Laundon v Hartlepool Borough Council

Compensation for compulsory purchase of house–Site value–Entitlement to owner-occupier’s supplement under Housing Act 1969, section 68 and Schedule 5–Qualifying conditions–Occupation as a private dwelling throughout the qualifying period–Effect of presence of furniture during physical absence–Distinction between established occupation and new occupation–Scope of de minimis rule–Lands Tribunal correct in rejecting claim to supplement in this case This was an appeal by David Laundon, owner of a house at 21 Talbot Street, West Hartlepool, from a decision of the Lands Tribunal (V G Wellings QC) on July 2 1975 rejecting the appellant’s claim to the payment of an owner-occupier’s supplement under the Housing Act 1969, section 68 and Schedule 5 on the compulsory purchase of his house at site value. The decision of the Lands Tribunal was reported at (1975) 235 EG 576, [1975] 2 EGLR 169. W J Glover QC and John Grove (instructed by Sinclair, Roche & Temperley, agents for Tilly, Bailey & Irvine, of Hartlepool) appeared on behalf of the appellant; J Newey QC and Jim Williams (instructed by the Solicitor, Hartlepool Borough Council) represented the respondents. Giving the first judgment at the invitation of Stephenson LJ, ORR LJ said: This is an appeal by David Laundon, the owner of a house, 21 Talbot Street, West Hartlepool, against27 a decision of the Lands Tribunal (V G Wellings QC) dated July 2 1975 whereby it was held that the appellant, while admittedly entitled to receive, as compensation for the compulsory purchase of that house pursuant to a closure order, the sum of £24 assessed (and as a figure not in dispute) by the district valuer as the site value of the house, was not entitled to receive by way of further compensation as an owner-occupier’s supplement under the provisions of section 68 and Schedule 5 of the Housing Act 1969 a further sum of £1,226 assessed (and also as a figure not in dispute) by the district valuer as the difference between the site value of the house and its full compulsory purchase value (or market value). The events relevant to the compulsory acquisition of the house are that on April 5 1973 the area in which it is situated was declared by the borough council to be a clearance area under the provisions of the Housing Act 1957; on April 6 1973 a compulsory purchase order was made under the same Act in respect of this and other houses within the area; that order was on December 18 1973 confirmed by the Secretary of State; and on December 12 of the same year notification of the order was sent to the appellant together with a notice to treat, following which compensation claim forms were submitted by the appellant’s solicitors to the council and inquiries were made on the council’s behalf with a view to determining the appellant’s entitlement to the supplement. The relevant statutory provisions with reference to the supplement may be summarised as follows: section 68 of the Housing Act 1969 (which I will call "the Act"), enlarging provisions contained in the Housing Act 1957 as to payment of compensation in respect of unfit houses purchased or demolished, enacts that the provisions of Schedule 5 to the Act shall have effect with respect to certain payments to be made in certain circumstances in respect of owner-occupied houses. Paragraph 1 of Schedule 5 provides as follows: 1. (1)  Where a house has been purchased at site value in pursuance of a compulsory purchase order made by virtue of Part II or Part III of the Act of 1957 or in pursuance of an order under paragraph 2 of Schedule 2 to the Land Compensation Act 1961, or has been vacated in pursuance of a demolition order under Part II of the Act of 1957, a closing order under section 17 of that Act or a clearance order, then, if: (a) the relevant date is later than April 23 1968; and (b) on the relevant date and throughout the qualifying period the house was wholly or partly occupied as a private dwelling and the person so occupying it (or, if during that period it was so occupied by two or more persons in succession, each of those persons) was a person entitled to an interest in that house or a member of the family of a person so entitled; the authority concerned shall make in respect of that interest a payment of an amount determined in accordance with paragraphs 2 and 3 of this Schedule. (2)  Where an interest in a house purchased or vacated as mentioned in subparagraph (1) of this paragraph was acquired by any person (in this subparagraph referred to as the first owner) after April 23 1968 and less than two years before the relevant date, and a payment under subparagraph (1) of this paragraph in respect of that interest would have fallen to be made by the authority concerned had the qualifying period been a period beginning with the acquisition and ending with the relevant date, the authority concerned shall make to the person who was entitled to the interest at the date the house was purchased or vacated a payment of the like amount, if — (a) the authority are satisfied that before acquiring the interest the first owner had made all reasonable inquiries to ascertain whether it was likely that the order, notice or declaration by reference to which the relevant date is defined in paragraph 5 (1) of this schedule would be made or served within two years of the acquisition and that he