. It is
not necessary that the claimant’s house should be actually touched or
interfered with to entitle him to claim compensation under the Acts: a
substantial interference with the enjoyment of light and air affords a ground
of action or of claim for compensation.
Keating J
stated, at p106:
Agreeing with
all that has fallen from my Lord and my two learned Brothers, the practical
ground upon which I rest my judgment is, that the present case ranges itself
within Chamberlain‘s case ((1862) 2 B&S 605) and not within
Ricket‘s Case because the highway has been permanently interfered
with so as in the opinion of the jury to have diminished the value of the
plaintiff’s property.
Lord O’Hagan
in McCarthy (p268) also considered the differences between Ricket
and Chamberlain: ‘The distinction is perfectly plain that the injury in
the one case was temporary and personal, and in the other case permanent and to
the premises’. In Chamberlain v West End of London & Crystal
Palace Railway Co (1863) 2 B&S 617, at p637, Erle CJ, in the Exchequer
Chamber, affirming the judgment in the court below, had stated:
Moore v The Great Southern and Western Railway Company (10 Irish
Com Law Rep 46) is in principle very closely allied to the present, for there
the Company did not take any part of the plaintiff’s land, but, in order to
lower the road, made a deep cutting along the boundary of his land, so that he
was deprived of the easy access to his house and premises which he before
enjoyed; and it was held that this was a permanent injury for which he was
entitled to compensation. Here the Railway Company have substituted a new
highway for the old one; the old highway is blocked up, and the plaintiff’s
houses are as inaccessible as was the plaintiff’s house in Moore …
I have
referred to the analysis in Walker, and in Chamberlain and Beckett,
to demonstrate the scope of section 10 as I understand it to be. It is
concerned, in cases where land is not acquired from the claimant, with
compensation for works interfering with an owner’s rights in or in connection
with the land. The measure of compensation is the diminution in the value of
the land caused by that interference. I anticipate question 3 by adding that it
is concerned with a comparison between the value of land before and after the
works.
Interferences
with rights of access feature prominently in the cases. There may also be
compensation where land has been purchased subject to a restrictive covenant
protecting the claimant’s land or where there has been an interference with,
for example, a right of support or a right of light. That being so, I consider
that the parties’ expression ‘direct physical interference’, in question 1,
fails to identify the real point of difference between them, which does not
depend on the directness of the interference. It fails to appreciate the nature
of the rights for breach of which section 10 may provide compensation.
The claims
made under headings 2, 3 and 4 are capable of forming the basis of a section 10
claim, because they each allege obstruction of access to and from the hotel, a
right used in connection with the land. The hoardings are alleged to have
‘effectively prohibited or restricted access’. As heads of claim they are not
in issue, though whether the particular obstructions give rise to compensation
may be in issue as in Ricket and Beckett. What the appellants in
this case are truly seeking under question 1, as emerged in the course of Mr
Harper’s submissions, is a finding that disturbance caused by ‘noise, dust and
vibration’ (heading 1), inevitably resulting from the works, can form the basis
of a claim in the absence of their causing physical damage to the land. To
illustrate his point, Mr Harper referred to the law of nuisance and the three
kinds of nuisance (Clerk & Lindsell on Torts 17th ed para 18-05):
first, encroachments; second, nuisances causing physical damage; and third, nuisances
causing an interference with the enjoyment of land. In St Helens Smelting Co
v Tipping (1865) 11 HL Cas 642 Lord Westbury LC stated, at p650:
It is a very
desirable thing to mark the difference between an action brought for a nuisance
upon the ground that the alleged nuisance produced material injury to the
property, and an action brought for a nuisance on the ground that the thing
alleged to be a nuisance is productive of sensible personal discomfort.
Mr Harper’s
aim is to establish that the third kind of nuisance as so defined, and provided
it affects the value of the land, is compensatable under section 10. There is
an overlap between this submission and question 3, because the submission does
contemplate, if not require, that devaluation during the works is
compensatable. The disturbance of use by way of personal discomfort during the
works is unlikely to be significantly reflected in the value of the land upon
completion of the works. What is sought is compensation for devaluation during
the works, by noise, dust and vibration. It is also claimed that obstruction to
access during the works, if reflected in the value of the land during the
works, is compensatable.
It may be
interposed that it is common ground that, especially in the case of commercial
premises such as hotels, a valuation at the conclusion of the works may well be
lower than at the commencement, because of the disruption of trade caused by
the works and the need to recover trade over a period after the works are
complete. That diminution is accepted as being compensatable under section 10.
Further, vibration, and even dust, may cause damage to land and premises
leading to a lower value when works are complete. That, too, is compensatable,
but is different from the damage through disturbance which Mr Harper seeks to
bring within section 10.
Mr Harper
relies upon the decision of the Court of Appeal in Lingke v Christchurch
Corporation [1912] 3 KB 595 and of Parker J in Leonidis v Thames
Water Authority [1979] 2 EGLR 8*, decided under the Public Health Acts, the
first of them under section 308 of the 1875 Act and the second under its
successor, section 278(1) of the 1936 Act. Section 308 provided that ‘where any
person sustains any damage by reason of the exercise of any of the powers of this
Act … full compensation shall be made to such person by the local authority
exercising such powers’. Section 278(1) provides that ‘a local authority shall
make full compensation to any person who has sustained damage by reason of the
exercise by the authority of any of their powers under this Act …’. Business
losses caused by interference with access during the works were successfully
claimed.
*Editor’s
note: Also reported at (1979) 251 EG 669
The first
issue in Lingke was whether a cause of action arose. The principle was
expressed that a ‘plaintiff succeeds if it can be shewn that the act, if it had
not been rendered lawful by statutory powers, would have been to her an
actionable wrong’: Fletcher Moulton LJ, at p610. The principle was affirmed by
Parker J in Leonidis: ‘If a private individual had done what the
defendants did in the present case the claimant would have had a good cause of
action …’.
These cases
affirm the principle in Ricket that ‘unless the particular injury would
have been actionable before the company had acquired their statutory powers it
is not an injury for which compensation can be claimed’: per Lord
Chelmsford, at p187. That principle is not in issue in the present case. The
second issue in Lingke, whether the plaintiff sustained particular
damage to enable him to sue in respect of a public nuisance, is also not in
issue in the present case.
The cases do
not support the proposition that compensation is payable for disturbance under
section 10, because compensation in those cases was not dependant on proving
damage to the value of land. The sections in the Public Health Acts provide
that compensation shall be paid to a ‘person’ who has sustained damage and do
not support a reconciliation between damage to land and disturbance to users,
creating a business loss, even if that is accompanied by a temporary loss of
value to land. Parker J (at p10) acknowledged the distinction between the
Public Health Acts and ‘sections which do limit compensation to injury to
land’. It will be necessary to refer to Lingke again on question 3.
As posed,
question 2 does not arise upon the answer I propose to give to questions 1 and
3, but I set out the basis of the appellants’ case. It assumes a right of
action in the claimant. The appellants’ proposition is that once such a right
of action exists, damages are recoverable for all the detrimental consequences
of the works, including those which would not themselves have founded an
action. It is also submitted, and I regard it as a separate submission, that
the principle that no cause of action arises in respect of operations, such as
demolition of buildings, if they are reasonably carried out and all reasonable
and proper steps are taken to ensure that no undue inconvenience is caused to
neighbours, does not apply to major public works such as those in the present
case.
Mr Harper
relies essentially upon the Court of Appeal decision in Re London, Tilbury
and Southend Railway and Gower’s Walk School (1889) 24 QBD 326, where
compensation was awarded for diminution
owned buildings with ancient lights, pulled them down and erected a new
building in their place. While the position of some of the windows of the new
building coincided with that of windows on the old, other windows on the new
building occupied wholly different positions. A railway company, in the
exercise of their powers, erected a warehouse, which obstructed the lights of windows
in the new building. The claim was brought under section 16 of the Railways
Clauses Act 1845, but the difference in wording between that and the Lands
Clauses Consolidations Act 1845 (requiring the railway company to ‘make full
satisfaction … to all parties interested, for all damage by them sustained’)
does not appear to have been considered relevant.
