Trustees for Methodist Church Purposes and another v North Tyneside Metropolitan Borough Council

Compensation for compulsory acquisition–Claim by church for compensation on equivalent reinstatement basis–Purported withdrawal of notice to treat by acquiring authority–Whether authority entitled to withdraw–Whether claimants had served a proper notice of claim in accordance with section 4 of the Land Compensation Act 1961–Claim not quantified in terms of money–If section 4 had to be interpreted literally there was no answer to authority’s contention that it could withdraw under section 31–Claimants’ arguments based on alleged impossibility of quantifying the claim and on anomalies of literal construction rejected–Held that a notice complying with section 4 had not yet been served and that authority could still withdraw This was a summons taken out by the custodian trustee and a representative of the managing trustees of the Methodist Church and Sunday School in Burdon Street, Percy Main, North Shields, in order to obtain the determination of the court on the construction of certain statutory provisions. These provisions concerned the withdrawal of a notice to treat following the confirmation of a compulsory purchase order which included the plaintiffs’ church property and a notice of claim served by the plaintiffs. The defendants, the North Tyneside Metropolitan Borough Council, were the housing authority for North Tyneside. Michael Mann QC and D G Robins (instructed by Herbert Reeves & Co, agents for Ingledew Mark Pybus, of Newcastle upon Tyne) appeared on behalf of the plaintiffs; A D Dinkin (instructed by Darley, Cumberland & Co) represented the defendant council. Giving judgment, BROWNE-WILKINSON J said: This case raises a short point on the Land Compensation Act 1961 (which I will call ‘the 1961 Act’). The defendant authority is the housing authority for North Tyneside and in that capacity on March 27 1974 made a compulsory purchase order affecting a block of houses and other buildings at Percy Main, North Shields. Included in the Order were the Methodist Church and Sunday School in Burdon Street, which was vested in the first plaintiff as custodian trustee. The second plaintiff is joined to represent the 17 managing trustees of the church. The compulsory purchase order was duly confirmed and on January 5 1976 the local authority served on the plaintiffs a34 notice to treat and a notice of entry. On April 14 1976 the plaintiffs gave a notice of claim in answer to the notice to treat claiming compensation on the basis of equivalent reinstatement. Although, so I am told, the local authority has proceeded to acquire and demolish the houses surrounding the church, at some stage it decided not to go ahead with the acquisition of the church and in fact has never entered under the notice of entry. On June 3 1977 the local authority informed the plaintiffs that it was going to withdraw the notice to treat at the first available opportunity. The plaintiffs claim in this action that the local authority cannot now withdraw the notice to treat but is bound to acquire the premises. In order to understand the matter in issue I must refer to some of the relevant statutory provisions. Section 5 of the 1961 Act lays down rules to be applied in assessing compensation payable on a compulsory acquisition. Rule (2) is the general rule, ie that the land shall be valued at its open market value. Rule (5) provides as follows: Where land is, and but for the compulsory acquisition would continue to be, devoted to a purpose of such a nature that there is no general demand or market for land for that purpose, the compensation may, if the Lands Tribunal is satisfied that reinstatement in some other place is bona fide intended, be assessed on the basis of the reasonable cost of equivalent reinstatement. The classic cases to which the rule (5) equivalent reinstatement basis applies are cases such as the present where a church or school is being acquired. Until 1970 it was thought that rule (5) compensation had to be assessed on the basis of values and costs ruling at the date of the service of the notice to treat. But in Birmingham Corporation v West Midland Baptist (Trust) Association Inc [1970] AC 874 the House of Lords declared the law to be otherwise and held that in a rule (5) case compensation was to be assessed on the basis of prices ruling at the date when the actual work of reinstatement might reasonably have been commenced. Provisions for the service and contents of a notice to treat are contained in section 5 of the Compulsory Purchase Act 1965, subsection (2)(b) of which requires that every notice to treat ‘shall demand particulars of the recipient’s estate and interest in the land, and of the claim made by him in respect of the land.’  