had no reason to believe that it was likely; and (b) the person entitled to the interest at the date when the house was purchased or vacated was the first owner or a member of his family. (3)  Where during a part of the qualifying period amounting, or during parts thereof together amounting, to not more than one year a person previously in occupation of the whole or part of the house was not in occupation thereof by reason only of a posting in the course of his duties as a member of the armed forces of the Crown or of a change in the place of his employment or occupation he shall be deemed for the purposes of this paragraph to have continued in occupation during that part or those parts. Paragraph 5 of Schedule 5 defines the "qualifying period" for the purposes of paragraph 1 as "the period of two years ending with the relevant date," which in this case was April 5 1973, being the date of the clearance order. Accordingly the issue in the case has been whether "throughout" the period from April 6 1971 to April 5 1973, the house in question was wholly or partly occupied as a private dwelling. The relevant facts found by the Lands Tribunal as to the house, 21 Talbot Street, were as follows: it was owned and occupied by a Mr Galloway, who sold it to the appellant, from before April 6 1971 (the commencement of the qualifying period) until October 27 1972, when Mr Galloway ceased to live in the house but left in it certain items of furniture which were sold along with the house to the appellant, but the tribunal made no finding as to the date of the contract of sale. On November 6 1972 the keys of the house were handed to the appellant, who thereafter visited the house for the purpose of redecorating it for residential occupation. The purchase price was paid on November 15; on November 25 the appellant and his wife began to live in the house; and from that date there is no doubt that it was wholly occupied by them as a private dwelling, but the question at issue in the case is whether this requirement was satisfied during the two short periods to which I have already referred, the first from October 27 to November 6 1972, when the vendor had ceased to live in the house and it was occupied only by the items of furniture, and the second from November 6 to 25, when the appellant did the decorative work and the furniture left by the vendor remained in the house. On this material the tribunal held that the appellant was not entitled to the owner-occupier supplement and came to a similar conclusion as respects five other references, all involving sales of houses and gaps of varying length, the longest over a year, between the vendor ceasing and the purchaser beginning to reside at the house in question, and some of them also involving the factors of furniture left by the vendor and/or decorative or other work done by the purchaser in the house before he began to reside in it. At the conclusion of the hearing, in response to a request made by the solicitor of the local authority that guidance should be given as to the approach to be made to paragraph 1(2) of Schedule 5 in case any of the applicants should wish to make a claim for compensation under that provision, the tribunal observed that the several claimants appeared to fulfil all the conditions of that provision save that each of them would have to show that before acquiring his interest he had made all reasonable inquiries and had no reason to believe that it was likely that the order, notice or declaration in question would be made or served within two years of his acquisition, but that the acquiring authority had not so far been asked to say that it was satisfied as to these matters which were for the acquiring authority to determine, there being, as the tribunal understood the law, no provision for review of the decision either by the tribunal or by the courts. In rejecting the various applications the tribunal said that in its view the word "occupied" in Schedule 5 bore its ordinary meaning, which was not limited to personal occupation but included occupation enjoyed vicariously through, inter alia, furniture by the exercise of control over the subject matter, but the question at issue was not confined to occupation. It was whether the house "throughout" the qualifying period was wholly or partly occupied "as a28 private dwelling."  In the tribunal’s view the word "throughout" meant that there must be no break in residential occupation, any injustice to which this requirement might give rise being alleviated in a proper case by subparagraph (2) of paragraph 1. As respects the appellant’s case the tribunal concluded that the gap of 10 days between October 27 and November 6 1972, during which the house was "completely unoccupied," was in itself sufficient to destroy the appellant’s claim, but added that there was also a further period from November 6 to 25 before the appellant’s occupation became residential in quality. Against this decision the appellant now appeals and it has not been in dispute in the appeal that the tribunal was right in holding as it had clearly done (decision, p 578) that the house was during the two periods in question "occupied" by virtue of the presence of the furniture and that in later referring to the house as being "completely unoccupied" during the first period the tribunal must have meant that it was unoccupied apart