Blandrent Investment Developments Ltd v British Gas Corporation

Compensation for acquisition by British Gas Corporation of easement to lay gas mains or pipes–Entitlement based on deed of grant by claimants’ predecessors in title–Whether compensation covered injurious affection to certain other land of claimants–Predecessors had no interest in such other land at date of grant to corporation but land then already owned by claimants–Majority of Court of Appeal reject construction that compensation provisions in deed covered injurious affection to land not owned by claimants’ predecessors at date of grant–Dissenting judgment by Stephenson LJ This was an appeal and cross-appeal by case stated from a decision of the Lands Tribunal (W H Rees FRICS) on a reference by the claimants, Blandrent Investment Developments Ltd, to determine the amount payable by the British Gas Corporation in certain events in accordance with a deed of grant by the claimants’ predecessors in title, who were the British Railways Board. The deed granted to the corporation an easement to lay, maintain, inspect and replace gas mains or pipes in, through, upon or over a narrow strip of land which was subsequently conveyed to the claimants. The deed contained provisions for the payment of compensation where the grantor’s covenants prevented benefit from being derived from development with actual or probable planning permission. The effect of the Lands Tribunal’s decision and the issues raised in the appeals are set out in the dissenting judgment of Stephenson LJ. Gerald Moriarty QC and Guy Roots (instructed by Belmont & Co) appeared on behalf of the appellants (the claimants, Blandrent Investment Developments Ltd); John Drinkwater QC, Gerard Ryan and Charles George (instructed by Michael A E Louks) represented the British Gas Corporation. Giving judgment, STEPHENSON LJ said: This is an appeal by way of case stated from a decision of the Lands Tribunal (W H Rees Esq, FRICS) dated April 8 1976. The decision was given on a reference by the appellant claimants, Blandrent Investment Developments Ltd, under clause 6(iv) of a deed of grant dated May 17 1973, to determine the compensation payable under that deed by the respondent authority, the British Gas Corporation. Two bases of compensation were put before the tribunal by the claimants and a third by the corporation, should the tribunal find that the claimants were entitled to claim any compensation. The tribunal decided (1) that an outline planning consent of November 20 1973 gave rise to a claim to compensation under clause 6 of the deed; (2) that the amounts payable on the three bases put before it were £85,000, £45,000 and £5,100 respectively (in each case less £224 already paid under clause 1 of the deed); (3) that the second basis (‘Valuation II’) was the correct basis and the compensation was accordingly £44,776. The question on which our decision is desired is whether upon the facts found the tribunal came to correct decisions in point of law. There is no dispute about the three figures as figures, and counsel are agreed that there are therefore two questions for the court: (1) whether on the agreed facts the planning permission of November 20 1973 brings into operation clause 6 of the deed of May 17 1973 and qualifies the claimants for compensation thereunder and (2) if it does, what is the proper basis of that compensation. The claimants ask us to uphold the tribunal by answering the first question ‘yes’, but to substitute Valuation I (£85,000 less £224) for Valuation II. The corporation asks us to answer the first question ‘no’, and alternatively, if the answer to it is ‘yes’, to substitute Valuation III (£5,100 less £224) for Valuation II. The dispute which the tribunal has decided arises out of the laying and maintaining of gas pipes in and under land near Rainham railway station in Essex. In 1962 and 1964 the corporation and its predecessors laid a 4-in gas pipe and a 6-in gas pipe in and through a 20-ft-wide strip south of the railway station and lines (and in 1971 a 24-in gas main a little to the north of the pipes, but there is no relevant agreement or dispute in respect of that main). On January 11 1973 another company conveyed about 20 acres of land south of the strip to the claimants (‘the blue land’). On March 21 1973 the corporation wrote a letter to the British Railways Board approving the deed, which was11 executed on May 17 1973. On April 4 1973 the board agreed to sell and the claimants agreed to purchase a long and narrow parcel of land 2.6 acres in size lying between the blue land and the railway line (‘the red land’). It runs for about 1,100 ft from a frontage 135 ft wide on Ferry Road to the east, narrowing to 75 ft at Rainham Creek at the rear or western end. On June 7 1973 the board conveyed the red land to the claimants for £27,500. But between the contract in April and the conveyance in June the board granted the corporation on May 17 an easement to lay, maintain, inspect and replace gas mains or pipes in, through, upon or over the 20-ft strip, and the red land was conveyed subject to that grant. The development of the red land depends upon access to it from the blue land. There is a history of outline planning applications and consents relating to the red and blue lands from December 14 1971 to June 30 1975. I need refer to four only. (1) On December 14 1971 outline consent was granted for the lay-out of roads and services for industrial/warehouse development on land which included the whole of the blue land and a small portion of the red at its western end. (2) On October 25 1972 outline consent was granted for parking, loading and stacking on an area of 2.16 acres, together with a building of 12,000 sq ft on part of the red and part of the blue lands. (3) On November 20 1973 outline consent was granted for three warehouse units with individual access and parking with ancillary offices to each unit in one block on part of the red land and part of the blue land. (4) On May 14 1974 outline consent was granted for 10,000 sq ft of offices on part of the red land at the eastern end. Permission no (3) alone is relied on as activating clause 6. It was ultimately conceded that permission no (4) is not relevant to this appeal. Both counsel concede that the answers to both questions turn on the true construction of the deed of May 17 1973. Mr Moriarty for the claimants asks us to construe it against the background of the statutory provisions which regulate compensation for compulsorily-acquired land and interests in land and of the equitable interest conferred upon the claimants by the contract of April 4 1973. Mr Drinkwater for the corporation was, I think, compelled by the language of clause 6(i)(c) of the deed to resile from his submission that those statutory provisions were irrelevant; but he asked us to keep them very much in the background and he maintained to the end that the claimants’ equitable ownership of the red land was irrelevant. He tells us that this deed is in a standard form which has had long and extensive use and its construction is therefore of interest to others than the two parties to it; yet we are also