COMPULSORY PURCHASE—COMPENSATION—INJURIOUS AFFECTION

Court of Appeal, Civil Division
Lord Phillips CJ, Tuckey and Carnwath LJJ
26 July 2007

The inclusion of compulsory powers in the package of orders for a development scheme, for at least part of the land required, is enough to trigger the application of the Compulsory Purchase Act 1965 (CPA 1965), s 10 to the works as a whole.

Craig Howell-Williams and Richard Honey (instructed by DLA Piper UK LLP) for the claimant.
David Holgate QC, Timothy Mould QC and Zoe Leventhal (instructed by the treasury solicitor) for the secretary of state.

The claimant operated a motorway service area (the MSA). The MSA lay close to a junction on the M40. During 2001 and 2002, alterations were carried out to the junction, involving general improvements and the stopping up and realignment of various sections of highway (the scheme). The scheme was undertaken under various orders made by the defendant secretary of state under the Highways Act 1980 (HiA 1980). According to the claimant, the new arrangement substantially diminished the value of its site as a service station, principally because the routes to it were longer and less direct. It sought compensation under CPA 1965, s 10 for the diminution in value of its leasehold interest. The Lands Tribunal ordered the trial of a preliminary issue, namely whether, if the claimant had suffered loss through the diminution in value of its leasehold interest in the premises due to the carrying out of the works, it was entitled to compensation under s 10. It answered that question in the affirmative and the secretary of state appealed.

LORD JUSTICE CARNWATH:

Section 10 of CPA 1965, which replaced the Land Clauses Consolidation Act 1845 (LCCA 1845),
s 68, provided, so far as material:

“(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 Lands Clauses Consolidation Act 1845 has been construed as affording in cases where the amount claimed exceeds fifty pounds…”

The principles governing compensation which emerged under LCCA 1845, s 45 as restated by Lord Hoffmann in Wildtree Hotels Ltd v Harrow London BC [2000] UKHL 70 (Jun), [2000] 3 All ER 289 included:
(i) the section gave a right to compensation to anyone whose land, or interest in land, had been injuriously affected by the execution of the works. It was not necessary that any of his land should have been taken;
(ii) the term “injuriously affected” connoted “injuria,” that was to say, damage which would have been wrongful but for the protection afforded by statutory powers. In practice that meant that a claimant had to show that but for the statute he would have had an action for damages for public or private nuisance.

The debate in this case centred mainly on the second principle. That depended on drawing an analogy with common law principles of public nuisance. This case was the first in which the Court of Appeal had been asked to apply those principles to improvement works to a major trunk road junction, carried out by the secretary of state as highway authority.
The tribunal below identified two issues. The first was the “works” issue. The secretary of state contended that the claimant’s loss (if any) arose from the stopping-up of the slip roads, which did not constitute part of “the works” for the purposes of s 10.
The second was the “public nuisance” issue. The secretary of state contended that the claimant had not suffered particular damage under Wildtree principle (ii).

Stopping-up order

As to the works issue, his lordship considered Jolliffe v Exeter Corpn [1967] 1 WLR 993, [1967] 2 All ER 1099. That case established that, where the execution of the works was facilitated by a stopping-up order made by a different compensating authority, under a different statutory scheme not incorporating CPA 1965, the stopping-up did not give rise to a claim under s 10. In this case, by contrast, the stopping-up order was made under the same act by the same authority, and as part of a composite package of measures, all of which were required for the execution of the works. There was no reason to extend the Jolliffe principle to thiscase.

His lordship turned to whether or not the law as settled under s 68 had been altered. The short answer was “no”, principally because s 10(2) made that clear. Section 10 was to be construed as affording “in all cases” the same right to compensation as under s 68. His lordship held that the inclusion of compulsory powers in the package of orders for the scheme, for at least part of the land required, was enough to trigger the application of s 10 to the works as a whole.

His lordship turned to the public nuisance issue. The president of the Lands Tribunal considered that the obstructions were sufficiently “local”, and the relationship between the MSA and the motorway sufficiently special, to provide at least the starting point for a claim to “particular damage”. His lordship agreed. The next stage of the reasoning was more controversial. The president considered that, once that relationship had been established, it was enough to show that the existing accesses were obstructed “in a way that causes a diminution in the value of its interest”.

The tribunal seemed to have proceeded on the basis that, once the special relationship had been established, the only question was proof of the amount of the loss. But that left out an essential step in the reasoning. The immediate accesses to the MSA remained substantially unaffected. The loss resulted, not from any direct obstructions to those accesses, but from the rearrangement of the judgment as a whole. That left open the question whether a claim might be made for the effect of temporary closures during the works, on which the tribunal had made no findings.
Accordingly, the matter would be remitted to the tribunal to consider and determine that issue.

Lord Justice Tuckey and Lord Phillips agreed.