from the furniture. The sole issue in the appeal has therefore been whether the tribunal was right in holding that during the two periods in question the house, although occupied, was not occupied as a private dwelling, and on this issue Mr Glover for the appellant conceded that the fact that the appellant during the second period did the decorative work could add nothing to his case. In my judgment this concession was plainly right on the authority of Arbuckle Smith & Co Ltd v Greenock Corporation [1960] AC 813, where the House of Lords drew a clear distinction between user of premises for the purposes for which they are occupied and work done in preparation for such user. Having made this concession Mr Glover’s argument was that the words "throughout the qualifying period" in paragraph 1(1) of the schedule involve that the court has to look at the use made of the house by occupiers throughout the period; that the house never had been occupied other than as a private dwelling; that the appellant having been found to be in occupation by virtue of the furniture, the only possible character of the occupation must have been as a private dwelling; and that if, as Mr Newey accepted, the character of the occupation as a private dwelling, once established, is not destroyed by temporary absence of the occupier on holiday or for other reasons, the word "throughout" cannot mean at every instant during the qualifying period. Mr Newey for the respondents relied on a number of dictionary meanings of the word "throughout."  He accepted that once an occupant has begun to reside in premises he can temporarily absent himself on holiday or for other reasons without ceasing to occupy the premises as a private dwelling, but contended that before residence begins it cannot be said that the premises are occupied as a private dwelling. He accepted that a short gap between residential occupations could be treated as de minimis but claimed that de minimis in the present context would be no more than one day, and that any hardship arising where there has been, as here, a longer gap is alleviated by subparagraph (2) in the schedule, which would apply in the present case provided the appellant can satisfy the requirements already mentioned. I have not found the case an easy one to determine. It is clear from the terms of paragraph 1(1)(b) of the schedule, which refers to occupation by two or more persons in succession, that Parliament must have contemplated that there could be sales of the property in question and it seems unrealistic to suppose that the purchaser would always, or even in most cases, take up residence on the very day the vendor leaves, but the effect of Mr Newey’s argument is that if the purchaser does not do so the right conferred by paragraph 1(1) is not acquired and the purchaser can only rely on the more restricted rights under subparagraph (2) and with no right of appeal against the decision. On the other hand I can well understand that if the entry of the purchaser can be delayed indefinitely, or for a substantial period, the evil which the legislature wished to prevent might well arise in that a purchaser who never intended to occupy the house but only to make a profit by resale in what he believed, on the supposition that a clearance order was going to be made, to be a rising market, would be given time to negotiate a resale. It is true that he would probably have to pay his vendor, but he might be prepared to do so, or the vendor might be prepared to wait for his money, it may be on terms that he should have some share in the resale profit. I do not suggest for a moment that anything of this kind underlay the present case but only that evils of this kind could arise and that for this reason Parliament may well have taken the view that such cases should be dealt with under subparagraph (2). For these reasons the construction of subparagraph (1) which I should wish to adopt is that which will provide a reasonable protection against the abuses which Parliament clearly had in mind but which will not impose on a purchaser such a time limit for the taking up of residential occupation as may in practice be impossible for bona fide purchasers to comply with. I would also, so far as possible, wish to adopt a construction which will not involve artificialities or the attribution of decisive importance to chance factors. As to this last matter it seems to me surprising that a purchaser’s ability to become an occupier of a house as a private dwelling without going to live in it should depend on the chance factor of the vendor having items of furniture which the purchaser wishes to buy, but it is in my judgment an even stronger objection to Mr Glover’s argument that if the purchaser can obtain residential status by virtue of the items of furniture involved in this case there appears to be no reason why this situation should not continue indefinitely and so give rise to the evils which the legislature was clearly concerned to prevent. Apart, however, from these considerations I am unable, with great respect to the contrary view, to accept that because the presence of furniture involves, as in law it undoubtedly does, that the house is occupied, it also follows in this case that the house was occupied as a private dwelling. This question is not answered in my judgment by reference to the past history of the house