Section 6 of the 1965 Act then provides that if a person served with a notice to treat does not within 21 days from the service of the notice state the particulars of his claim the question of disputed compensation shall be referred to the Lands Tribunal. It is common ground that once a notice to treat has been served in default of agreement it cannot be withdrawn unless there is an express statutory power so to do. The power to withdraw the notice relied on by the local authority in this case is contained in section 31 of the 1961 Act. But in order to understand that section I must first read section 4 of the 1961 Act. Subsection (1) is as follows: Where either–(a) the acquiring authority have made an unconditional offer in writing of any sum as compensation to any claimant and the sum awarded by the Lands Tribunal to that claimant does not exceed the sum offered; or (b) the Lands Tribunal is satisfied that a claimant has failed to deliver to the acquiring authority, in time to enable them to make a proper offer, a notice in writing of the amount claimed by him, containing the particulars mentioned in subsection (2) of this section; the Lands Tribunal shall, unless for special reasons it thinks proper not to do so, order the claimant to bear his own costs and to pay the costs of the acquiring authority so far as they were incurred after the offer was made or, as the case may be, after the time when in the opinion of the Lands Tribunal the notice should have been delivered. Subsection (2) is as follows: The notice mentioned in subsection (1) of this section must state the exact nature of the interest in respect of which compensation is claimed, and give details of the compensation claimed, distinguishing the amounts under separate heads and showing how the amount claimed under each head is calculated. The local authority claim that the plaintiffs have not served any proper notice containing the particulars specified in section 4(2). They say that if the plaintiffs now serve such a notice they will withdraw the notice to treat under section 31(1) or, if no further notice is served, they will withdraw the notice to treat under section 31(2) after the Lands Tribunal has determined the claim. The plaintiffs maintain that the notice they served on April 14 1976 did constitute a proper notice for the purposes of section 4 of the 1961 Act and that accordingly the local authority cannot at any stage hereafter withdraw the notice to treat under section 31. The notice to treat in this case was in common form. After referring to the compulsory purchase order, paragraph (3) reads as follows: The Council hereby demand particulars of your estate and interest in the said lands together with all charges and interest to which the same are subject and of the claims made by you in respect thereof, all which particulars, charges, interests and claims should be shown in the accompanying form of claim and thereafter delivered to the undersigned at the underwritten offices of the Council. Paragraph (4) states the willingness of the local authority to treat, and paragraph (5) then reads as follows: If for 21 days after the service hereof you shall fail to state the particulars of your estate, claims and interest as aforesaid . . . the Council will forthwith proceed to require the amount of such compensation to be settled in the manner directed for settling cases of disputed compensation by the Acts incorporated with and applied by the said order. The schedule to the notice refers inter alia to the Methodist Church and Sunday School and land attached thereto. Then at the foot of the notice to treat there is a note which reads as follows: ‘A form of claim to be filled in and signed accompanies this notice to treat, and must be returned within 21 days from the date of the service of this notice.’ The form enclosed was also a common form of claim in answer to notice to treat published by a well-known legal publisher. It was headed: ‘Claim in answer to notice to treat. The particulars of the claimant’s estate and interest in the property comprised in a notice to treat served on the 5th day of January 1976, and of the claims made in respect thereof are as follows.’  After a series of questions directed to obtaining particulars of the claimant’s interest in the property question 14 reads as follows: ‘Particulars of claim: (i) For the value of the claimant’s interest in the land being taken, including any easements. (ii) For severance or injurious affection of other land of the claimant. (iii) For disturbance.’  Then there is a note to question 14, which is as follows: ‘Details should be furnished showing how the amount claimed under any head is calculated. (See sections 4(2) and 31 of the Land Compensation Act 1961).’  Question 15 refers to some deductions that might conceivably be made. Then question 16 says: ‘Net claim (ie the total of 14 less 15).’ In my judgment it is clear from these questions, and in particular from the note to question 14, that the local authority in this case was demanding of the plaintiffs that within 21 days they should give the particulars specified in section 4(2) of the 1961 Act, that is to say the amount of the claim and how the amount was calculated. The claim in answer was put in by the plaintiffs’ surveyors, who inserted answers on the form supplied by the local authority. They answered question 14 as follows. Opposite the heading ‘For the value of the claimant’s interest in the land being taken, including any easements’ they wrote: ‘Compensation on a rule (5) basis to represent the cost of acquiring a simple site and erecting an alternative place of worship.’  