Compulsory purchase – Compensation – Notice of reference – Substitution of party – Claimant making reference to Upper Tribunal to determine compensation payable for disturbance by reason of compulsory acquisition of property for purpose of Crossrail project – Wrong party named in notice of reference as acquiring authority – Claimant applying to substitute correct party – Whether tribunal having power to order substitution after expiry of limitation period for bringing claim – Application allowed
In September 2009, the secretary of state for transport took possession of the claimant’s premises on Charing Cross Road, London WC2, pursuant to a compulsory purchase order made to facilitate the Crossrail project. An earlier notice to treat and notice of entry served on the claimant had been signed by the company secretary of Crossrail Ltd as agent for the secretary of state. In April 2010, Transport for London (TfL) was substituted as the acquiring authority, in place of the secretary of state, by virtue of the Crossrail (Devolution of Functions) Order 2010.
The claimant claimed compensation in excess of £185,000 for disturbance, pursuant to section 37 of the Land Compensation Act 1973. Following negotiations, TfL made an advance payment of compensation in July 2011 in the sum of £160,000. However, the negotiations later went into abeyance and no agreement was reached on the final sum payable.
In September 2015, the claimant made a reference to the Upper Tribunal, under section 38 of the 1973 Act, to determine the compensation payable for disturbance. The reference was made only a few days before the expiry of the applicable six-year limitation period under section 9 of the Limitation Act 1980. By accident, the claimant named Crossrail Ltd as the respondent to its reference, whereas the actual acquiring authority, and the proper respondent to the reference, was TfL.
When the error came to light, Crossrail invited the claimant to withdraw its reference on the ground that the reference could not succeed against Crossrail and that, owing to the expiry of the limitation period, it was now too late to substitute TfL as respondent. The claimant did not accede to that request but instead applied to the Upper Tribunal to substitute TfL as the respondent to the reference.
The central issue was whether the Upper Tribunal had power to make such a substitution after the limitation period for making a reference had expired.
Held: The application was allowed.
(1) The claimant’s reference was not valid in the absence of a correctly identified respondent. Although r 28(1) of the 2010 Rules, prescribing the requirements for making a reference for the determination of compensation, did not in terms require the name and address of the acquiring authority to be included in the notice of reference, such a requirement flowed from section 38(4) of the 1973 Act so far as it conferred jurisdiction to determine any “dispute” as to the amount of a disturbance payment. For there to be a dispute, there had to be at least two parties who disagreed. Those parties were identified in section 37(1) as the person displace from the land and the authority possessing compulsory purchase powers which was responsible for the acquisition. Only a dispute between those parties could be referred to the tribunal and a notice of reference that did not refer to such a dispute notice for the purpose of stopping time running against the displaced person.
Moreover, the claimant had no entitlement to compensation from Crossrail Ltd and a notice of reference referring to a dispute with Crossrail Ltd could neither create nor crystallise any liability on the part of TfL unless it was substituted as a party. It was therefore essential to the continuation of the reference that TfL be substituted in place of Crossrail Ltd as the acquiring authority and respondent.
(2) The Upper Tribunals’ power to substitute parties pursuant to r 9(1) of the Tribunal Procedure (Upper Tribunal) (Lands Chamber) Rules 2010 could not be exercised to substitute a different respondent after the expiry of the relevant limitation period, since the tribunal’s power under the 2010 Rules to regulate its own procedure was expressly subject to the provisions of statute. The exercise of r 9(1) to permit the making of a new claim after the expiry of the limitation period would be expressly contrary to section 9 of the 1980 Act.
(3) Nor was the relevant power conferred by section 35(1) and (2) of the 1980 Act, so far as those provisions modified the effect of section 9 of the 1980 Act, and other limitation periods, by deeming a claim against a new party to have been made earlier than it was in fact made in certain circumstances. Those provisions did not themselves confer a power to permit new claims but instead assumed that such a power was available to the courts and tribunals under their procedural rules. However, where the exercise of the power conferred by those rules was itself subject to any other enactment, as was the case with the Upper Tribunal, the rules could not be relief on to subvert those enactments.
