City of Glasgow District Council and another v Mackie

Land compensation — Discretionary disturbance payment — Whether Scottish Lands Tribunal has jurisdiction to determine amount of discretionary disturbance payment under section 34(4) of the Land Compensation (Scotland) Act 1973 The respondent, Duncan G Mackie, held a lease of a shop in Glasgow which was due to terminate in 1992 — Because the shop was in an area the subject of a comprehensive improvement scheme, the respondent was obliged to give up possession in 1987 — Although it was originally envisaged that the respondent’s loss of occupation would be only temporary, because the improvement works were delayed he became permanently displaced and negotiated a renunciation of his lease with his landlords by which the lease was determined in 1989 — The improvement scheme was carried out by the second appellants, Yoker Housing Association Ltd, as agents for the first appellants, City of Glasgow District Council — On a reference to the Lands Tribunal to have determined the amount of a discretionary disturbance payment under section 34(4) of the Land Compensation (Scotland) Act 1973, the tribunal rejected the second appellants’ argument that since a discretionary payment was not a ‘disturbance payment’ within the meaning of section 35(4) of the Act it had no jurisdiction to determine the amount in dispute — The appellants appealed from the decision of the tribunal to repel their pleas to a competency on the grounds that it had jurisdiction to determine the amount in dispute Held: The appeal was allowed — The jurisdiction of the tribunal is defined by section 35(4) of the 1973 Act and refers to ‘any dispute as to the amount of a disturbance payment’ — A discretionary payment under section 34(4) applies only where a person who is displaced is not entitled to receive a disturbance payment — The payment in this case was not a disturbance payment but was for the discretion of the compensating authority — There is no indication in section 34(4) that the amount of the discretionary payment, if in dispute, is to be referred to and determined by the tribunal — Gozra v Hackney London Borough Council relating to the same provisions in the Land Compensation Act 1973 (section 37(5)) not followed The following cases are referred to in this report. Glasgow Corporation v Anderson 1976 SLT 225 Gozra v Hackney London Borough [1988] 2 EGLR 20; [1988] 46 EG 87 Lanarkshire and Dunbartonshire Railway Co v Main (1985) 22 R 912; 21 R 1018; 31 SC LR 239; 2 SLT 258 McMonagle v Westminster City Council [1990] 2 AC 716; [1990] 2 WLR 823; [1990] 1 All ER 993, HL R v Federal Steam Navigation Co Ltd [1974] 1 WLR 505; [1974] 2 All ER 97; [1974] 1 Lloyd’s Rep 520, HL This was an appeal by City of Glasgow District Council and Yoker Housing Association Ltd by way of a case stated by the Lands Tribunal for Scotland under the Tribunals and Inquiries Act 1971 in respect of a determination that the tribunal had jurisdiction to determine the amount of a discretionary disturbance payment under section 34(4) of the Land Compensation (Scotland) Act 1973 claimed by the respondent, Duncan G Mackie. James McNeill QC (instructed by Campbell Smith & Co, for the first appellants, and MacRoberts for the second appellants) appeared for the appellants; Gerard Moynihan (instructed by McClure, Naismith, Anderson & Gardiner) represented the respondent. Giving his opinion, LORD HOPE (LORD PRESIDENT) said: This is an appeal by case stated by the Lands Tribunal for Scotland under the Tribunals and Inquiries Act 1971 and Rule of Court 291. The respondent was the lessee of a shop in Glasgow. His lease was due to terminate in 1992, but the tenement in which the shop was located was the subject of a comprehensive improvement scheme as a result of which he was obliged to move out of the property in 1987. It was originally envisaged that his loss of occupation of the premises would be only temporary, but the contractor went into liquidation and the work was delayed. The respondent alleges that he was not able to return to the premises and that he was permanently displaced. He negotiated a renunciation of his lease with his landlords, as a result of which it was determined in 1989. The improvement scheme was being carried out by Yoker Housing Association Ltd, who allege that they were acting as agents for City of Glasgow District Council. This case is concerned only with the appellants’ pleas to the competency of the respondent’s application to the tribunal for determination of his claim for compensation for legal costs and loss of profits resulting from these events. The respondent’s application to the tribunal