to bear in mind that it should be construed as an agreement between two statutory undertakers. The relevant parts of the deed are these: This Deed of grant is made the 17th day of May 1973 between British Railways Board (hereinafter called ‘the Grantor’ which expression where the context so admits shall be deemed to include its successors in title and assigns) of the one part and British Gas Corporation whose North Thames Regional Office is at 30 Kensington Church Street, London W8 (hereinafter called ‘the Corporation’ which expression where the context so admits shall be deemed to include their successors and assigns) of the other part. Whereas: (1) the Grantor is seised in unencumbered fee simple in possession of the land referred to in the first Schedule hereto (hereinafter called ‘the said land’) and (2) the Corporation are a statutory corporation established under the provisions of the Gas Act 1972 and are the owners of a statutory gas undertaking and desire to lay and thereafter maintain mains pipes and ancillary apparatus in the said land and (3) the Grantor has agreed to grant to the Corporation the easements rights and privileges hereinafter mentioned and the Corporation have agreed to enter into the covenants hereinafter contained. Now this Deed witnesseth as follows: 1. In pursuance of the said agreement and in consideration of the sum of £224 now paid by the Corporation to the Grantor (the receipt whereof the Grantor hereby acknowledges) and of the Corporation’s covenants hereinafter contained the Grantor as Beneficial Owner (and to the intent that the easements rights and privileges hereby granted shall be appurtenant to the statutory gas undertaking of the Corporation) hereby grants unto the Corporation all those easements to lay construct erect use maintain inspect alter enlarge renew replace remove or render unusable mains or pipes for the transmission or storage of gas or other materials connected with the exercise and performance of the functions of the Corporation all necessary apparatus ancillary thereto (all hereinafter together called ‘the said works’) in through upon and over a strip of the said land 20 feet in width indicated for identification purposes only on the plan No 3564 annexed hereto and thereon coloured pink (hereinafter called ‘the said strip of land’) and to pass over the said strip of land for the purposes of the said works and of any works of the Corporation contiguous therewith and over the said land for the purpose of access to the said strip of land with all necessary workmen vehicles machinery and apparatus at all reasonable time and in an emergency at any time To hold the same unto the Corporation in fee simple. 2. The Corporation (to the intent and so as to bind the easements rights and privileges hereby granted into whosesoever hands the same may come and to benefit and protect the said land and every part thereof) hereby covenant with the Grantor as follows: (i)  In exercising the easements rights and privileges hereby granted the Corporation shall not unreasonably obstruct or interfere with the user of the said land nor cause further than is reasonably necessary any damage or injury thereto. (ii)  The Corporation shall so far as is reasonably practicable make good all damage or injury to the said land caused by the exercise by the Corporation of the easements rights and privileges hereby granted and shall make full compensation to the Grantor in respect of any such damage or injury in so far as the same shall not have been made good as aforesaid. Then: 3  The Grantor (to the intent and so as to bind the said land and every part thereof into whosesoever hands the same may come and to benefit and protect the easements rights and privileges hereby granted) hereby covenants with the Corporation as follows: (i)  The Grantor shall not do or cause or permit to be done on the said land anything calculated or likely to cause damage or injury to the said works and will take all reasonable precautions to prevent such damage or injury. (ii)  The Grantor shall not without the consent in writing of the Corporation (such consent not to be unreasonably withheld) make or cause or permit to be made any material alteration to or any deposit of any thing upon any part of the said strip of land or any part of the said land being a part nearer than 10 feet measured in any direction from the said strip of land so as to interfere with or obstruct the access thereto or to the said works by the Corporation or so as to lessen or in any way interfere with the support afforded to the said works by the surrounding soil including minerals or so as materially to reduce the depth of soil above the said works. (iii)  The Grantor shall not without the consent in writing of the Corporation (which shall be in the absolute discretion of the Corporation) erect or install or cause or permit to be erected or installed any building or structure or permanent apparatus in through upon or over the said strip of land nor save with the consent in writing of the Corporation (which consent shall not be unreasonably withheld) any part of the said land being a part nearer than 10 feet measured in any direction from the said strip of land. Provided that nothing in this Clause shall prevent the Grantor from installing necessary services under the supervision of the Corporation or carrying on normal agricultural operations or acts of good husbandry including fencing hedging and ditching not causing such interference obstruction or material reduction of the depth of soil as aforesaid. 4. If any interference with or disturbance of the functioning of any drain or drainage system in on or under the said strip of land or the adjoining land of the Grantor can be shown by the Grantor to have been caused by the laying of any main or pipe in the exercise of the easements rights and privileges hereby granted then the Corporation shall so far as is reasonably practicable make good any damage or injury thereby caused and shall make full compensation to the Grantor in respect thereof in so far as the same shall not have been made good as aforesaid. 5. Any dispute arising under Clauses 2, 3, and 4 hereof shall be determined in default of agreement by a single arbitrator to be agreed upon between the parties hereto or failing agreement to be appointed on the application of either party (after notice in writing to the other party) by the President of the Royal Institution of Chartered Surveyors and save as aforesaid the provisions of the Arbitration Act 1950 and of any statutory modification or re-enactment thereof for the time being in force shall apply to any such reference and determination. 