Aberdeen City District Council v Sim and another

Compensation for compulsory acquisition — Case stated for opinion of Court of Session by the Lands Tribunal for Scotland — Appeal by acquiring authority — Whether respondents were entitled to recover, by way of compensation for disturbance, solicitors’ fees incurred in connection with purchase of another house — Other house purchased by respondents in anticipation of impending compulsory purchase of subject property, which was in a redevelopment area, but before the date of the deemed notice to treat, before the compulsory purchase order affecting the property and even before the resolution of the council to promote the order — In fact respondents purchased the alternative house with entry in September 1973 whereas the date of the deemed notice to treat was in June 1978 — It was argued by the acquiring authority that the date of the deemed notice to treat was the earliest date from which disturbance expenses could be claimed — English Lands Tribunal case of Bloom (Kosher) & Sons Ltd v London Borough of Tower Hamlets cited in support of this view — Authority’s submission rejected by Court of Session, who approved a previous Scottish Lands Tribunal decision in Smith v Strathclyde Regional Council — Court of Session held that Harvey v Crawley Development Corporation, properly understood, supported the respondents’ case, as did Venables v Department of Agriculture for Scotland — Respondents’ payment of solicitors’ fees was a loss occasioned by reason of their dispossession, even if not a ‘consequence’ in a temporal sense — Lands Tribunal’s questions of law as to whether the expenses were properly compensatable answered by court in the affirmative — Appeal by acquiring authority refused This was a reference by case stated to the Court of Session by the Lands Tribunal for Scotland (William Hall FRICS) to determine a question of disputed compensation following the compulsory acquisition of the owner-occupier interest of James and Margaret Sim in a house at 27 South Constitution Street, Aberdeen. The stated case was solely concerned with the question whether the solicitors’ account in connection with the purchase of another house by Mr and Mrs Sim, at 47 Constitution Street, incurred prior to the date of the deemed notice to treat, was compensatable. The decision of the Lands Tribunal for Scotland from which the appeal arose, Sim v Aberdeen City District Council, was reported at (1981) 258 EG 451. The case of Smith v Strathclyde Regional Council, cited in the Court of Session’s opinion, was reported at (1981) 257 EG 391, 501. Counsel for appellants, Brian Gill QC; solicitors, A C Bennett & Fairweather WS, Edinburgh. Counsel for respondents, R G Craik QC; solicitors, Simpson & Marwick WS, Edinburgh. The opinion of the court reads: This appeal arises out of a reference to the Lands Tribunal to determine the amount of disputed compensation following the compulsory purchase by the appellants of the owner-occupier interest of the respondents in a house at 27 South Constitution Street, Aberdeen. The only point to which this appeal relates is whether the respondents are entitled to recover by way of compensation for disturbance inter alia the solicitors’ fees which they incurred in connection with the purchase of another house at 47 Constitution Street, Aberdeen, in anticipation of their house at 27 South Constitution Street being compulsorily acquired. The relevant history of events is as follows: On October 16 1972 the appellants’ statutory predecessors instructed their officials to proceed with negotiations for the acquisition of properties within the King Street/Beach Boulevard redevelopment area when they were offered to the council by the owners. If the owners were prepared to sell, the estates surveyor was instructed to reply that the council were willing to enter negotiations. The house adjoining the respondents’ house at 27 South Constitution Street, as well as other houses in the area, was acquired by the council in 1972. This house was subsequently let by the council to tenants who caused distress to the respondents. This distress was contributory to the respondents’ decision to buy the alternative house at 47 Constitution Street, which was only a short distance from the house at 27 South Constitution Street but was outside the development area. The respondents bought the alternative house with entry on September 7 1973, and the solicitors’ fees for that purchase as determined by the tribunal is the subject of the issue in the appeal. It is recorded that at the hearing before the tribunal the appellants’ surveyor accepted that if that house had not been purchased, the legal expenses of buying another house after the deemed notice to treat would have been likely to be included in the estimate of the amount of claim made in connection with the future dispossession of the respondents. A resolution to make a compulsory purchase of the said King Street-Beach Boulevard redevelopment area was passed by the appellants on September 6 1976. A compulsory purchase order was confirmed on November 24 1977 and a general vesting declaration was executed with effect from July 21 1978. The date of the deemed notice to treat was June 22 1978. To complete the picture, after the respondents had purchased the alternative property (which they have not occupied) in September 1973 their solicitors wrote to the appellants’ predecessors in April 1974 indicating that the respondents had purchased another property and were therefore in a position to dispose of 27 South Constitution Street. Negotiations were entered into but nothing materialised because the sums offered and sought were so far apart. No progress was made in the negotiations until the present reference was made to the tribunal in 1980. The value of £4,000 determined by the tribunal was substantially higher than any figure offered by the appellants. There is one final matter which has to be mentioned. The respondent Mrs Sim stated to the tribunal that the appellants’ predecessors