I can see no
application in the present case for anything decided in Tilbury. I
consider Tilbury to be decided on the narrower ground first considered
by Lord Esher MR, at p329:
If … a person
puts up buildings, the inevitable consequence of their erection being to
obstruct ancient and modern lights, should he not be taken to have foreseen
that in obstructing the one he would obstruct the other? If that were proved in
a common law action the plaintiff would be entitled to damages for the whole of
the consequences of the wrongful act of obstructing ancient lights, which would
include damage to the new as much as to the old lights. If so, it seems to me obvious
that compensation must be given under the statute to the same extent.
Lindley LJ
stated, at p332:
they [the
railway company] have infringed the rights of the trustees by darkening certain
ancient windows, and as a consequence of that they have diminished the value of
the land by an amount found by the arbitrator to be £1,450. That is the
necessary consequence of their wrongful act. On what principle are the railway
company not to pay for that diminution in value? The railway company say they
might have blocked up all the modern windows; but to this the trustees may
reply, that more than this has been done, that their rights have been
infringed, and that, though no action will lie because the infringement is
authorized by an Act of Parliament, their case falls within the 16th section of
the Railways Clauses Act, and that the consequence is that full compensation
must be made, which full compensation is the difference between the value of
the land as it was and as it is at present.
Lopes LJ
stated, at p332:
having regard
to the position of the windows of the school buildings, it is physically
impossible to obstruct the light to the new, without at the same time
obstructing the light to the ancient windows.
General
statements in Tilbury, which might suggest that damages irrecoverable at
common law could be claimed as compensation, must be read in the context that
the devaluation of the building was caused by the loss of light, whatever the
precise position of the windows. Having regard to the issues in the present
case, the principle that once the infringement of a relevant right is
established the damage is the diminution of value resulting from that
infringement, does not assist the appellants. If Mr Harper is correct in his
approach to question 1, the appellants must nevertheless establish loss
resulting from that which, if done without statutory authority, would give rise
to a cause of action. I see no justification for a departure from ordinary
principles of causation, whether by disapplying the principle in Andreae
v Selfridge or in any other way. I accept the submission of Mr David
Mole QC that section 68 does not allow a wider measure of compensation than
that allowable in an action for tort.
I turn to
question 3. In my judgment, there can be no doubt that section 10 of the 1965
Act is concerned with the value of land or damage to land. On its face, that
principle would appear to require a comparison of the value of the land before
and after the works. It may, however, be said that, for some purposes, the
phrase ‘the value of the land’ may include both the market value of the land
and compensation for disturbance. Thus, in Hughes v Doncaster
Metropolitan Borough Council [1991] 1 AC 382*, it was held that the phrase
‘the value of the land’ in section 5 of the Land Compensation Act 1961 included
both the market value and compensation for disturbance. Lord Wilberforce, with
whose speech the other members of the House of Lords agreed, stated, at p392G:
*Editor’s
note: Also reported at [1991] 1 EGLR31; [1991] 05 EG 133
Thus,
although compensation in respect of the market value of land acquired and
compensation for disturbance must in practice be separately assessed, the
courts have consistently adhered to the principle, both before and after the
present rules were first introduced by the Act of 1919, that the two elements
are inseparable parts of a single whole in that together they make up ‘the
value of the land’ to the owner, which, unless he retains other land
depreciated by severance or injurious affection, was the only compensation
which the 1845 code awarded to him.
That principle
does not assist the present appellants (and they did not seek expressly to
place reliance on it). Lord Bridge recognised that section 7 of the 1965 Act
involved a different approach to heads of compensation, and so, a fortiori,
does section 10.
The difficulty
of bringing their alleged loss and damage within section 10 emerges from the
way in which the appellants have formulated their claim. They recognise that
the damage must be to the value of the land. It is expressed as a series of
capital sums said to result from obstruction of access. On inquiry, however, it
was found to be based on an alleged loss of rental value, itself based on loss
of profits over the period of the works. I find it impossible to fit that
approach with the application of section 10 in the authorities.
The appellants
rely upon Ford. The plaintiffs had a short lease of three rooms. The
railway company took away part of the house, including the hall, through which
the plaintiffs had an exit to the street. There was evidence that interference
with the building did materially affect the value of the rooms on which the
plaintiffs had a lease. The plaintiffs’ right of going through a passage was
interfered with. Compensation of £600 was awarded, and this award was upheld in
the Court of Appeal.
Counsel
acknowledge the difficulty of assessing the effect of the decision, as
reported. The point was taken by the railway company that the arbitrator had
awarded compensation for some items upon which he had no jurisdiction to award
it: ‘mere personal inconvenience or mere injury to the business of the person
claiming’. Under the then existing law, an award was invalid if any part of the
compensation was beyond his jurisdiction. It was held that the arbitrator was
not influenced by matters beyond the scope of his jurisdiction. Bowen LJ
stated, at p29, that ‘the sum he has awarded is amply explained by the
existence of the substantial matter of compensation which the plaintiffs are
entitled to claim’. What is not clear from the report is whether the loss of
access was permanent and therefore caused permanent loss of value and, if so,
whether the compensation was for that permanent loss.
What is clear
from the report is, first, that it was submitted that temporary damage could
not be the subject of compensation (p18). It is also clear that adverse comment
was made upon any distinction between injury existing during the works and
injury which remained when the work was finished. Lord Esher MR stated, at p20:
The chief
point argued is this: it was urged that we were bound by authority to hold that
if the arbitrator awards any compensation upon such a claim as this for injury,
when it is injury only existing during the continuance of the work, and does
not confine himself to injury which remains when the work is finished, the
award is bad. That has always struck me as an exceedingly strange proposition —
that compensation may be given for the injury which exists at the time when the
work is finished, and yet that no compensation is to be allowed for the very
same injury which exists during the progress of the works. That has always
seemed to me to be a very fine distinction, which I could not understand; and
when we look into the authorities, we find that it is based on an expression of
Lord Chelmsford. I cannot help thinking that that expression, which has been
cited from Ricket v Metropolitan Ry Co, decided in the House of
Lords, and has been relied upon as an opinion of Lord Chelmsford, is open to
the explanation that it is a defective expression; he did not intend to say
that which no doubt his words, prima facie, seem to imply. But be that as it
may, that expression of his, as has been pointed out, was not adopted by Lord
Cranworth in the very same case,
in Caledonian Ry Co v Walker’s Trustees. I cannot, therefore,
take that expression of Lord Chelmsford’s as a binding authority upon this
Court, as a decision of the House of Lords. If that be so, we are driven back
to principle. As I have said, I cannot believe that a fine-drawn distinction
which seems to me unreasonable can be the law, and therefore I cannot think
that the mere fact that the arbitrator has given some compensation for injury
done before the works were completed, invalidates the award.
Lord
Chelmsford in Ricket, at p189, had said of section 68 of the Lands
Clauses Consolidation Act 1845, and of section 6 of the Railways Clauses Act
1845, that they appeared to him to apply not to temporary but to permanent
works of companies, whereas section 16 of the latter Act related to the damage
occurring during the execution of the works.
Cotton LJ also
refers to, and cites, Lord Selborne’s comment upon the statement of Lord
Chelmsford. He concludes that Lord Chelmsford’s statement should not be relied
upon, because it was not the ground of decision in Ricket. Cotton LJ
continued, at p24:
In my opinion
it would be wrong, and to take a very narrow view of this Act, to say that
compensation for injury caused by the exercise of the powers vested in the
company is to be confined to injury caused by the works when constructed. In my
opinion the right to compensation ought to include also injury caused to the
house, not only by the works when finished, but by exercise of the powers of
the Act in the course of putting up those works … Therefore in my opinion — and
the Master of the Rolls has already expressed his opinion generally to the same
effect — if injury is caused to the value of the building by that which is done
while the works are being constructed, the owner or occupier or person having
an interest is entitled to compensation in respect of his land and his interest
in the land which are injuriously affected.
It is not
entirely clear whether Cotton LJ had in mind damage during the works having a
permanent effect or such damage having only a temporary effect on value. If the
above statement may suggest the latter, the analysis by him, at p22, does not:
The railway
company took away part of the house; they took away, as I understand, all the
front block, and took away the hall, through which the plaintiffs had an exit
to the street, and there was evidence that that interference with the building
did materially affect the value of the rooms of which the plaintiffs had a
lease.