6. (i) If at any time (a) permission is granted under Part III of the Town and Country Planning Act 1962 or any statutory modification or re-enactment thereof for the time being in force (otherwise than by a development order) for development which consists of or includes building or mining operations which the Grantor is prevented by the covenants in Clause 3 hereof from carrying out or it is shown that but for the said works such permission might reasonably have been expected to be granted and (b) the said developments whether in the form for which permission is granted as aforesaid or in any alternative form of equivalent value for which permission might reasonably be expected to be granted cannot reasonably be carried out elsewhere on the said land consistently with the Grantor’s covenants in Clause 3 hereof and (c) the principal amount of compensation which would have been payable in respect of a compulsory acquisition by the Corporation of the easements hereby granted in pursuance of a notice to treat served on the date hereof if such permission had previously been granted exceeds the sum set out in Clause 1 hereof (which is calculated without reference to the prospect of any such operations) then subject to the provisions of this Clause the Corporation shall pay to the Grantor a sum equal to the excess. (ii)  If the Grantor claims to be entitled to a payment under the last foregoing sub-clause hereof he shall give notice in writing to the Corporation of such claim and shall furnish all such particulars in relation thereto as the Corporation may reasonably require. (iii)  There shall be deducted from any such sum which would otherwise be payable under this Clause an amount equal to any sum previously so paid in respect of the same land. (iv)  Any dispute arising out of the provisions of this Clause shall be referred to a single arbitrator to be agreed upon between the parties hereto and in default of such agreement to the Lands Tribunal. The First Schedule is: All that piece of land situate at Rainham in the London Borough of Havering containing 2 acres 3,299 square yards or thereabouts shown edged green on the plan annexed hereto. (It is to be noted that the land edged in green described in that Schedule is what is called by the tribunal ‘the red land’). Some things about the deed are clear. 1. It binds the successors in title and assignees of the two parties ‘where the context so admits.’  2. It recites that the board is seised in unencumbered fee simple in possession of the red land–untruly, as the fee simple was already encumbered with the equitable interest conferred on the claimants by the contract of April 4 1973. 3. It recites that the corporation desires to lay mains and pipes as well as to maintain them in the red land–misleadingly, as they were already laid. 4. The corporation is exercising and performing its functions under sections 2 and 6 of the Gas Act 1972 and the Second Schedule to the Act in taking the easement to do the works set out in the deed (‘the said works’) in the 20 ft strip of the red land (Clause 1). I read section 2 of the Gas Act 1972 and section 6 (1) and (5): 2.–(1)  It shall be the duty of the Corporation to develop and maintain an efficient, co-ordinated and economical system of gas supply for Great Britain, and to satisfy, so far as it is economical to do so, all reasonable demands for gas in Great Britain. . . . 6.–(1)  Subject to subsections (2) and (3) below, the Corporation shall have power to do any thing, and to enter into any transaction (whether or not involving the expenditure of money, the borrowing of money, the lending of money, the acquisition of any property or rights or the disposal of any property or rights), which in their opinion is calculated to facilitate the exercise or performance of their functions under any enactment other than this subsection (including any enactment passed or made after the passing of this Act), or is incidental or conducive to the exercise or performance of any such function. . . . (5)  The provisions of Schedule 2 to this Act shall have effect with respect to the acquisition of land by the Corporation (and without prejudice to the generality of the said subsection (1) so far as they concern its acquisition by agreement). Paragraphs 5 to 19 of the Second Schedule deal with the creation of a new right and I shall refer to paragraph 13 later. 5. The red land and the easements are bound and protected from injury and interference by the covenants of the Grantor and the Corporation (clauses 2 and 3). 6. There are numerous references to the red land (‘the said land’) throughout the deed and the only possible reference in the deed to any other land than the red land is the reference in clause 4 to ‘the adjoining land of the Grantor,’ which might mean either (a) the part of the red land adjoining the strip of land or (b) other land of the Grantor adjoining the red land–that is the railway land to the north. ‘The same land’ in clause 6(iii) refers to the land in respect of which compensation has been previously paid under the clause but does not help to identify what that land should be. 7. Compensation to the Grantor for damage or injury to the red land from the easement works and for interference with drains in the strip or adjoining land of the Grantor is to be ‘full’–without further elaboration or definition (Clauses 2(ii) and 4) and to be determined in default of agreement by a single arbitrator or, failing agreement, the President of the Royal Institution of Chartered Surveyors (clause 5). Those clauses leave to clause 6 provision for compensating the Grantor (or its successors in title or assignees) in the future for loss of development rights or value (such development as permitted building or mining operations) if the loss exceeds £224. 8. By clause 6(i)(a) this compensation is to be payable if at any time permission for certain developments is granted or might reasonably have been expected to be granted but for the restrictions imposed on the Grantor (or its successors) by clause 3. By clause 6(i)(b) it is nevertheless not to be payable then if those developments could reasonably be carried out elsewhere on the red land. By clause 6(i)(b) it is nevertheless not to be payable then if those developments could reasonably be carried out elsewhere on the red land. By clause 6(i)(c) it is to be payable if the permission required by clause 6(i)(a) has been or would be granted for developments within clause 6(i)(a) which cannot reasonably be carried out elsewhere on the red land and if the amount of compensation prescribed by clause 6(i)(c) exceeds £224. If the Grantor claims to be entitled to payment under subclause (i), it must give notice to the Corporation under subclause (ii), by subclause (iii) any sum previously paid under the same subclause in respect of the same land must be deducted and by subclause (iv) its claim if disputed is referred to a single arbitrator and in default of agreement to the Lands Tribunal. Subclause (i)(c) appears to provide a deferred means of assessing compensation with reference to the prospect of such operations as building or mining operations, the £224 paid under clause 1 having already been assessed without reference to such prospect. The assessor is required to take the permission, actual or potential, which qualifies for payment of compensation under subclause (i)(a), to treat that permission as granted before the date of the deed, to assume that a notice to treat had been given on the same date in respect of a compulsory acquisition by the Corporation of the easements granted to it by the deed and to determine what principal amount