had written to them (ie her husband and herself) saying that they would be prepared to enter into negotiations to purchase the house at 27 South Constitution Street if they were disposed to sell, and when the house at 47 Constitution Street became available for sale in 1973 she and her husband decided to buy it. She was unable to produce that letter from the local authority. The appellants stated to the tribunal that they had no record of such a letter being23 sent and challenged Mrs Sim’s statement. However, at the appeal counsel for the appellants very fairly accepted that, although the tribunal had not made any finding that such a letter was sent to the respondents, when the respondents bought the house at 47 Constitution Street they had every reason to believe that the local authority was interested in acquiring houses in the redevelopment area. That tied in with the view expressed by the tribunal that at the time the respondents bought the house at 47 Constitution Street there was sufficient to indicate that an acquisition was likely to take place in the near future. That matter does not require to be considered further in view of the very fair concession by the appellants’ counsel. When the issue was debated before the tribunal, the appellants maintained that legal expenses incurred prior to the date of the deemed notice to treat should not be allowed and prayed in aid the decision of the English Lands Tribunal in Bloom (Kosher) & Sons Ltd v London Borough of Tower Hamlets (1978) 35 P & CR 423; [247 EG 1091, [1978] 2 EGLR 176] to support that proposition. The tribunal, which on this occasion consisted of a single lay member of wide experience, decided however to follow a previous decision of the Lands Tribunal for Scotland, namely Smith v Strathclyde Regional Council 1982 S L T Lands Tribunal Reports [247 EG 391, 501]. The basis of that decision was that the circumstances there (which raised the same point of principle) satisfied the tests adumbrated by Romer LJ in Harvey v Crawley Development Corporation [1957] 1 QB 485 at p 494 that: Any loss sustained by a dispossessed owner (at all events one who occupies his house) which flows from a compulsory acquisition may properly be regarded as the subject of compensation for disturbance, provided first, that it is not too remote, and secondly, that it is the natural and reasonable consequence of the dispossession of the owner. Accepting these tests here the tribunal included in the compensation for disturbance the solicitors’ fees in question, which they fixed at £66 inclusive of VAT. While that may seem a somewhat insignificant sum which scarcely warrants an appeal to this court, it is but right to record that we were informed that there were prospects of this issue being involved in a large number of cases within the appellants’ area due to redevelopments. When the issue was debated in this court the argument advanced by counsel, although presented from different angles, came to this. The legal position between the parties did not come into existence until the notice to treat — or the deemed notice to treat — was served. Accordingly the date of the notice to treat was the earliest date from which expenses incurred in consequence of the disturbance occasioned by the acquisition of the property could legally be claimed, as was decided in Bloom supra. In the instant case, the expenses claimed were incurred some five years prior to the notice to treat, and years prior to the compulsory purchase order itself and even prior to the resolution of the appellants’ predecessors to promote a compulsory purchase order. It was only on the promulgation of the compulsory purchase order that the act of acquisition had begun. That submission having been advanced and stoutly supported, counsel for the appellants conceded that if the tests adumbrated in Harvey supra were applied, and it was legitimate to look at the period before the notice to treat was served, the circumstances here were sufficient to warrant the decision at which the tribunal arrived. The argument of counsel for the appellants was crystallised in three submissions, namely: (1)  compensation in these circumstances is only due in respect of expenditure which is incurred in consequence of the compulsory acquisition; (2)  expenditure incurred, as in this case, prior to the date of the deemed notice to treat, prior to the compulsory purchase order itself, and even prior to the acquiring authority’s resolution to promote the compulsory purchase order cannot be said to have been incurred in consequence of the compulsory purchase order; (3)  the tribunal’s ultimate error was that it appeared to have regarded the remoteness test as an alternative to the causation test whereas it is merely a limitation of the causation test. Counsel for the respondents in reply principally referred to and founded upon the decision in Smith supra and the reasons therefore given by the tribunal in their full judgment on this point, all of which he adopted. He laid particular emphasis on three points, namely (1) the concept of full compensation as set out in Venables v Department of Agriculture for Scotland 1932 SC 573; (2) the tests of Romer LJ in Harvey as set out supra which were basically questions of fact (per Sellers LJ at p 496); and (3) the abandonment of the date of the notice to treat as being the ‘magic’ date in terms of the decision in Bloom supra — Birmingham City Corporation v West Midland Baptist (Trust) Association Inc [1970] AC 874 per Lord Reid at p896F. He maintained that on the argument presented by counsel for the appellants the earliest date from which such entitlement to compensation for disturbance could accrue was the date or the deemed date of the notice to treat, and that the date could not be brought forward to the date of the confirmation of the compulsory purchase order. He submitted that the restriction involved in the argument for the appellants ran contrary to the concept of ‘full’ compensation. We could have contented ourselves with a simple approval of the