Moreover,
there seems to me to have been, with the greatest respect, a misunderstanding
of Lord Selborne’s comments in Walker, cited by Cotton LJ, upon Lord
Chelmsford’s statement in Ricket. Lord Selborne stated, at p283:
Much of Lord
Chelmsford’s reasoning was founded upon a distinction between temporary and
permanent damage under the 68th section of the Lands Clauses Act, and the 6th
and 16th sections of the Railways Clauses Act, in which Lord Cranworth did not
concur; and it certainly does not appear to me that the decision of Ricket‘s
Case, either in this House or the Exchequer Chamber, can satisfactorily
be explained by any such distinction. But both these noble and learned Lords
agreed that the damage by loss of custom, of which the plaintiff complained,
was a consequence of the works of the railway company, too remote and indefinite
to bring it within the scope of any of the compensation clauses of the Acts;
and this I consider to have been the true ground of that decision …
It can readily
be agreed that Ricket (cf Chamberlain) was decided on the ground
of remoteness. It does not follow that the distinction made in Ricket,
and other cases, between permanent and temporary loss, is invalid. The two
issues are separate, and I do not read Lord Selborne as advocating that
temporary loss of value comes within section 68. The damage for which an award
was made in Walker was a permanent damage: Lord Blackburn, at pp291 and
292. Moreover, Lord Selborne spoke with approval of Beckett, where the
permanence of the damage was a feature. All that Lord Selborne was doing, in my
view, was to explain why a different result was reached by the House in Ricket
and rightly concluding that it was on the ground of remoteness.
Bowen LJ
referred to the proposition of Mr Thesiger approved in Walker and
stated, at p27: ‘We are driven therefore to consider what is the right, if any,
in the present case which has been interfered with, and whether it has been
interfered with so as to affect the selling value of the property as property
within the definition to which I have alluded’. Bowen LJ considered the right of
the plaintiffs and stated (at p28) that it ‘was therefore a private right which
the occupiers of those rooms were by law entitled to make use of in connection
with their property, and I think there can be no question that the right gave
an additional market value to the property’. Bowen LJ continued:
Has that
right been interfered with according to the definition laid down in Metropolitan
Board of Works v McCarthy? It is urged that the injury which was
caused to the house by the taking away of the enjoyment of this hall, was an
injury caused only during the progress of the works, and therefore was not such
an injury as was intended to be compensated by s 6 of the Railways Clauses Act,
which provides for compensation being given for an injury done to lands by the
construction of a railway. But the question seems to me rather to be what is
the character of the injury inflicted, than what is the period during which it
occurs. I cannot help thinking that on the plain reading of the Act of
Parliament an injury may be done to houses and land, (if it is an injury
sufficient to lessen the value of the property,) quite as fully during the
progress of the works, as by the works after they have been constructed …
Compensation, therefore, was rightly claimed by the plaintiffs in this case in
respect of the alteration of the hall which formed the access to the demised
premises.
In the absence
of a reported finding as to whether the diminished right of access was
temporary or permanent, and in the presence of statements by Cotton LJ and
Bowen LJ which could apply to damage during the works having a permanent
effect, I find it difficult to assess the principle in Ford and its
effects. The main object of the court, it seems to me, was to decline to
invalidate the arbitrator’s award on the ground that it included heads of
damage beyond his jurisdiction. Bowen LJ concluded by stating:
I have come
to the conclusion that he did not do so, that the sum he has awarded is amply
explained by the existence of the substantial matter of compensation which the
plaintiffs are entitled to claim, and that, therefore, the award ought not to
be disturbed.
Concentrating,
as it did, on that question, the court did not authoritatively define what the
award was for or by what process any compensation for injury during the works
related to or formed a part of the sum awarded.
It appears to
me, from the statement of Bowen LJ just cited, that the ‘substantial matter of
compensation’ he had in mind was a permanent loss of value. Notwithstanding his
adverse comments upon a distinction between injury during the works and injury
when the works are finished, the analysis by Cotton LJ of the injury suffered
is in terms entirely consistent with the approach in the earlier cases I have
cited.
In the result,
I am not able to conclude that the majority of the court established a
principle that compensation was payable under section 68 for temporary
disturbance of rights over or in connection with land. The basis of the
decision is too uncertain to establish any such principle, and it would, in any
event, be contrary to the principles established in earlier cases of high
authority. It has to be recognised that, in Lingke, Fletcher Moulton LJ
stated, at p607:
It is quite
true that in the long line of decisions (not consistent with one another in all
cases) there was a time when it was thought that there was a fundamental
difference between damage caused by temporary interference with property to the
user of it and permanent interference. But since the case of Ford v Metropolitan
and Metropolitan District Ry Co 17 QBD 12, which was decided in this Court
in 1886, it has been settled law that the fact that an interference is only
temporary and that it takes place during the construction of the works is not
fatal to the right to compensation. Where the interference would give ground
for compensation if perpetual, then if it is temporary, but not for a
negligible time, it will also give ground for compensation.
That statement
was obiter, because the court was dealing with the Public Health Act
1875, where, as already stated, different considerations apply. As a comment on
the then current view, the statement of Fletcher Moulton LJ is, of course,
entitled to great respect. Upon analysis, however, I find myself driven to the
conclusion that
referred. We have not been referred to any case under section 10 in which the
‘temporary loss of rental value’ basis put forward in this case has been
approved.
Compensation
under section 68, and now under section 10 of the 1965 Act, is based upon a
permanent devaluation of or damage to the land, and no further sum is payable
with respect to temporary devaluation during the works on the basis argued in
this case. If I am wrong about that, I would, in any event, hold that
compensation is not payable under section 10 for disturbance during the works
by noise, dust and vibration not affecting the value of the land when the works
are complete, as distinct from temporary physical interference with the land or
a right used in connection with the land.
Since writing
this judgment, I have had the opportunity to see in draft the judgment of Ward
LJ. The answer which Ward LJ gives to question 1 follows from his conclusion as
to the effect of the decision of the House of Lords in Hunter v Canary
Wharf Ltd [1997] AC 655. It is a view which was not expressed on behalf of
the appellants at the hearing and, before concluding this judgment, I should
wish to refer to it.
The relevant
principle in Hunter is that only a person with an interest in land can
sue in private nuisance. Counsel arguing the contrary case in Hunter
(p679D) relied on St Helens Smelting Co v Tipping. He submitted
that, in St Helens, enjoyment of property by substantial occupation
(short of an interest in the land) had been recognised as a distinct form of
nuisance and that no material distinction was to be drawn in nuisance between
owner and non-owner occupation. It was in order to refute that argument that
Lord Hoffmann held (p707) that the third category of nuisance in St Helens,
that is nuisances causing an interference with the enjoyment of land, ‘do not
constitute a separate tort of causing discomfort to people but are merely part
of a single tort of causing injury to land’. St Helens had not ‘divided
nuisance into two torts’. Lord Hoffmann stated that once that was understood,
the rule that the plaintiff must have an interest in the land falls into place
as logical, and indeed inevitable. The purpose and effect of the decision of
the House in Hunter on this point was to limit the category of persons
who can sue in private nuisance.
Lord Hoffmann
was not expressly construing section 68 of the 1845 Act and the authorities
under it, and I do not understand his reasoning to have that effect or to bear
upon the law there expressed. St Helens is not cited in any of the cases
cited in the speeches in Argyle or in the other cases upon which I have
relied in considering question 1 (and injurious affection cases were not cited
in St Helens). There is nothing in those cases which suggests that the
law of injurious affection under section 68, and now section 10 of the 1965
Act, was being treated as part of or a branch of the law of nuisance. There is
nothing to suggest that the law of injurious affection was so influenced by the
categorisation of nuisance in St Helens (Lord Westbury LC, at p650) that
Lord Hoffmann’s reaffirmation that St Helens did not divide nuisance
into two torts could have the effect of equating a section 10 claim with a
claim in private nuisance.