of compensation would then have been payable for that notionally permitted development. Now at the date of the deed the parties were concerned with the red land, an easement over part of it and how its development value might be restricted by the easement. But it was a small piece of land lacking access and any development of it would have to be carried out by using the blue land and might well be carried out in conjunction with development on the blue land. Indeed, outline consents already mentioned had been granted for development on the red land and the blue land together on December 14 1971 and October 25 1972. Furthermore, it was at the date of the deed the law, and had been the law at least since 1845, that compensation payable to a landowner whose lands had been compulsorily acquired included with the value of the land taken (the purchase money) compensation for damage sustained by severing of the land taken from other lands of his and for injurious affection of other lands of his by the exercise of the compulsory powers: see Lands Clauses Consolidation Act 1845, sections 48, 63 and 68. The right to compensation for the injurious affection to land retained, as well as for land taken, is preserved by section 7 of the Compulsory Purchase Act 1965, as modified by paragraph 13 of Schedule 2 to the Gas Act 1972, which provides as follows: For section 7 of that Act (that is the 1965 Act) (measure of compensation) there shall be substituted the following: ‘7. In assessing the compensation to be paid by the acquiring authority under this Act regard shall be had not only to the extent (if any) to which the value of the land over which the right is to be acquired is depreciated by the acquisition of the right but also to the damage (if any) to be sustained by the owner of the land by reason of its severance from other land of his, or injuriously affecting that other land by the exercise of the powers conferred by this or the special Act’ In spite of the difficulty of attaching the words ‘injuriously affecting’ to any particular preceding words in this or earlier statutory versions, and although no land was in fact taken by12 the corporation but the land was merely subjected to the corporation’s easement, compensation would clearly in law have been payable in respect of a compulsory acquisition by the corporation of the easements granted by the deed in pursuance of a notice to treat served on the claimants and the board (see section 5 of the Compulsory Purchase Act 1965) on May 17 1973, if permission for development within clause 6(i)(a) had previously been granted, for the extent to which the value of the red land had been depreciated by the acquisition of the easement and the right to carry out the ancillary works and also for injurious affection to the blue land by the exercise of the powers conferred by sections 2 and 6 and by the execution of the ancillary works. If the creation and acquisition of the new right of an easement over the red land and its exercise not only depreciated the value of the red land but injuriously affected the blue land by restricting development on parts of both lands, compensation would be payable both for that depreciation and for that injurious affection under paragraph 13 of the Second Schedule and therefore, in my judgment, under clause 6(i)(c) of the deed, provided the total exceeded £224. The injurious affection would be a head of compensation payable ‘in respect of’ the compulsory acquisition no less than the depreciation. A third factor is that at the date of the deed the claimants had a contract to purchase the red land and so were equitable owners of it and were already legal owners of the blue land. There is authority–not binding on us, but not challenged by the corporation–for holding that they, not the board, although both should have been served with the notice to treat, were therefore to be treated at the date of the notice to treat as the party entitled to compensation: Hillingdon Estates Co v Stonefield Estates Ltd [1952] Ch 627; and that as owners of the blue land they were entitled to be paid compensation for any loss (or a fortiori for any depreciation) of their equitable interest in the red land which injuriously affected the blue land: Oppenheimer v Ministry of Transport [1942] 1 KB 242. There was no evidence that the corporation knew of the claimants’ contract of purchase or that it was registered as a land charge so as to affect the corporation with notice of it; and I for my part do not think that any duty of the corporation to make diligent inquiry under section 5 of the Compulsory Purchase Act 1965 comes into the questions we have to decide. The only qualifying permission on which the claimants rely for an affirmative answer to the first question is the outline consent for warehouses and offices on part of the red land and part of the blue land. It was on that planning consent that the claim was founded and the tribunal held that it succeeded. Does that permission fall within clause 6(i)(a) on its true construction?  If it does, there is no dispute that it is not disqualified by subclause (i)(b). The reasons for the tribunal’s decision on this first question are not altogether clear and the construction of subclause (i)(a) on which counsel for the claimants relied to support his decision shifted between the opening and the close of the appeal hearing. I cannot myself doubt that it refers to permission for development of the said land which consists of or includes building or mining operations on the said land and that the words ‘or includes’ do not embrace such operations outside the said land, but are inserted, as counsel for the corporation submitted, to cover material changes of use, the other category of development than such operations. The words ‘of the said land’ are too obvious to need insertion in subclause (i)(a) and their insertion in subclause (i)(b) supports their implication in subclause (i)(a). But this construction of clause 6(i)(a) does not determine the first question, for granted that the qualifying permission must be a permission to develop the red land, must it be a permission to develop that land alone and not other land with it?  Does the inclusion in the permission of November 20 1973 of other land than the red land with the red land qualify or disqualify the permission?  Does subclause (i)(c) indicate or decide the correct answer?  By going through the hypothetical motions of backdating the permission of November 20 1973 to May 17 1973 or before it and supposing a notice to treat for the purchase of the easement on that day and a compulsory acquisition of the easement by the corporation, does one end up inside or outside the area of subclause (i)?  