(4) However, power to substitute a party after the expiry of the limitation period did exist by virtue of section 25 of the Tribunals, Courts and Enforcement Act 2007, together with section 35(3) and (4) of the 1980 Act. Section 25 of the 2007 Act vested the Upper Tribunal with the powers of the High Court in relation to the attendance and examination of witnesses, the production and inspection of documents, and all other matters incidental Upper Tribunal’s functions. Section 25 was intended to be read literally and applied generally, so that, where no express limitation had been imposed by tribunal procedure rules as contemplated by section 25(3)(b), the Upper Tribunal had the same powers as the High Court in relation to all matters incidental to its functions.
The functions of the Upper Tribunal included the resolution of disputed compensation. The management of references for the determination of such compensation, including the procedure for the joinder of the correct parties, were matters incidental to that function. It followed that the powers akin to those of the High Court which were vested in the Upper Tribunal by section 25 included the power, conferred on the High Court by section 35(3) and (4) of the 1980 Act, to allow a new claim to be made by the substitution of a new party after the limitation period had expired, in accordance with the relevant rules of court, provided that the conditions in section 35(5) were satisfied: R (on the application of Cart) v Upper Tribunal [2010] EWCA Civ 859 and BPP Holdings Ltd v Commissioners for HM Revenue and Customs [2016] EWCA Civ 121 applied; Raftopoulou v Commissioners for HM Revenue and Customs [2015] UKUT 630 (TCC) distinguished.
(5) In the High Court, an application to substitute a new party after the limitation period had expired was determined in accordance with CPR 19.5, which gave effect to section 35(4) of the 1980 Act. The Upper Tribunal should therefore adopt the same approach to the exercise of its similar power under section 25 of the 2007 Act. It should therefore permit substitution only if the relevant limitation period was current when the proceedings were started and if the substitution was “necessary”, in that there had been a mistake as to the name of the appropriate party, within CPR 19.5(3)(a), or the claim could not properly be carried on unless the new party was substituted, so as to fall within CPR 19.5(3)(b). All of those requirements were met in the instant case.
With regard to CPR 19.5(3)(a), the relevant mistake had to be as to the name of the party rather than as to the identity of the party, and it had to be possible to identify the intended defendant by reference to a relevant description. In the instant case, Crossrail Ltd had been named as the respondent by mistake and, given that it was described it as the “acquiring authority” and the steps attributed to it were those actually carried out by TfL, any reasonable recipient of the notice of reference would have understood the nature of that mistake. Alternatively, the requirements of CPR 19.3(5)(b) were met since the claim for disturbance compensation had been brought against a party that was not liable to pay such compensation and the claim would inevitably fail unless TfL was substituted as respondent to that same claim: Adelson v Associated Newspapers Ltd [2007] EWCA Civ 701; [2008] 1 WLR 585 and Insight Group Ltd v Kingston Smith (a firm) [2012] EWHC 3644 (QB) applied.
(6) Although the making of an order was discretionary, there was no reason not to order substitution in the instant case. The only prejudice that TfL would suffered as a result of the order would be the loss of the right to defeat the claim against it by relying on the defence of limitation. While that was a significant prejudice, it was prejudice of a kind that would always arise when such an order was made and could not, by itself, provide a sufficient reason to refuse to make the order. The claimant’s application had been made promptly and there was no suggestion that TfL would be any less able to contest the reference that it would have been had it originally been named as the respondent. It was already well informed as to the nature of the claim and had been sufficiently satisfied of the claimant’s entitlement to enable it to make an advance payment in July 2011. It would not be fair or just for TfL to benefit from a windfall and for the public purse to avoid compensating the claimant fully for such losses as it was required, for the public benefit, to sustain in order that the Crossrail project could proceed. Accordingly, TfL was to be substituted as the respondent to the reference.
Timothy Corner QC and Andrew Tabachnik (instructed by Gosschalks, of Kingston upon Hull) appeared for the claimant; Richard Glover QC and Richard Honey (instructed by Eversheds LLP) appeared for the acquiring authority.
Sally Dobson, barrister
Click here to read a transcript of William Hill v Organization Ltd v Crossrail Ltd.