While the
conclusion of Ward LJ demonstrates a way in which the law of injurious
affection under section 68 might have developed (a way which may well have been
beneficient), it does not, in my respectful view, accord with the way it did in
fact develop. I have already cited Lord Wilberforce’s rejection in Argyle
(at p130G) of the notion of introducing a more generous policy of compensation
under section 10 by judicial decision.
I would
dismiss the appeal and allow the cross-appeal.
Dissenting, WARD LJ said: I am consoled by the
fact that the problems acutely presented to me in this case by section 68 of
the Lands Clauses Consolidation Act 1845 have never been easy of resolution. In
1867 in Ricket v Metropolitan Railway Co (1867) LR 2 HL 175 it
appeared to the Lord Chancellor (Lord Chelmsford):
to be a
hopeless task to attempt to reconcile the cases upon the subject.
Lord
Wilberforce more than a century later observed in Argyle Motors (Birkenhead)
Ltd v Birkenhead Corporation [1975] AC 99, at p129A and 129F:
The relevant
section of the Act of 1845 (section 68) has, over 100 years, received through a
number of decisions, some in this House, and by no means easy to reconcile, an
interpretation which fixes upon it a meaning having little perceptible relation
to the words used. This represents a century of judicial effort to keep the
primitive wording — which itself has an earlier history — in some sort of
accord with the realities of the industrial age … It is not disputed that, in
spite of its apparent form, this subsection is, by the force of judicial
interpretation, a compensation section and not merely procedural, ie, it
authorises the payment of compensation ‘in respect of any lands, or of any
interest therein, which shall have been … injuriously affected by the execution
of the works, …
The questions
which arise in this appeal are whether compensation is payable under section 10
of the Compulsory Purchase Act 1965, which itself applies section 68 of the
1845 Act in respect of the claims, which are brought under four heads:
1. Nuisance by
noise, dust and vibration, said to be ‘physical interferences’ to the
claimants’ rights to be protected in their enjoyment of the premises directly
affected by the nuisance.
2. Nuisance by
the erection of hoardings obscuring the hotel and effectively preventing or
restricting the claimants’ rights of access to and from the highway.
3. Nuisance by
obstruction of the hotel’s rights of access to and from the adjoining public
highway.
4. Nuisance by
obstruction of the use of the public highway thereby obstructing access to the
premises.
I agree with
Pill LJ that the claims brought under headings 2, 3 and 4 above, being claims
of interference with rights of access, are capable of forming the basis of a
claim under section 10 (though whether in fact they do or not is a matter for
the Lands Tribunal). I also agree with him that the real and important issues
are:
1. whether the
claim under the first heading for compensation for nuisance by noise, dust and
vibration is sustainable if no physical damage is caused to the land itself;
and
2. whether a
claim lies if the loss in the value of the land is of temporary duration
lasting only while the property is affected by the actual execution of the
works and without the property having suffered any permanent ill-effect by the
time of the completion of the work.
Need for
physical damage
Support for
the respondents’ submissions are principally derived from the speech of Lord
Cranworth in Ricket and from the speech of Lord Chelmsford in Metropolitan
Board of Works v McCarthy (1874) LR 7 HL 243. Lord Cranworth said,
at p198:
The injury
must be actual injury to the land itself, as by loosening the foundation of
buildings on it, obstructing its light, or its drains, making it inaccessible
by lowering or raising the ground immediately in front of it, or by some such
physical deterioration.
Lord
Chelmsford said, at p253:
where by the
construction of works there is a physical interference with any right, public
or private, which the owners or occupiers of property are by law entitled to
make use of, in connection with such property … there is a title to
compensation, if, by reason of such interference, the property, as a property,
is lessened in value.
I do not
accept those dicta justify or were intended to lay down a rule so narrow
and circumscribed as the respondents submit. My reasons for that view are the
following.
1. Although Ricket
may really have been decided on remoteness, I accept what Lord Wilberforce said
about the case, namely that, at p130F:
the
pronouncements by eminent members of this House are in such explicit terms that
a clear conviction of their error or, possibly, the most powerful
considerations of policy would need to be present before so strong a current of
authority could be turned back.
The ratio of
that case (when not viewed in terms of remoteness) is, as I analyse it, no more
than that the damage must be damage to the land itself. In the sentence
immediately preceding the passage I have quoted above, Lord Cranworth had said,
at p198:
Both
principle and authority seem to me to shew that no case comes within the
purview of the statute, unless where some damage has been occasioned to the
land itself, in respect of which, but for the statute, the complaining party
might have maintained an action.
That is the
general principle. He then went on to give examples of actual injury to the
land, but his use of the phrase ‘as by …’ is an indication, to my mind, that he
is not giving an exhaustive list of examples. There is no suggestion that other
examples of ‘actual injury’ to the land itself would be excluded from
compensation. He was not, in my judgment, circumscribing the ambit of the
section of the Act with which the court was concerned, which was in similar
terms to section 68.
There is no
hint in the speech of Lord Chelmsford that he was limiting the application of
the section. As he later explained in McCarthy, he was taking ‘some
pains to distinguish’ the case where the premises themselves had been
injuriously affected and Ricket‘s case where, at p255:
the jury
found that there was no damage done to the structure of the house, ie, to the
premises; and the question in the special case for the opinion of the Court
was, ‘whether the loss of customers by the Plaintiff in his trade was such
damage as to entitle him to recover from the company?’
Lord Westbury
dissented, and one has to note that Lord Blackburn in Caledonian Railway Co
v Walker’s Trustees observed that Lord Cranworth’s reasoning was not
accepted by the other members of the House and that he (Lord Blackburn) would
not have been prepared to follow that particular dictum.
2. The next
case in the Victorian trilogy is McCarthy. The lord chancellor, Lord
Cairns, embraced the test stated by counsel, Mr Thesiger, that the construction
of the works should be such character that, at p253:
there is a
physical interference with any right, public or private, which the owners or
occupiers of property are by law entitled to make use of in connection with the
property … if, by reason of such interference, the property, as a property is
lessened in value.
I make these
observations about the definition:
(i) The title
to compensation depends on the property as a property being lessened in
value. This restates the point I have made that the essence of the claim is
damage to property, lessening its value as such.
(ii) The lord
chancellor said of the Thesiger definition, at p253:
I … should
not be disposed to find fault with any part of that definition …
An essential
part of the definition to which he was thus giving his approval must also have
been the meaning which counsel himself was giving to the words he was using,
even though counsel’s explanation was not being repeated in the speech. Counsel
is reported, at p249, to have said:
The word
‘physical’ is here used in order to distinguish the case from cases of that
class where the interference is not of a physical, but rather of a mental,
nature, or of an inferential kind, such as those of a road rendered less
agreeable or convenient, or a view interfered with, or the profits of a trade,
by the creation of new highway or street, diminished in the old one.
The definition
cannot be properly applied without using it in the context it was intended to
have.
(iii)
Moreover, this distinction between physical and personal is expressly made by
Lord Chelmsford. He said, at p256:
After the
many irreconcilable decisions upon the compensation clauses in the Lands
Clauses Consolidation Act, and the Railways Clauses Consolidation Act,
I think we may now be said to have arrived at some settled conclusions on the
subject. It may be taken to have been finally decided that in order to found a
claim to compensation under the Acts there must be an injury and damage to the
house or the land itself in which the person claiming compensation has an
interest. A mere personal obstruction or inconvenience, or a damage
occasioned to a man’s trade or the goodwill of his business, although of such a
nature that but for the Act of Parliament it might have been the subject of an
action for damages, will not entitle the injured party to compensation under
it. (My emphasis.)
(iv) Lord
Penzance first stated the general rule, then made the qualification. The
general rule is (p262):
It may
reasonably be inferred that the Legislature, in authorizing the works, and thus
taking away any rights of action which the owner of the land would have if the
works had been constructed by his neighbour, intended to confer on such owner a
right to compensation co-extensive with the rights of action of which the
statute deprived him. But on no reasonable ground, as it seems to me, can it be
inferred that the Legislature intended to do more, and actually improved the
position of the person injured by the passing of the Act.