By putting the permission through this process, does it emerge qualified or disqualified? If the clock is put back to May 17 1973, and notice to treat is assumed to be given then, it seems to me to follow: (1) from the unchallenged authorities cited to us that the claimants would be the party entitled to be compensated for the compulsory purchase of the easement, just as much as they would have been if the conveyance of the red land to them had also been backdated from June 7 1973 to the same date and had made them assignees three weeks earlier than in fact they were; (2) from paragraph 13 of the Second Schedule to the Gas Act 1972, that the claimants would be entitled to compensation for any permitted development which the existence of the easement and clause 3 of the deed prevented them from carrying out not only on the red land, but also on the blue land. Those consequences would indicate that the permission to develop partly on the red land and partly on the blue does qualify for inclusion in subclause (i)(a) unless that would be repugnant to other provisions of the deed or the whole tenor of the deed. If I am right in thinking that an assignee of the red land with the legal ownership of both red and blue land would have been entitled to compensation, the problem would seem to be whether the context, of clause 6 in particular, admits that the expression ‘the grantor’ includes its successors in title or assignees. If it does, it also admits the equitable owner of the red land with the consequences I have just stated; if it does not, it excludes that owner and the blue land from consideration. There is a strong case for saying that the deed read as a whole is concerned only with the red land as at May 17 1973 and its development thereafter, that the rights of the claimants under the deed against the corporation are the rights of the board under it as at that date, and that the fact that the red land was already in equitable ownership of a third party which had the legal ownership of the adjoining blue land is an irrelevant accident which should not be allowed to increase the value of the red land by thousands of pounds. But counsel for the corporation had eventually to concede that the statutory background of compensation for compulsorily acquired land or interests in land was introduced into the picture by clause 6(i)(c), and the question seems to me to be whether you can or must cut down the consequences of its introduction by eliminating some of them in deference to the intent of the deed as a whole. With considerable hesitation I have come to the conclusion that there is nothing to be collected from the deed, its wording or the circumstances which surrounded its making, which is clear to establish an intention to cut down the right to compensation which subclause (i)(c) would appear in its ordinary meaning to confer upon the claimants. I would therefore hold that the Lands Tribunal came to a correct decision in point of law in answering the first question in favour of the claimants and holding that the permission of November 20 1973 entitled them to claim compensation under clause 6. Then comes the second question: what is the correct basis of valuation?  Was it Valuation II?  I find it as difficult as I think the tribunal and counsel have found it to keep the two questions separate. But I think that it follows from the claimants’ common ownership of the red and blue lands and their consequent right to claim compensation for injurious affection of the blue land by prevention of development on the red land that they are entitled to compensation for being prevented from joint development of the red and blue lands and that Valuation I is right. That may be said to result in a windfall for the claimants, an open-ended commitment for the corporation and an arbitrary and capricious increase of the burden imposed by the one on the other, or rather by the board on the corporation. I13 express no opinion on the question whether that might give the corporation any sort of claim against the board. But if the burden imposed on the red land by the easement injuriously affects the blue land, the basis of compensating the common owner must be the joint development which the easement prevents. I would therefore hold that Valuation I is the correct basis, hold that the tribunal came to a wrong decision in law in awarding compensation on the basis of Valuation II and substitute for the tribunal’s award of £44,776 an award of £84,776. If I am wrong in holding that Valuation I applies, I would uphold the tribunal’s preference for Valuation II over Valuation III. The choice between them depends on deciding whether rule (3) of section 5 of the Land Compensation Act 1961, applies to the facts which have been agreed by the parties or found by the tribunal. That section provides: Compensation in respect of any compulsory acquisition shall be assessed in accordance with the following rules: (1) No allowance shall be made on account of the acquisition being compulsory: (2) The value of land shall, subject as hereinafter provided, be taken to be the amount which the land if sold in the open market by a willing seller might be expected to realise: (3) The special suitability or adaptability of the land for any purpose shall not be taken into account if that purpose is a purpose to which it could be applied only in pursuance of statutory powers, or for which there is no market apart from the special needs of a particular purchaser or the requirements of any authority possessing compulsory purchase powers. Counsel for the claimants contends that there is a market for the purpose of the development for which the red land is suitable or adaptable apart from the special needs of the claimants; for the tribunal has found that there would be purchasers for the red land other than the claimants, including the board, a person who might wish to use the red land for a car park, a speculator, a purchaser of the red and blue lands together and a purchaser of the red land hoping for access from the blue. And he relied on Corrie v Central Land Board (1954) 4 P & CR 276. But, as counsel for the corporation points out, the rule does not refer to a market for the land but a market for a purpose of its owner alone and the purpose must be a purpose for which the quality of the land is suitable or adaptable: Lambe v Secretary of State for War [1955] 2 QB 612. There was no finding by the tribunal of any market for such a purpose apart from the special needs of the claimants themselves. The purpose for which they specially needed the red land was to marry it with the blue land for joint development. In Corrie’s case there were possible purchasers of the land other than the Coal Board for the purpose of ‘tipping.’  So counsel for the claimants changed his ground and submitted that the marriage of the red and blue lands was not such a purpose, there was no such quality of the red land proved, and if there was, no resulting enhancement of its value proved. On that fresh ground, not apparently raised before the tribunal, which decided in favour of Valuation II because the case was ‘on all fours with Corrie,’ I would have preferred Valuation II to Valuation III, had I not decided that Valuation I was the correct basis of compensation. GEOFFREY LANE LJ: This appeal concerns a reference by Blandrent Investment Developments Ltd (hereinafter called ‘the claimants’) to the Lands Tribunal to determine the amount of compensation payable by the British Gas Corporation in accordance with a deed of grant dated May 17 1973 in respect of a parcel of land some 2.66 acres in area at Rainham. The member of the tribunal published his award on October 19 1976 in the form permitted by Rules of the Supreme Court, Order 61, rule 1 (4) and the practice direction of this court dated July 27 1956. That was done because the parties found themselves unable to agree upon the manner in which the points of law which they desired should be determined were to be expressed. There are three areas of land which require description: (1) Furthest north is land owned at all material times and still owned by British Railways Board (hereinafter referred to as ‘British Rail’). That land carries Rainham railway station and the permanent way. (2) Adjoining that to the south is the 2.66 acres in the shape of a long narrow roughly rectangular area referred to throughout as ‘the red land.’  