Heading (ii) was not applicable. In answer to heading (iii) ‘For disturbance’ they wrote: ‘A claim is reserved under the head.’  And opposite the note they said: ‘On the basis of current market values.’  Then in answer to question 16 they wrote: ‘Net claim under 14(i) and 14(iii) above.’ The claim in answer was in fact served on April 14 1976, that is well after the stipulated 21-day time-limit had expired. 35 In these circumstances the argument for the local authority is very straightforward. They say that it is clear from the use in section 4, subsections (1) and (2), of the words ‘amount’ and ‘calculated’ that for a notice to comply with that section a claim must be quantified in terms of money. The claim submitted made no attempt to quantify the amount claimed. Accordingly, no notice has been served containing the matters specified in section 4(2) of the 1961 Act and therefore the local authority will be entitled under section 31 to withdraw its notice to treat when either a proper notice is served or the Lands Tribunal determines the compensation. If section 4 of the 1961 Act is to take effect according to its literal meaning there is no answer to the local authority’s contention. But the plaintiffs claim that this is one of those exceptional cases where the court is entitled to depart from the literal meaning of the words, since to give them their literal effect would either require the plaintiffs to do the impossible or produce absurd anomalies which Parliament cannot have intended. The plaintiffs say, and the defendants accept, that before any realistic claim can be quantified in a case to which rule (5) applies the following steps would have to be taken. First, a site for the new building would have to be identified; their architects would have to prepare plans for the new building on that site, then bills of quantities would have to be got out. Even then, the only figure which could be claimed would be an estimate of the then current costs whereas, as the Birmingham Corporation case (supra) shows, the compensation falls to be assessed at prices ruling at the date on which the work of reinstatement could reasonably begin. It is common ground that it would be quite impossible for any proper claim to be formulated within the 21 days referred to in the notice to treat. Therefore, say the plaintiffs, Parliament cannot have intended the impossible to be done. Moreover, even if 21 days is not an absolute time-limit, they say it would be ridiculous to require all this cost and trouble to be incurred by the plaintiffs only to find that the authority is not going to acquire the property after all. I will consider first the argument based on impossibility. I accept the proposition that if the literal meaning of a statutory provision would impose on the claimant a positive duty to do something which is physically impossible that cannot have been Parliament’s intention and the court is entitled and bound to depart from the literal meaning. But this legislation does not impose any such duty. The claimant is not under any obligation to make a claim within 21 days under section 6 of the 1965 Act, nor at any later stage under section 4 of the 1961 Act. The scheme of the legislation is not to impose a duty to make a claim but to provide that certain consequences follow if no claim is made, ie the local authority is free to go straight to the Lands Tribunal under section 6 of the 1965 Act and if no detailed quantified claim is made the claimant may in certain circumstances suffer by being deprived of costs if he fails to put in a claim when he might reasonably have done so. Therefore the statute does not impose a duty to formulate any claim within 21 days. Moreover, a claim can be amended. It may well be that a claim in the form used by the plaintiffs in this case is sufficient for the purposes of section 6 of the 1965 Act; it can then later be amended by putting in the necessary figures and calculations. When this amendment is made, it will for the first time become a sufficient notice for the purposes of section 4 of the 1961 Act. Next it is said that because compensation is to be assessed at prices current at a future date, ie when the work of reinstatement could reasonably be started, it is impossible to quantify the claim before that date is reached. I do not think this argument is correct. Although until the decision in the Birmingham Corporation case (supra) any difficulty caused by future inflation could not have arisen in rule (2) and rule (5) cases (since values were assessed as at the date of the notice to treat) the difficulty has always been present in relation to claims for disturbance, compensation for which has always been assessed on the basis of actual cost. Yet Parliament plainly intended the claim for disturbance to be quantified. It seems to me that where the future values or prices are relevant the quantification specified in section 4(2) would be satisfied by stating the claim at values current at the date of claim and stating that the claimant will adjust his claim to take account