Then he added
the qualification:
There is
another rule, which is, I conceive, well settled in these cases, namely, that
the damage or injury, which is to be the subject of compensation, must not be
of a personal character, but must be a damage or injury to the ‘land’ of the
claimant considered independently of any particular trade that the claimant may
have carried on upon it.
I emphasise
that his qualification is not that there should be physical damage, but
that there should be damage to the land as opposed to damages of a personal
character.
(v) The
general rule is part of the ratio of the case. The lord chancellor said,
at p252:
I propose
entirely to accept the test which has been applied both in this House and
elsewhere, as to the proper meaning of those words (‘injuriously affected’) as
giving a right of compensation, namely, that the proper test is to consider
whether the act done in carrying out the works in question is an act which would
have given a right of action if the works had not been authorized by Act of
Parliament.
Lord Hatherley
said, at p260
But I believe
the rule to be a sound one, that wherever an action might have been brought for
damages if no Act of Parliament had been passed, the case is brought within the
class of cases in which the property is ‘injuriously affected’ within the
meaning of the Act.
Lord O’Hagan
said, at p265:
The policy of
that Act I apprehend to have been to prevent private caprice or selfishness from
interfering with the prosecution of works designed for the public benefit; but
to do this with strict regard to individual rights by securing ample
compensation in every case in which individual sacrifice or inconvenience is
found to be essential to the general good. It never contemplated that the
community should profit at the expense of a few of its members, and as the
condition of redress, it required only proof by the owner of injury to his
property.
3. The third
case is Caledonian Railway Co v Walker’s Trustees. Lord Selborne
LC said, at pp275–276:
the
propositions which I regard as having been established by (earlier decisions of
the House) … being these:–
1. When a
right of action, which would have existed if the work in respect of which
compensation is claimed had not been authorized by Parliament, would have been merely
personal, without reference to land or its incidents, compensation
is not due under the Act. 2. When damage arises, not out of the execution, but
only out of the subsequent use of the work, then also there is no case for
compensation. 3. Loss of trade or custom, by reason of a work not otherwise
directly affecting the house or land in or upon which a trade has been
carried on, or any right properly incident thereto, is not by itself a proper
subject for compensation. 4. The obstruction by the execution of the work, of a
man’s direct access to his house or land, whether such access be by a public
road or by a private way, is a proper subject for compensation. (My emphasis.)
Lord O’Hagan
said, at p288:
I have never
been able to understand the reason why premises should not be held to be
‘injuriously affected’ if they are injured under such circumstances by the
construction of a railway so as to be diminished in usefulness and
lowered in value, or why, if there be real and appreciable injury, there should
not be adequate compensation.
Lord Blackburn
said, at p293:
And it must,
I think, also be now considered as settled that the construction of those
statutes is confined to giving compensation for an injury to land or an
interest in land; that it is not enough to shew that an action would have lain
for what was done if unauthorized, but it must also be shewn that it
would have lain in respect of an injury to the land or an interest in land.
(My emphasis.)
Again it is
pertinent to point out that the qualification to the general rule (there must
have been a cause of action but for the statutory authorisation) is only the
qualification that there must be injury to the land. There is no suggestion
that there must be physical injury to the land.
4. Finally
there is Argyle Motors (Birkenhead) Ltd v Birkenhead Corporation.
That case establishes, at pp129–130, that:
by a series of
judicial observations of high authority it is well established that the only
compensation which can be obtained under this section is ‘in respect of …
lands,’ ie, in respect of some loss of value of land, or (what is a branch
under this same heading) in respect of some damage to lands, and that
compensation cannot be obtained for any loss which is personal to the owner, or
which is related to some particular user of the land.
As a matter
of language, though language is an uncertain guide in this statute, it must be
said that the words I have quoted ‘in respect of any lands, …’ support the
exclusion of claims for personal loss.
if the right
to compensation in the present case depends upon section 68 the appellants
cannot succeed in obtaining compensation for business losses as such. I make it
clear, as did the Court of Appeal, that if they can prove that a loss
of profitability affects the value of their interest in the land they can
recover compensation for this loss of value. (My emphasis.)
The criterion
laid down by Lord Wilberforce to entitle compensation is ‘some loss of value of
land’ or ‘some damage to lands’. He does not require that the damage be
physical damage. He accepts that if a loss of profitability affects the value
of the land, compensation is payable for that loss of value.
The real
question posed in this case is whether or not the claim for compensation for
nuisance by noise, dust and vibration is an injurious affection of the land of
the kind which the speech of Lord Wilberforce would embrace. At the heart of
the issue lies the question whether or not a cause of action for that kind of
nuisance is one the essence of which is the causing of some loss of value of
land or some damage to land or to an interest in the land.
In my
judgment, those questions are answered affirmatively by Hunter v Canary
Wharf Ltd [1997] AC 655. The speech of Lord Cooke of Thorndon, citing the
judgment of Sayre J in Hosmer v Republic Iron & Steel Co
(1913) 60 South 801, enables me to quote Blackstone’s definition of nuisance as
‘anything done to the hurt or annoyance of the lands … of another’ (Commentaries,
4th ed (1876) vol III, ch XIII, p190). For Lord Goff of Chieveley, at
pp687G–688C:
The basic
position is, in my opinion, most clearly expressed in Professor Newark’s
classic article on ‘The Boundaries of Nuisance’ (1949) 65 LQR 480 when he
stated, at p482, that the essence of nuisance was that ‘it was a tort to land.
Or to be more accurate, it was a tort directed against the plaintiff’s
enjoyment of rights over land …’ Later, when distinguishing cases of personal
injury, he stated, at pp488–489: ‘In true cases of nuisance the interest of the
plaintiff which is invaded is not the interest of bodily security but the
interest of liberty to exercise rights over land in the amplest manner. A
sulphurous chimney in a residential area is not a nuisance because it makes
householders cough and splutter but because it prevents them taking their ease
in their gardens. It is for this reason that the plaintiff in an action for
nuisance must show some title to realty.’
For Lord Lloyd
of Berwick, at pp695B and 696A:
Private
nuisances are of three kinds. They are (1) nuisance by encroachment on a
neighbour’s land; (2) nuisance by direct physical injury to a neighbour’s land;
and (3) nuisance by interference with a neighbour’s quiet enjoyment of his
land…
It has been
said that an actionable nuisance is incapable of exact definition. But the
essence of private nuisance is easy enough to identify, and it is the same in
all three classes of private nuisance, namely, interference with land or the
enjoyment of land. In the case of nuisances within class (1) or (2) the measure
of damages is as I have said, the diminution in the value of the land. Exactly
the same should be true of nuisances within class (3). There is no difference
of principle …
Damages for
loss of amenity value cannot be assessed mathematically. But this does mean
that such damages cannot be awarded: see Ruxley Electronics and Construction
Ltd v Forsyth [1996] AC 344 per Lord Mustill, at pp360–361,
and per Lord Lloyd of Berwick, at p374.
For Lord Hope
of Craighead, at p724:
So where it
is the tort of nuisance which is being relied upon to provide the remedy — and
I believe that the same rules should apply whether the remedy sought is that of
an injunction or in damages — the plaintiff must show that he has an interest
in the land that has been affected by the nuisance of which he complains …
The effect on
that interest in land will also provide the measure of his damages, if
reimbursement for the effects of the nuisance is what is being claimed,
irrespective of whether the nuisance was by encroachment, direct physical
injury or interference with the quiet enjoyment of the land. The cost of
repairs or other remedial works is of course recoverable, if the plaintiff has
required to incur that expenditure. Diminution in the value of the plaintiffs’
interest, whether as owner or occupier, because the capital or letting value of
the land has been affected, is another relevant head of damages. When the
nuisance has resulted only in loss of amenity, the measure of damages must in
principle be the same.
For my part,
the speech of Lord Hoffmann brings symmetry to the law and removes the uncertainties
which have blighted a consistent approach to the meaning of the language of
section 68 of the 1845 Act. Lord Hoffmann explains, at p702H:
Nuisance is a
tort against land, including interests in land such as easements and profits.