Prior to April 1973 that land had also been in the ownership both legal and equitable of British Rail. (3) Further south still a much larger area of land, again roughly rectangular, bounded on the north by the red land, on the west by Rainham Creek, and on the east by Ferry Lane. That area is called ‘the blue land’ and at all material times was owned by the claimants. The history of events is as follows. Before the events with which we are concerned the Gas Board had laid three separate pipelines across a portion of the red land; in 1962 a 4-in pipe, in 1964 a 6-in, and in 1971 a 24-in pipe. These pipes run under the red land, just to the north of and parallel with its boundary with the blue land. On January 11 1973 the claimants took a conveyance of the blue land. On March 21 1973 the Gas Corporation wrote to British Rail approving a draft deed of grant in respect of the use of the land for the pipeline. On April 4 1973 the claimants contracted to buy the red land from British Rail for £27,500. On May 17 1973 the deed of grant was executed by British Rail in favour of the Gas Corporation giving to the corporation an easement in respect of their pipelines in consideration of the payment of £224. On June 7 1973–that is to say, some three weeks after the execution of the deed of grant–the red land was conveyed to the claimants by British Rail. By this date an estate road was under construction on the blue land and the blue land was being filled to raise it to the level of the red land. The configuration of these various plots is such that no development of the red land would be allowed by means of access direct from Ferry Lane. Consequently, it is essential, in order to make any profitable use of the red land, to gain access to it from the blue land. On November 20 1973 outline planning consent was given to the claimants for a warehouse and offices to be built partly on the red land and partly on the blue land. It is this consent which is the only one among many which is material to this appeal. As appears from the short statement of facts, the claimants derive their standing in this action simply and solely from British Rail, their predecessors in title. That being so, it seems to me that they possess the same rights against the Gas Corporation as British Rail would have had, if they had at the date of the hearing still been the freeholders of the land under which the pipes had been laid. No one disputes that the material date for ascertaining those rights is the date of the deed of grant; that is, May 17 1973. No one suggests that the claimants are entitled to pray in aid anything which has happened since that date to enlarge their claim. It follows that the claimants’ rights must be determined by the terms of the deed of grant upon which British Rail’s rights were founded. That document describes the situation unequivocally, if inaccurately. The corporation desire to lay . . . pipes in the said land. British Rail is seised, it declares, of an unencumbered fee simple in possession of the land (the red land); they are the owners of the red land. There is no mention of the other land owned by British Rail to the north and, of course, there is no mention of the blue land which belongs to neither party to the deed. There is no mention of any equitable rights vested in the claimants or in anyone else. It seems to me to be a strange proposition that in the face of that document and those assertions, on which this claim is necessarily based, the claimants are entitled to say that the deed was wrong, that there was an encumbrance; that the claimants had contracted to buy the red land; that, moreover, they had already bought the blue land to the south; accordingly that they are entitled to base their claim to compensation on the injurious affection which the pipelines have caused not only to the red but also to that blue land. The claimants’ contention is based on the wording of clause 6 of the deed of grant, which runs as follows: 6. (i) If at any time (a) permission is granted . . . for development which consists of or includes building . . . operations which the Grantor is prevented by the covenants in Clause 3 hereof from carrying out . . .14 and (b) the said developments . . . cannot reasonably be carried out elsewhere on the said land consistently with the Grantor’s covenants in Clause 3 hereof and (c) the principal amount of compensation which would have been payable in respect of a compulsory acquisition by the Corporation of the easements hereby granted in pursuance of a notice to treat served on the date hereof if such permission had previously been granted exceeds the sum set out in Clause 1 hereof (which is calculated without reference to the prospect of any such operations), then subject to the provisions of this Clause the Corporation shall pay to the Grantor a sum equal to the excess. Mr Moriarty’s argument, as I understand it, is based on these provisions of clause 6(i)(c), and runs as follows. In order to come to a conclusion with regard to this subsection, it is necessary to inquire what would have been the situation if there had been a notice to treat on the date of the grant, namely May 17 1973. If there had been such a notice to treat it would, on the authorities, have had to be served on the claimants as the holders of the equitable title to the land, or at least upon both British Rail (the legal owners) and the claimants (the equitable owners). That being the case, the claimants would have been entitled to claim compensation in respect of injurious affection to any land of which they were then the owners whether at law or in equity and accordingly their claim in respect of the blue land is properly founded, because they were at the time of the grant the equitable owners of the red land. It seems to me that that argument is founded on a fallacy. It is perfectly true that clause 6(i), with its three subclauses, provides that certain matters must be established before a claimant is entitled to compensation. That is, however, very far from saying that clause 6 is capable of altering the basis upon which the grant was made to the claimants’ predecessors in title. That would to my mind be giving to the subclause an effect far beyond anything which the draftsman can have intended. No doubt, if the decision of Vaisey J in Hillingdon Estates is correct and