or on the basis of a presumption of continuance. The question is whether over the two periods in question it was being occupied as a private dwelling and in my judgment the answer is that it was not, but was being occupied as a temporary repository for the items of furniture, and factors such as temporary absence on holiday or otherwise, which would be relevant on the question whether an established residential occupation has continued through a period of physical absence, are not in my judgment material when the question is whether a new residential occupation has commenced. On this critical issue in the appeal I therefore accept Mr Newey’s argument, but I part company from Mr Newey on the issue of what, in the present context, would be de minimis. In my judgment de minimis would apply, in this and at least most other cases of this kind, to a gap of up to a week between residential occupations and might apply to a 10-day gap, but in my judgment it could not cover the gap of just under a month between October 27 and November 25. For these reasons I would dismiss this appeal. Agreeing, CUMMING-BRUCE LJ said: I accept without qualification my Lord’s approach to the construction of Schedule 5 and his decision that the appellant could add nothing to his case by reliance upon the period from November 6 to 25 when he was doing decorative work in preparation for his residence in the house. As a consequence of the ground relied upon in the notice of appeal, and the ensuing question upon which the decision29 of this court is desired, the argument in this court focused on the narrow and somewhat abstract issue whether a house empty save for some items of furniture was occupied as a private dwelling house within the meaning of Schedule 5. The appellant’s advisers fastened upon the contradiction between the decision that "occupied" in paragraph 1(1)(b) could be constructive occupation by furniture and the determination, no (4) in the case, that there was a gap for 10 days in which the house was completely unoccupied. Having established that the Lands Tribunal has decided as a matter of construction that "occupied" in the paragraph has a broad meaning which includes occupation enjoyed vicariously through furniture (against which there is no cross-appeal), Mr Glover posed the problem: What was the house occupied as?  Which leads to the reasoning: It was occupied by the vendor as a private dwelling; and after sale by the purchaser as a private dwelling. The furniture was there to facilitate use of the house as a private dwelling. It is absurdly artificial to hold that for 10 days the occupation of the house had changed its character, if only because no one suggests that the house was ever contemplated by anyone as being occupied save as a private dwelling. This leads remorselessly to the conclusion that the vendor’s vicarious occupation of the house by furniture was an occupation as a private dwelling. In my view there is a fallacy in the reasoning which can be traced to the way in which the question for decision has been put. The presence of the furniture in the otherwise empty house has been isolated from the rest of the facts, and a pyramid of legal abstraction has been constructed upon this narrow foundation. I prefer to recite the facts as far as known (which is not very far) and to examine at each stage whether it is commonsense to regard the house as occupied as a private dwelling. But first I try to picture what usually may happen when there is a transfer of ownership of a privately occupied dwelling-house, for the draftsman must have intended the words he selected to be apt for what happens in most ordinary situations of change in occupation. First the vendor has to move out in order to give vacant possession. (i) He may personally depart taking his furniture with him on the same day, so that the house is empty. (ii) He may depart himself, but arrange for his furniture to follow him a short time later. (iii) Or he may personally depart, but leave all or some of his furniture behind for acquisition by a purchaser or disposal on the market. In (i) the vendor’s residence (occupation as a private dwelling) clearly ends when he goes with his furniture. In (ii) it can fairly be said that he is winding up his residence in the house over a short period of time, and that his occupation of the house as a private dwelling does not end until he has finished removing his furniture. In (iii), however, his use of the house as a private residence ends when he personally departs. The house is thereafter being used as a means towards disposal of the furniture. Whatever it is being used for, it is not as the vendor’s private dwelling. The vendor may alternatively move out personally with his furniture and put in decorators or builders to improve the house before he puts it on the market or while it is on the market. This is vicarious occupation of the house by the vendor, for the purpose of preparing it for use as a dwelling-house again after the decorators or builders have done their work. Secondly the purchaser has to move in. He may set about it in much the same way as the vendor, mutatis mutandis. (i) He may arrive with his furniture and paraphernalia. (ii) He may camp in the house and wait for the arrival of his furniture in a few days’ time (iii) He may install his furniture over a period of days and take up