decision of the tribunal in Smith’s case and the reasons given therefor, and holding that this was sufficient to warrant the tribunal’s decision. However, in recognition of the careful argument put forward by counsel for the appellants we shall express our own reasons, albeit somewhat briefly. There appears to be no provision for disturbance in the Land Compensation (Scotland) Act 1963 apart from what appears in section 12(6) thereof, namely: ‘The provisions of rule (2) shall not affect the assessment of compensation for disturbance or any other matter not directly based on the value of land’. Nor is there any definition of ‘disturbance’ in that Act. In Venables supra Lord Justice Clerk Alness quoted with approval the dictum of Lord Kinnear in Lanarkshire and Dumbartonshire Railway Co v Main (1895) 22 R 912 at p 919: It is a well-settled rule in the construction of the Lands Clauses Act (1845) that when lands have been taken in the exercise of compulsory purchase, the owner or occupier, as the case may be, is entitled not only to the market value of his interest but to full compensation for all the loss which he may sustain by being deprived of his land. The italics are ours. Lord Alness went on to say: If that be sound — and the language is quite general, and the authority of its author unimpeachable — cadit quaestio. He summed up the position thus: The sound principle would seem to be that the person dispossessed should get compensation for all loss occasioned to him by reason for his dispossession. Again the italics are ours, and it is to be observed that the words used are ‘occasioned to him by reason of his dispossession’ and not ‘in consequence of his dispossession’. He went on to indicate that in these circumstances the onus would be on the person maintaining a restriction to that unqualified statement to establish it. Venables is a decision which is binding on this court, and with respect we agree with it. It is a decision which has been accepted, cited with approval and followed in England, as in Harvey supra. We accordingly turn to consider whether the appellants have successfully circumvented the generality of Venables. We start by recalling the concession that if the tempus inspiciendi in relation to the expense incurred extends prior to the date of the notice to treat, the circumstances here present satisfy the two tests laid down by Romer LJ in Harvey as a matter of fact. The argument for the defenders was based on the use of the word ‘consequence’ by Romer LJ and Denning LJ (as he was then) in Harvey. In laying down the second of his conditions, Romer LJ said that the loss had to be the natural and reasonable consequence of the dispossession of the owner. Denning LJ said: ‘Legal costs reasonably incurred in acquiring another house can fairly be regarded as a direct consequence of the compulsory acquisition’. It was accordingly argued that ‘consequence’ could only mean ‘following’ in the temporal sense, and that placed the terminus a quo of the qualification for compensation as the date of the notice to treat at the earliest. It was only then that dispossession became a reality and not just possibly a threat. We have several observations to make on this. The word ‘consequence’ was used in Harvey in the circumstances of that case. It would appear that the expenditure in connection with the acquisition of alternative accommodation had been incurred after the development corporation had decided to acquire the plaintiff’s house compulsorily and the plaintiff was faced with the request for acquisition. In that situation the word ‘consequence’ could be used both in the temporal and in the causal sense. It does not follow that the judges were confining its use to the temporal sense. Such a restriction does not seem to us to march with the broader concept stated by Lord Kinnear and Lord Justice Clerk Alness. The24 phrase used by the latter was ‘all loss occasioned by reason of his dispossession’. Circumstances might prevail when the threat of dispossession was such that prudence would demand that steps be taken to obtain alternative accommodation before the notice to treat was served, since the time available between the service of that notice and the physical dispossession was so short that reasonable alternative accommodation could not be acquired in that period of time. In fact it was said that the period could be restricted to 28 days. The Lord Justice Clerk in Venables regarded the claim for disturbance as one of equity. In the absence of any statutory definition or restriction, we regard that as a proper test. It seems to us to be inequitable if a claim which satisfies the tests of Romer LJ should be denied the right to compensation because the expenditure was incurred prior to the service of the notice to treat, when similar expenditure incurred subsequent to the service of the notice would be admitted. Provided the tests are satisfied the former situation seems to us to be ‘a loss occasioned by reason of his dispossession’. We accordingly take the view that the decision in Smith was right and that the tribunal took the right course in following it in the circumstances of the case. Consequently we do not consider that Bloom should be followed. That being so, we reject the submission of the appellants that the date of the notice to treat or indeed any of their alternatives is the necessary datum line. As Sellers LJ said, it is a question of fact in each case. Any suggestion that such an extension of the time-limit would expose the appellants to extensive and unjustified liability is countered by the restriction imposed by the tests adumbrated by Romer LJ. Counsel for the appellants submitted an argument based on the provisions of section 39 of the Land Compensation (Scotland) Act 1963 and in particular subsections (1), (2) and (3) thereof, but these were dealing with a special situation and provide no guide, in our view, to the determination of the general position. We accordingly answer the questions of law in the affirmative and refuse the appeal.