applicable and if there had truly been a notice to treat, then things might have been different. One observes that the situation in Hillingdon Estates was the converse. There it was the notice to treat which was real and the contract and the parties thereto which were notional. Here there was not a true notice to treat. The only notice to treat is a notional one, and the notional notice to treat should, as I see it, be a notice based on the actual grant, that is to say a notice requiring treaty between British Rail and the Gas Corporation and therefore confined to the land owned by British Rail at the date of the grant. It is unnecessary to decide whether one should consider only the red land or whether one should also include the other British Rail land to the north. As I read clause 6 as a whole, it seems to me that it is referable only to operations carried out on the ‘said land’ which is the red land. The reference in subclause 6(i)(b) to the requirement that the developments must not be capable of being carried out ‘elsewhere on the said land’ indicates clearly that no other land is in contemplation and certainly no land belonging to a person who is not a party to the deed. I find it impossible to construe 6(i)(c) as in any way enlarging the rights of the grantor. If anything, it is restricting his rights by imposing a condition which must be fulfilled before he is entitled to compensation. Furthermore, the final words of this subclause (‘which is calculated without reference to the prospect of any such operations’) seem to me to refer to operations and developments on the ‘said’ or red land. It cannot be inferred from those words that the parties had it in mind that other land owned by someone not a party to the deed should if injuriously affected entitle the party to compensation. Those words imply the opposite. For those reasons, it seems to me that the claimants fail to show that the blue land has any relevance to the question of compensation. As I understand the situation, it was not contended on behalf of the claimants that on this interpretation of the deed any claim to compensation can arise by virtue of the planning permission of November 20 1973. In any event, on the claimants’ own valuation on this basis compensation is nil. The corporation nevertheless say they are willing to pay compensation of £5,100 less the £224 consideration for the grant. That is a matter for them. I would allow the appeal of the corporation and substitute an order that the corporation is not bound to make any payment by way of compensation to the claimants. I would dismiss the claimants’ appeal. Agreeing with Geoffrey Lane LJ, CUMMING-BRUCE LJ said: The first question is whether the operative words of clause 6 impose an obligation on the grantee of the easements to pay to the grantor’s successor in title compensation for injurious affection to other land of that successor in title. By clause 6 (i)(c), the measure of compensation is that sum which would have been payable in respect of a compulsory acquisition by the grantee in pursuance of a notice to treat served on the date of the deed, May 17 1973, less the sum set out in clause 1. If the corporation has compulsorily acquired the easements and served notice to treat on May 17 1973, the claimant as owner of the equitable interest in the red land would have been entitled to compensation for injurious affection to the blue land being other land of the claimant within the meaning of paragraph 13 of the Second Schedule to the Gas Act 1972, provided that it could show that planning permission had been granted for joint development on the red and blue lands which would be prevented by the grant of the easements. And such planning permission was granted on November 20 1973. This follows from the combined effect of the decisions in Oppenheimer and Hillingdon Estates. By the former case the notice to treat identified ‘the interest’ of the claimants, that is, their equitable interest in the red land; by the latter case an equitable interest so identified entitles the claimants to compensation for injurious affection not only to the red land but also to other land of theirs pursuant to paragraph 13 of the Second Schedule to the Gas Act. But this was not a compulsory acquisition and notice to treat was never served. It is a grant of the easement for an agreed measure of compensation against the background that had agreement not been reached the procedure for compulsory acquisition would have been pursued. The question therefore resolves itself into a question of construction of clause 6 in order to determine what compensation or measure of compensation the parties agreed. Clause 6(i) determines the measure of compensation by reference to three contingencies. Clause 6(i)(a) defines the first contingency: ‘Permission is granted . . . for development which consists of or includes building or mining operations which the Grantor is prevented by the covenants in Clause 3 hereof from carrying out or it is shown that but for the said works such permission might reasonably have been expected to be granted.’  By the introductory words of the deed, the expression ‘the Grantor’ where the context so admits shall be deemed to include its successors in title and assigns. In clause 6 (i)(a) the context does so admit, so that permission for development including building fulfils the condition provided that the permission relates to land contemplated by the clause. Mr. Moriarty submitted that the phrase ‘which consists of or includes building or mining operations which the Grantor is prevented from carrying out . . .’ was to be understood in a geographical sense; that is, that if the permission related both to the red land and to the blue land, the permission was permission ‘including’ the red land even though the Grantor had not to be regarded as having an interest in the blue land at the date of the deed. I cannot accept that ‘including’ is there intended to carry such a meaning. The phrase ‘consists of or includes building or mining operations’ defines the character of the relevant operations and does not refer to the extent of the land upon which those operations are carried out. Clause 6(i)(b) provides that compensation shall only be payable in respect of development which cannot reasonably be carried out elsewhere ‘on the said land.’  