residence when the house is ready for him. In cases (i) and (ii) his occupation as a private dwelling is complete on the first day. In case (iii) the process of occupation as a private dwelling begins with the arrival of the first instalment of furniture, and is completed when he takes up his residence personally in the house. Or he may decorate or repair in order to prepare the empty or nearly empty house for use as a private dwelling, and move in when the work is done. On the ordinary use of language he does not make the house his home, his dwelling, until he moves in himself, or at least, having begun the process of moving in by installing his furniture, continues the process without undue break in time until he personally takes up residence. So to the facts of the instant case to see what happened. The vendor personally moved out, apparently taking some of his furniture but leaving behind what he did not want, intending to dispose of it by sale to the purchaser or otherwise. When the vendor thus moved out with the furniture he wanted, he ceased to occupy the house as his private dwelling. The purchaser at an uncertain date agreed to buy the furniture as part of the bargain for purchase of the house. He obtained possession of the house and furniture on November 6 and paid for it on November 15. If on November 6 he had personally taken up residence in the house, or had begun the process of moving the rest of his belongings into the house, it might be fairly said that the process of his occupation of the house as his dwelling began on November 6. But on the facts that did not happen. On November 6 he began decoration of the house to prepare it for his use as his residence, and did not move in until November 25. So looking backwards in time from November 25, it is quite unreal to hold that the presence of the furniture in the house with effect from October 27 had any causative effect upon his occupation of the house as his residence until November 25. It must be the purchaser’s installation or use of the furniture in the house which imparted to the occupation of the house a quality of occupation as a private dwelling. On the facts that did not begin to happen until November 25. Between October 25 and November 6 the existence in the house of the furniture which the vendor was selling to the purchaser did not begin the process by which the purchaser imparted to the house the quality of occupation as his private dwelling. Mr Newey has conceded that where a house is occupied as a private dwelling, the continuity of such occupation is not broken if the householder goes away on a short holiday or is absent for brief intervals such as usually occur to many people living at home. But he submits that the essential feature of such situations is that the house has already been occupied by the owner-occupier as his dwelling-house, and does not assist a purchaser to claim that a house is his dwelling for a similar period of time before he has established himself in it as his home. I accept this distinction. That is sufficient to dispose of this appeal. But I would add a reference to the room for the de minimis rule. It may frequently happen that the vendor vacates the house a few days before the date for vacant possession, or that the purchaser does not begin to establish his residence in the house until a few days after that date. The Hartlepool Borough Council has regarded what it describes as such short gaps in residential user as too insignificant to destroy occupation throughout the qualifying period. I agree with this approach. If the effect of the practical arrangements made by vendor or purchaser, or both of them, is to leave the house vacant for a week, I would not regard the continuity of occupation as a private dwelling throughout the period as thereby broken. And if there is an unforeseen accident which adds a day or two to that week, that might reasonably be disregarded too. But 28 days is too long to be disregarded by resort to the de minimis rule. Also agreeing STEPHENSON LJ said: I had prepared a judgment of my own, but I agree so fully with both judgments delivered by my Lords that I propose to add only this: I find some support for the decision of the Lands Tribunal in paragraph 1(3) of Schedule 5. That subparagraph refers30 to "a person previously in occupation" of the house, who during a part or parts of the qualifying period is not in occupation himself by reason of a posting in the armed forces or a change in the place of his employment or (in another sense) occupation. Such a person would not necessarily, or perhaps usually, move his furniture out of the house, yet the subparagraph regards him as not in occupation during the part or parts of the qualifying period when he is away on army duty or in his new place of work. I concur in dismissing the appeal, and the question stated will be answered in the affirmative, namely, that the tribunal was correct in law in holding that the house had not been wholly or partly occupied as a private dwelling throughout the qualifying period, which included the 10 days, so disentitling Mr Laundon to the owner-occupier’s payment in accordance with section 68 and Schedule 5 to the Housing Act 1969. The appeal was dismissed, no order being made as to costs except legal aid taxation of the appellant’s costs. Leave to appeal to the House of Lords was refused.