That, therefore,
is common ground in the four speeches. It is, however, from his critical
analysis of Khorasandjian v Bush [1993] QB 727 that I draw my
crumbs of comfort for my dissenting from the strong views taken by my lords,
Pill LJ and Peter Gibson LJ, whose judgments I have read in draft. Lord
Hoffmann said of Dillon LJ’s judgment in that case (at p705A), seeking to
extend the right of action to others than those who have an interest in the
land, that his (Dillon LJ’s) reasoning:
is based upon
a fundamental mistake about the remedy which the tort of nuisance provides.
It is, I fear,
necessary to cite at some length from pp705 and 707 of his speech. He said:
It (that
fundamental mistake) arises, I think, out of a misapplication of an important
distinction drawn by Lord Westbury LC in St Helens Smelting Co v Tipping
(1865) 11 HL Cas 642. In that case, the plaintiff bought a 1,300 acre estate in
Lancashire. He complained that his hedges, trees and shrubs were being damaged
by pollution from the defendants’ copper-smelting works a mile and a half away.
The defendants said that the area was full of factories and chemical works and
that if the plaintiff was entitled to complain, industry would be brought to a
halt. Lord Westbury said, at pp650–651:
‘My Lords, in
matters of this description it appears to me that it is a very desirable thing
to mark the difference between an action brought for a nuisance upon the ground
that the alleged nuisance produces material injury to the property, and an
action brought for a nuisance on the ground that the thing alleged to be a
nuisance is productive of sensible personal discomfort. With regard to the
latter, namely, the personal inconvenience and interference with one’s
enjoyment, one’s quiet, one’s personal freedom, any thing that discomposes or
injuriously affects the senses or the nerves whether that may or may not be
denominated a nuisance, must undoubtedly depend greatly on the circumstances of
the place where the thing complained of actually occurs … But when an
occupation is carried on by one person in the neighbourhood of another, and the
result of that trade, or occupation, or business, is a material injury to
property, then there unquestionably arises a very different consideration. I
think, my Lords, that in a case of that description, the submission which is
required from persons living in society to that amount of discomfort which may
be necessary for the legitimate and free exercise of the
result of which is sensible injury to the value of the property.’
St Helens
Smelting Co v Tipping was a landmark case.
It drew the line beyond which rural and landed England did not have to accept
external costs imposed upon it by industrial pollution. But there has been, I
think, some inclination to treat it as having divided nuisance into two torts,
one of causing ‘material injury to property,’ such as flooding or depositing
poisonous substances on crops, and the other of causing ‘sensible personal
discomfort’ such as excessive noise or smells. In cases in the first category,
there has never been any doubt that the remedy, whether by way of injunction or
damages, is for causing damage to the land. It is plain that in such a case
only a person with an interest in the land can sue. But there has been a
tendency to regard cases in the second category as actions in respect of the
discomfort or even personal injury which the plaintiff has suffered or is
likely to suffer. On this view, the plaintiff’s interest in the land becomes no
more than a qualifying condition or springboard which entitles him to sue for
injury to himself.
If this were
the case, the need for the plaintiff to have an interest in land would be hard
to justify. The passage I have quoted from Dillon LJ (Khorasandjian v Bush
[1993] QB 727, 734) is an eloquent statement of the reasons. But the premise is
quite mistaken. In the case of nuisances ‘productive of sensible personal
discomfort,’ the action is not for causing discomfort to the person but, as in
the case of the first category, for causing injury to the land. True it is that
the land has not suffered ‘sensible’ injury, but its utility has been
diminished by the existence of the nuisance. It is for an unlawful threat to
the utility of his land that the possessor or occupier is entitled to an
injunction and it is for the diminution in such utility that he is entitled to
compensation …
But
inconvenience, annoyance or even illness suffered by persons on land as a
result of smells or dust are not damage consequential upon the injury to the
land. It is rather the other way about: the injury to the amenity of the land
consists in the fact that the persons upon it are liable to suffer
inconvenience, annoyance or illness …
Once it is
understood that nuisances ‘productive of sensible personal discomfort’ (St
Helens Smelting Co v Tipping, 11 HL Cas 642, 650) do not constitute
a separate tort of causing discomfort to people but are merely part of a single
tort of causing injury to land, the rule that the plaintiff must have an
interest in the land falls into place as logical and, indeed, inevitable.
It is, to my
mind, equally logical and, indeed, inevitable that a claim for compensation for
nuisance through noise, dust and vibration should also fall into place alongside
the right to compensation for nuisance through direct physical injury to the
land or for nuisance through an interference with a right of way or a right of
access to and from the properties. They are all examples of land or an interest
in land being injuriously affected by the execution of authorised work. Once
the true nature of the claim made in this case is understood to be in lieu of
the tort against land, there can be no reason not to include it as a form of
injurious affection of land.
Consequently,
and like Lord O’Hagan in McCarthy, I ‘cheerfully’ answer the first
question posed by the member of the Lands Tribunal by saying, ‘Yes, the Lands
Tribunal did err in law in deciding that compensation is not payable under
section 10 of the Compulsory Purchase Act 1965 where an interference to some
legal right, public or private, is not a direct physical interference to the
land or a right appurtenant to land’.
Is
temporary interference enough?
My immediate
reaction is why should it not be? The settled purpose of the legislation is to
confer a right to compensation coextensive with the right of action of which
the statutes deprived the claimant: see, for example, Lord Penzance’s speech in
McCarthy cited above. I do not apprehend there to be any doubt about the
entitlement to damages where an actionable nuisance causes a temporary
interference. To cite Lord Hoffmann in Hunter again, he said, at p706D,
dealing with ‘an action for nuisance caused by smells from a pig farm’:
But diminution
in capital value is not the only measure of loss. It seems to me that the value
of the right to occupy a house which smells of pigs must be less than the value
of the occupation of an equivalent house which does not. In the case a transitory
nuisance, … the property will seldom be reduced. But the owner or occupier
is entitled to compensation for the diminution in the amenity value of the
property during the period for which the nuisance persisted. To some extent
this involves placing a value upon intangibles. But estate agents do this all
the time. The law of damages is sufficiently flexible to be able to do justice
in such a case: compare Ruxley Electronics and Construction Ltd v Forsyth
[1996] AC 344.
There may of
course be cases in which, in addition to damages for injuries to his land, the
owner or occupier is able to recover damages for consequential loss. He will,
for example, be entitled to loss of profits which are the result of inability
to use the land for the purposes of his business. (My emphasis.)
I have already
referred to the speech of Lord Hope where he refers to the letting value of the
land as a relevant head of damages.
So, in my
judgment, it should be. Suppose the claimant is the owner of a house, the only
entrance to which is from the highway on which roadworks are being carried out,
with the result that a mound of earth is piled outside his front door making it
impossible for him to enter his home for a period of six months in the middle
of the five years while this work is being carried out. He has to incur the
expenditure of finding alternative accommodation. He suffers no further loss.
Why, in all justice, should he not have a right to be reimbursed that
expenditure? If the purpose of the Act is, and surely it is, that he should be
compensated for the loss he would otherwise recover by his action in tort, then
I confess I baulk at imposing the restrictions upon his claim for which the
respondents to this appeal contend.
What is the basis
for that restriction? The respondents rely upon a passage in the speech of Lord
O’Hagan in McCarthy, where he said, at p268:
It appears to
me that, looking only to Ricket‘s Case and Chamberlain‘s Case,
the distinction is perfectly plain that the injury in the one case was
temporary and personal, and in the other case permanent and to the premises.
This seems to
me a scant basis for a proposition which runs counter to Lord O’Hagan’s own
statement of the general principle, which is also cited above. It did not
feature in Mr Thesiger’s definition, which was accepted by that court as the
appropriate test.
A second
reason for this limitation derives from Lord Chelmsford’s analysis in Ricket‘s
case of the sixth and 16th sections of the Railways Clauses Consolidation Act
1845 (section 6 being similar to section 68 of the Lands Clauses Consolidation
Act with which we are concerned). It led him to say, at p189:
These
sections appear to me to apply not to temporary, but to permanent works of
companies.