The meaning of ‘the said land’ has to be collected from the first recital and is the parcel of land described in the First Schedule to the deed; that is, the red land. This is a strong indication that in relation to15 compensation the parties were only contemplating development upon the red land. If the parties had had in contemplation development upon other land of the Grantor as well as the land described in the schedule, it is to be expected that they would have also disqualified for compensation development upon such other land which could be carried out elsewhere upon that other land. Mr Moriarty accepts that the limited extent of the exclusion indicates that the parties were then focusing attention too exclusively upon rearrangement of development upon the red land, but submits that that is an anomaly which should not be regarded as throwing light on the intention of the parties to be collected from other paragraphs of clause 6. I reject that submission. Clause 6(i)(c) sets out the measure of compensation. First it is necessary to calculate the amount of compensation which would have been payable in respect of compulsory acquisition. Had the grantor owned the legal and equitable interests in the red land at the date of the deed, the only question of construction would have been whether the parties contemplated compensation for injurious affection to other land of the Grantor as well as to the red land which was specified in the First Schedule to the deed. But in fact on April 4 1973 the Grantor entered into a contract with the claimants to sell the red land to them. So that from that date the equitable interest in the red land was vested in the claimants who already owned the blue land. As a result, the principal amount of compensation which would have been payable to them in respect of a compulsory acquisition by the corporation in pursuance of a notice to treat served on May 17 would have included compensation for injurious affection of the blue land which they already owned. But did the clause contemplate that the Grantee should be under an obligation to pay only such compensation as the British Railways Board would have been entitled to on compulsory acquisition, or did it contemplate the entitlement to compensation of a successor in title who already at the date of the deed held the equitable interest in the red land and who already held the legal interest in the blue land to the south of the red land?  Clause 6(i)(c) itself is silent, and clause 6(i)(b) suggests that the parties were contemplating compensation for injurious affection of the red land alone. There is sufficient uncertainty about the intention of the parties to be collected from the words of clause 6(i)(c) to entitle the court to look elsewhere in the deed and to have regard, if necessary, to the recitals as an aid to construction of the operative words. The observations of Lord Macnaghten in Orr v Mitchell [1893] AC 238, at p 254, apply: When the words in the dispositive or operative part of a deed of conveyance are clear and unambiguous they cannot be corrected by reference to other parts of the instrument. When those words are susceptible of two constructions the context may properly be referred to for the purpose of determining which of the two constructions is the true meaning. In order to justify a reference to the context for this purpose, it is not necessary that the language of the dispositive or operative clause should be ambiguous in the sense that without some help you cannot tell which of the two meanings should be taken. The rule applies though one of the two meanings is the more obvious one, and would necessarily be preferred if no light could be derived from the rest of the deed. For the purpose of construing the dispositive or operative clause, the whole of the instrument may be referred to though the introductory narrative or recitals leading up to that clause are, perhaps, more likely to furnish the key to its true construction than the subsidiary clauses of the deed. In the deed dated May 17 the first recital describes the interest of the Grantor: ‘The Grantor is seised in unencumbered fee simple in possession of the land referred to in the first Schedule hereto (hereinafter called ‘the said land’).’  This recital clearly denies the existence of any other person having any interest in the red land. The grantee contracted with the Grantor on that basis. Though a successor in title could succeed to the rights and privileges of the Grantor, he could not increase the burden of compensation falling upon the Grantee. This suggests that the common intention of the parties to the deed was that compensation for injurious affection in clause 6(i)(c) should be limited to injurious affection of the interests in land held by the Grantor on May 17 1973, an inference consistent with the inference to be drawn from clause 6(i)(b). The strongest reason for doubt about the validity of this construction arises from the statement of Mr Drinkwater that this deed was drafted from a pro forma which had for years been used by the British Gas Corporation or its predecessors. This explains the inaccuracy of the second recital. The corporation did not in fact ‘desire to lay’ mains and pipes in the strip of the red land wherein the easements were granted. The pipes had been laid in 1962 and 1964. So, if the second recital contained a careless inaccuracy as a consequence of the use by the corporation of a form with an inappropriate recital, it may be dangerous to look to the first recital which turns out on the facts also to be inaccurate. Against this background, Mr Moriarty submits that it is wrong to hold that the construction of the operative words of clause 6 may be aided by looking at the recitals. If it is right to have regard to Mr Drinkwater’s statement that the deed was prepared from a pro forma frequently used by the Gas Corporation, it is also right to have regard to the finding that a letter dated March 21 1973 was sent by the assistant solicitor to the compensation authority to the chief legal adviser and solicitor to British Railways Board agreeing the draft of the deed. This date was before the date of the contract whereby the Grantor agreed to convey the red land to the claimants. At the date when the draft of the deed was agreed, the first recital was accurate, and in my view it may be looked at to clarify the uncertainty which exists upon the intention of the parties in clause 6. I observe that it is a relevant feature of the history that by the conveyance dated June 7 1973 the claimants acquired the red land with notice of the deed of May 17 between British Railways Board and the Gas Corporation. So the claimants took the red land with notice that the British Railways Board had represented to the Gas Corporation that no one else had any interest in the red land at the date of the deed whereby the measure of compensation for the grant of the easement was agreed. For those reasons, I would hold that the claimants are not entitled to any compensation for injurious affection caused by prevention of joint development by them upon the red land and the blue land. Their rights are restricted to compensation for prevention of development upon the red land alone. That compensation on the facts found is nil, though the corporation are apparently willing to pay £5,100 less the £224 consideration for the grant. I would allow the appeal of the corporation and substitute the order proposed by Geoffrey Lane LJ. I would dismiss the claimants’ appeal. Had I taken the same view as Stephenson LJ upon the construction of the deed, I would respectfully agree with him that Valuation I was the correct basis of compensation, for the reasons that he has given. The appeal of the claimants, Blandrent Investment Developments Ltd, was dismissed with costs in the Court of Appeal and below. The cross-appeal of the compensating authority, British Gas Corporation, was allowed with costs in the Court of Appeal and below.