of changes in prices and values between the date of claim and the date of assessment. Therefore in my judgment there is no reason to depart from the literal meaning of the words used on the ground that they require the claimant to do the impossible. I turn then to the argument that the anomalies produced by a literal construction are so absurd that it cannot represent Parliament’s true intention and therefore the court must give the words some other meaning. It is established that in some circumstances it is legitimate for the court to take this course: see Re Lockwood [1957] 3 All ER 520. On the other hand in Stock v Frank Jones (Tipton) Ltd [1978] 1 WLR 231 the House of Lords has recently re-emphasised the very strict limits to this doctrine. The views of the House are I think reflected in a passage from the speech of Lord Scarman at p 239 E, where he says: If a study of the statute as a whole leads inexorably to the conclusion that Parliament has erred in its choice of words, eg used ‘and’ when ‘or’ was clearly intended, the courts can, and must, eliminate the error by interpretation. But mere ‘manifest absurdity’ is not enough: it must be an error (of commission or omission) which in its context defeats the intention of the Act. So in my judgment it is not legitimate for me to give sections 4 and 31 of the 1961 Act anything other than their plain meaning unless I am satisfied that the literal meaning will defeat the intention of that Act. This is not a case where I have to choose between two possible constructions of the words. Unless some words are added to the statutory provisions the words used have only one possible meaning. I confess that I have grave doubts whether the draftsman of the Act and Parliament really intended that in a rule (5) case the claimant would either have to put forward a claim based entirely on guesswork or run the risk that when all preparatory steps necessary to remove a church or school to another site had been taken the local authority might decide not to go ahead. But anomalous as this is, I do not think the strict construction would defeat the intention of the Act. To my mind the obvious intention of section 31 is to ensure that until the local authority knows, either from a detailed claim under section 4 or from a decision of the Lands Tribunal, how much it is going to have to pay it is to be free to withdraw from the acquisition. To give the local authority this opportunity it is necessary that they should have a quantified claim on the basis of which they can make an open offer. The effect of giving a local authority this opportunity to withdraw is that in a rule (5) case it may be impossible for the claimants to achieve any certainty that their property will be acquired unless and until they have expended much money in getting out plans and quantities so as to be able to quantify their claim. Hard and unreasonable though this seems to me, I do not feel able to say that it defeats the intention of the Act. Parliament may have thought that it was a necessary price to pay to ensure that local authorities should not be bound to purchase at a price far in excess of what they had budgeted for. When the notice to treat is withdrawn the local authority has to compensate the claimant for pecuniary loss flowing from the service of the notice: section 31(3) of the 1961 Act. In the ordinary case this provision for compensation on withdrawal will hold a reasonable balance between the interests of the local authority on the one hand and the owner of the property on the other. In a rule (5) case it may not be adequate, since pecuniary compensation cannot make good the upset to sensibilities and the disruption inherent in closing a church, which course may well have been taken if the notice to treat is withdrawn at a late date. But since Parliament appears36 to have intended the local authority to have the right to withdraw at any time up to the moment when there is a quantified claim, I do not think that the possible unfairness in one limited type of case justifies me in saying that the literal construction defeats the intention of the Act. Accordingly I must hold that a notice complying with section 4 of the 1961 Act has not yet been served and that the local authority still has the right to withdraw the notice to treat in accordance with section 31 of the 1961 Act. Finally, I should mention two points. First, there was some discussion during the hearing whether the words in section 31(2) of the 1961 Act ‘Where a claimant has failed to deliver a notice as required by the said paragraph (b)’ (my italics) cover every case where such a notice has not been served, whether or not the claimant was at fault. The plaintiffs accepted that they did cover every case and therefore I need not comment further on the point. Secondly, in these proceedings I am asked merely to construe the statutes. Nothing in this judgment is intended to affect the rights or claims, if any, arising from the fact that the notice to treat served by the local authority in this case did in fact demand full particulars of a quantified claim within 21 days. The plaintiffs’ summons was dismissed with costs.