I have pointed
out that his speech stood alone. His distinction between temporary and
permanent damage was criticised by Lord Selborne LC in Caledonian Railway Co
v Walker, at p283. When Lord Chelmsford was at pains to explain in McCarthy
the reasoning of his opinion in Ricket‘s case, he (unlike Lord O’Hagan)
distinguished Ricket‘s case from Chamberlain‘s case only on the
basis of the absence of damage done to the house in the former case. He made no
reference there to the temporary as opposed to the permanent nature of the
damage. True it is that on the facts of McCarthy there was permanent
damage caused by the destruction of the dock, but that is mentioned as a fact
of the case and not as the reason for the decision in the case.
For me, the
matter is put beyond doubt by the decision of this court in Ford v Metropolitan
District Railway (1886) 17 QBD 12. As appears from p20 in the judgment of
Lord Esher MR:
The chief
point argued is this: it was argued that we were bound by authority to hold
that if the arbitrator awards any compensation upon such a claim as this for
injury, when it is injury only existing during the continuance of the work, and
does not confine himself to injury which remains when the work is finished, the
award is bad. That has always struck me as an exceedingly strange proposition —
that compensation may be given for the injury which exists at the time when the
work is finished, and yet that no compensation is to be allowed for the very
same injury which exists during the progress of the work. That has always
seemed to me to be a very fine distinction, which I could not understand; and
when we look into the authorities, we find that it is based on an expression of
Lord Chelmsford. I cannot help thinking that that expression, which has been
cited from Ricket v Metropolitan Ry Co, decided in the House of
Lords, and has been relied upon as an opinion of Lord Chelmsford, is open to
the explanation that it is a
prima facie, seem to imply. But be that as it may, that expression of his, as
has been pointed out, was not adopted by Lord Cranworth in the very same case,
and certainly has been spoken of, to say the least, with doubt by Lord
Selbourne in Caledonian Ry Co v Walker’s Trustees. I cannot,
therefore, take that expression of Lord Chelmsford’s as a binding authority
upon this Court, as a question of the House of Lords. If that be so, we are
driven back to principle. As I have said, I cannot believe that a fine-drawn
distinction which seems to me unreasonable can be the law, and therefore I
cannot think that the mere fact that the arbitrator has given some compensation
for injury done before the works were completed, invalidates the award. (My
emphasis.)
I add the
emphasis to show that the point was central to the decision. Cotton LJ was of
the similar view that Ricket was not binding upon the court, and he
said, at p24:
In my opinion
it would be wrong, and to take a very narrow view of this Act, to say that
compensation for injury caused by the exercise of the powers vested in the
company is to be confined to injury caused by the works when constructed. In my
opinion the right to compensation ought to include also injury caused to the
house, not only by the works when finished, but by the exercise of the powers
of the Act in the course of putting up those works … I should say
‘construction’ (in section 6 of the Railway Clauses Act 1845) points to the
actual construction of the works as well as to the works when constructed.
Finally, Bowen
LJ said, at p28:
I cannot help
thinking that on the plain reading of the Act of Parliament an injury may be
done to houses and land, (if it is an injury sufficient to lessen the value of
the property,) quite as fully during the progress of work, as by the works
after they have been constructed;
It was thus
the unanimous view of the Court of Appeal that Lord Chelmsford’s language was
not an integral part of the decision in Ricket‘s case. They were not
bound by it. Neither am I. But, since this was, as I have indicated, a point
fully material for the court’s decision, then it cannot be treated as obiter
and it is binding upon us.
No case was
cited to us which throws doubt upon Ford, which has stood the test of
more than a century. On the contrary, it was applied by this court in Lingke
v Christchurch Corporation [1912] 3 KB 595, at p607, where Fletcher
Moulton LJ said:
But since the
case of Ford v Metropolitan District Ry Cos, which was decided in
this Court in 1886, it has been settled law that the fact that an interference
is only temporary and that it takes place during the construction of the works
is not fatal to the right to compensation. Where the interference would give
ground for compensation if perpetual, then if it is temporary, but not for a negligible
time, it will also give ground for compensation.
I find it
difficult to ignore the persuasive force of that observation. It is correct
that section 308 of the Public Health Act 1875 is couched in terms that ‘where any
person sustained any damage by reason of the exercise of any of the powers
of this Act’, (emphasis added), but the difference between that and the
language of the 1845 Act does not seem to me to be crucial. He who has an
interest in land sustains damage when his land is injuriously affected.
Moreover, the court in Lingke was clearly of the view that they should
follow the Lands Clauses Consolidation Act cases in the House of Lords. They
adopted the same approach, namely that in order that there might be a claim for
compensation, the act must be an act which, if done by a private person, would
have inflicted an actionable wrong on the plaintiffs. Since the action in
nuisance would lie, there is no justification for denying compensation.
The choice of
valuation date does not present an obstacle to compensation being assessed,
albeit with difficulty on a letting value basis or otherwise for loss of
amenity, given the way in which the case proceeded before the member. His
decision records that:
In the course
of argument the parties accepted that the obvious date by reference to which
compensation must be assessed is the date when the works giving rise to the
entitlement to compensation are complete … Mr Mole also accepted that if, as I
have found, the claimant may be entitled to compensation for temporary damage
which comes to an end on the completion of work, then as at that date what must
be assessed is the loss which has been suffered up to that date. If that has to
be assessed by reference to annual values the relevant values must be the values
at the date when the loss was in fact suffered.
Pausing only
to say that an action for consequential loss is not to be excluded, I agree
with the decision of the member and, consequently, I would so answer the third
question posed by him.
Quantum of
compensation
On this issue
I am entirely in agreement with my lords. Just as I see no reason why the
claimant should get less in the case of a temporary interference, I see no
reason why he should get more than he would have been entitled to had he been
able to bring his action in tort. The member did not err in this respect.
For my part, I
would allow the appeal on question 1 and dismiss the cross-appeal.
Agreeing with
Pill LJ, PETER GIBSON LJ said: To those unfamiliar
with the law of compulsory purchase, it may come as a surprise that in the late
1990s that part of the law which relates to injurious affection of land not
held with land compulsorily purchased is still governed by the construction
given by the courts to a section of an Act passed over 150 years ago. That
surprise may be the greater because section 68 of the Lands Clauses
Consolidation Act 1845 has given rise to difficulty and a divergence of views
and, as Lord Wilberforce said in Argyle Motors v Birkenhead
Corporation [1975] AC 99 at p129, the section has received an
interpretation which fixes on it a meaning having little perceptible relation
to the words used. Thus, although section 68 is in form merely procedural, Lord
Wilberforce pointed out that it has been interpreted as a compensation section,
‘ie, it authorises the payment of compensation ‘in respect of any lands, or of
any interest therein, which shall have been … injuriously affected by the
execution of the works,…”. Moreover, although the section is expressed to
apply where lands or any interest therein shall have been ‘taken for or
injuriously affected by the execution of the works’ (my emphasis), as Lord
Wilberforce indicated in the passage which I have cited, the section has been
interpreted as applying as though the words emphasised were not there. Section
10(1) of the Compulsory Purchase Act 1965 repeats the words of section 68,
including the words ‘taken for or injuriously affected’, but subsection (2)
makes clear that it must be construed in the way in which section 68 has been
construed, as conferring the same right to compensation for injurious affection
to land.
Five
limitations on the right, conferred by section 68, to compensation have been
distilled by commentators from the decided cases, viz:
I. The
injurious affection must be the consequence of the lawful exercise of the
statutory powers relating to the execution of the works.
II. The
injurious affection must be such that if not caused by the acts done under
statutory authority, it would give rise to a cause of action.
III. The
value of the land or interest must be directly affected by physical
interference with some legal right, public or private, which the claimant is
entitled to make use of in connection with his property.
IV. The
damage must arise from the execution of the authorised works and not from their
use.
V. The
compensation must be ascertainable in accordance with the general rules
applicable to damages in tort.
(Encyclopedia
of Law of Compulsory Purchase and Compensation, Vol I, p[B] 0038.)
At least one
of those limitations is challenged in this appeal. I would emphasise that the
limitations are cumulative. Thus, it is not enough to find that the injurious
affection would have given rise to the tort of nuisance if caused by works not
under statutory authority. For example, if the tort would have been undue
interference with a landowner’s comfortable and convenient enjoyment of his
land, that would not suffice unless the third limitation were satisfied. Again,
if the injurious affection arose from the use of the authorised works, it would
not be compensatable by reason of the fourth limitation, even if the first,
second and third limitations were satisfied.
Of the two
questions of law stated by the Lands Tribunal in its case stated requested by
the appellants, the first, as amended in this court, is
payable under section 10, where an interference to some legal right, public or
private, is not a direct physical interference to land or a right appurtenant
to land.
Mr Harper QC,
for the appellants, submitted that the true test of compensation entitlement
was whether the injurious affection was attributable to an interference which
was capable of being an actionable wrong, and not whether the interference
capable of being an actionable wrong was a physical interference or not.
Thereby, Mr Harper challenged the correctness of the third limitation from the Encyclopedia.
Mr Harper pointed to the way Mr Thesiger QC is recorded in the note of the
argument in Metropolitan Board of Works v McCarthy (1874) LR 7 HL
243, at p249, as having put the proposition which was accepted by the House of
Lords and as having explained that proposition:
The principle
to be deduced from a consideration of all the cases is this, that where by the
construction of works there is a physical interference with any right, public
or private, which an owner is entitled to use in connection with his own
property, he is entitled to compensation if, by reason of such interference,
his own property is injured. The word ‘physical’ is here used in order to
distinguish the case from cases of that class where the interference is not of
a physical, but rather of a mental, nature, or of an inferential kind, such as
those of a road rendered less agreeable or convenient, or a view interfered
with, or the profits of a trade, by the creation of a new highway or street,
diminished in the old one.
Mr Harper
submitted that it was sufficient that the value of land was affected by matters
such as noise, dust and vibration, which would be actionable if produced
without statutory authority even though there was no physical interference.
I am not able
to accept those submissions. Mr Thesiger did not suggest that the interference
need not be physical nor did the House of Lords in adopting Mr Thesiger’s
proposition expand on the reference to ‘physical’ interference in the way Mr
Thesiger did or at all. As the Lands Tribunal pointed out, Mr Thesiger was
setting out the effect of earlier decisions and may well have had in mind the
remarks of Lord Cranworth in Ricket v Metropolitan Railway Co
(1867) LR 2 HL 175, at p198, referring to ‘actual injury to the land itself, as
loosening the foundation of buildings on it, obstructing its light or its drains,
making it inaccessible by lowering or raising the ground immediately in front
of it, or by some such physical deterioration’. No case under section 68 has
been shown to us where compensation was awarded without there being direct
physical interference with the land, or a right appurtenant to the land, of the
person to be compensated. I accept the submission of Mr Mole QC, for the
respondents, that, although it is a necessary condition that the injurious
affection must have been actionable but for statutory authority, it is not a
sufficient condition. The proposition that everything gives rise to a claim for
compensation if, but for the statute, it would be actionable is not true. Thus,
it is clear that damage arising from the use of the land with the authorised
works, even though actionable but for statutory authority, is not
compensatable: Hammersmith and City Railway Co v Brand (1869) LR
4 HL 171. Moreover, Lord Wilberforce in Argyle Motors, supra, at
p130, cautioned against extending the scope of compensation by judicial
decision.
In my
judgment, therefore, it is plain that the Lands Tribunal did not err in law in
relation to the first question which falls to be answered in the negative.
The second
question stated by the Lands Tribunal is whether it erred in law in deciding
that where there has been interference with some legal right, public or
private, which is capable of giving rise to a claim for compensation under
section 10, the quantum of damages recoverable as compensation does not include
all injurious affection attributable to and caused by the execution of works,
whether or not caused by an interference, physical or otherwise, with some
public or private legal right.
Mr Harper
submitted that once there has been interference giving rise to a claim for
compensation, all injurious affection caused by the works is compensatable,
even though it did not amount to a legal wrong. That seems to me wrong in
principle, as offending the second recognised limitation on the right conferred
by section 68 to compensation. If Mr Harper were right, it would have the
surprising consequence that a person whose land was injuriously affected by
works executed under statutory authority would be better off than a person
whose land was injuriously affected by other works. In Metropolitan Board of
Works v McCarthy (1874) LR 7 HL 243, at p262, Lord Penzance said:
It may
reasonably be inferred that the Legislature, in authorizing the works, and thus
taking away any rights of action which the owner of land would have had if the
works had been constructed by his neighbour, intended to confer on such owner a
right to compensation co-extensive with the rights of action of which the
statute had deprived him. But on no reasonable ground, as it seems to me, can
it be inferred that the Legislature intended to do more, and actually improve
the position of the person injured by the passing of the Act.
Mr Harper
relied on Re London, Tilbury and Southend Railway and Gower’s Walk School
(1889) 24 QBD 326. But that case is authority only for the proposition that a
person is entitled to compensation for all the injurious affection caused by
the interference to his right to access to light, in the same way that he could
have recovered damages in tort in an action for that interference, but for the
statutory authority for the works. I accept Mr Mole’s submission that that case
is not authority for the proposition that a wider measure of compensation than
that allowable in an action for tort may be obtained in section 68 cases: see Horton
v Colwyn Bay and Colwyn Urban District Council [1908] 1 KB 327, at p341.
A claim to compensation under section 10 is to be distinguished from a claim to
compensation under section 7 of the 1965 Act, the words of which have been
construed more widely: Encyclopedia, para 2-1549.
Accordingly I
answer this question in the negative too.
The question
posed by the Lands Tribunal in the further case stated requested by the
respondents is whether the Lands Tribunal erred in law in holding that
compensation is payable under section 10 when the interference is only
temporary and where, after such temporary interference, the value of the land
has ceased being affected by the past interference.
It is common
ground that if the temporary interference is such as to affect adversely the
value of the land at the date of valuation for compensation purposes, then it
will be taken into account. For example, a temporary loss of profits, because
of the works, may nevertheless have an adverse effect on the value of the land.
The question, however, is based on the hypothesis that at the valuation date
any adverse effect of the interference has expired.
This question
is by far the most difficult of the three questions, in particular because of
the puzzling decision of this court in Ford v Metropolitan District
Railway (1886) 17 QBD 12, which the Lands Tribunal considered to be
determinative of the point raised by the question. But, for the reasons given
by Pill LJ, I am not persuaded that that case establishes that for the purposes
of section 68 a temporary interference which is not such as to affect the value
of land when the works are completed gives rise to a right to compensation
under that section.
What, in my
judgment, is crucial is the date at which the value of the land is to be
assessed. In the present case, it was accepted before the Lands Tribunal that
the date by reference to which compensation must be assessed is the date when
the works giving rise to the entitlement to compensation are complete. In the
light of that, as well as the acceptance of the principle that there must be a
loss in the value of the land for compensation to be recoverable, I do not
understand how a temporary loss of value, which would have been observable at
earlier dates, but which was no longer obtaining at the agreed date of
assessment, can give rise to a claim for compensation. When Mr Harper was asked
how the appellants arrived at the figure for their claimed loss, we were taken
to their expert’s statement of the basis of valuation. That basis was to
postulate a lease of the appellants’ hotel with five-year rent reviews, and to
assess the difference between the
had been no works. That rental value was assessed, first, at the date when the
works had just commenced, and, second, at a rent review five years later when
the works were about to end. The loss of profits was the major factor in the assessment
of the loss. The correctness of the appellants’ assessment has not been
pronounced upon by the Lands Tribunal, and Mr Harper, understandably, was not
in a position to address us on it. But I feel bound to say that the method used
to arrive at the calculation of the temporary loss of value of the hotel serves
to illustrate the artificiality of assessing that loss when the loss of profits
is not an allowable subject of compensation. It is an attempt to dress up part
of the temporary loss of profits as a loss of value of land when that value has
not in fact been lost, because the land, which remains in the hands of the
appellants, ex hypothesi, has ceased to be adversely affected by the
temporary interference at the time when the value is to be assessed. That seems
to me inconsistent with the principles reaffirmed in Argyle Motors.
Accordingly, I
would answer this question in the affirmative.
For these
reasons as well as those given by Pill LJ, I would dismiss the appellants’
appeal and allow the respondents’ cross-appeal.
Appeal
dismissed and respondents’ cross-appeal allowed.