was in terms of section 35(4) of the Land Compensation (Scotland) Act 1973, which provides that: Any dispute as to the amount of disturbance payment shall be referred to and determined by the Lands Tribunal. His claim was originally presented as being one for a disturbance payment in terms of section 34(1)(d) of the Act, by which it was provided for the first time that a payment could be recovered as of right by a person displaced from any land, and also for a discretionary payment in terms of section 34(4), which replaced the power to make an allowance to persons displaced in section 38 of the Land Compensation Act 1963. But his solicitor accepted in the hearing before the tribunal on the preliminary pleas that, as the housing association were not the owners of the land, section 34(1)(d) did not apply. He confined himself to the respondent’s claim for the determination of the amount of a discretionary payment under section 34(4), which is in these terms: (4)  Where a person is displaced from any land as mentioned in subsection (1) but is not entitled, as against the authority there mentioned, to a disturbance payment or to compensation for disturbance under any other enactment, the authority may, if they think fit, make a payment to him determined in accordance with section 35(1) to (3) below. The appellants’ submission was that this was not a question which was open for determination by the tribunal, since a discretionary payment under that subsection was not a ‘disturbance payment’36 within the meaning of section 35(4). The tribunal rejected that argument and repelled the pleas to competency on the ground that it had jurisdiction under the subsection to determine the amount which is in dispute. The tribunal noted that the respondent had no statutory entitlement to any payment under section 34(4). But they pointed out that the housing association had already exercised their discretion by agreeing to make a payment under that subsection to the respondent at the rate of £240 per week for the period of 20 weeks originally envisaged for the completion of the works. The subsection requires that the amount of any payment under section 34(4) is to be determined by the authority in accordance with section 35(1) to (3). They considered these provisions to be mandatory and not directory and said that it would be surprising if Parliament had given no statutory remedy to a displaced person if an authority did not determine the payment in accordance with what section 35(1) to (3) requires. They held that a payment, once it had been assessed under section 35, became a discretionary displacement payment and thus that it was a disturbance payment within the meaning of section 35(4) which could be referred to and determined by the tribunal if there were a dispute as to its amount. In our opinion, this approach is not in accordance with the words used by the legislature. The jurisdiction of the tribunal is defined by section 35(4), which refers to ‘any dispute as to the amount of a disturbance payment’. But the only dispute which remains in this case relates to a payment under section 34(4), which is to be made at the discretion of the authority. The phrase ‘disturbance payment’ is used in section 34(1) to define the payment which a person who is displaced from land is entitled to receive as of right in the circumstances to which that subsection refers. Section 34(4) applies in terms only where the person who is displaced is not entitled to receive a disturbance payment. The phrase which is used to describe the discretionary payment which may be made under that subsection is: ‘a payment . . . determined in accordance with section 35(1) to (3) below’. Thus, whether one starts with section 35(4) or with section 34(4) the result is the same. Section 35(4) is concerned only with disputes about the amount of a disturbance payment which, applying the language used in section 34, the payment in dispute in this case is not. And section 34(4) says that the amount payable under that subsection is to be determined in accordance with section 35(1) to (3), not in accordance with section 35(1) to (4). There is no indication in section 34(4) that the amount of the discretionary payment, if in dispute, is to be referred to and determined by the tribunal under section 35(4). Mr Moynihan submitted that there was an ambiguity as to the scope of the phrase ‘discretionary payment’ as used in section 35(4). He pointed out that section 34(1), when describing the payment with which that subsection is concerned, says that it is ‘hereafter referred to as ‘a disturbance payment”. It was open to question whether the word ‘hereafter’ meant simply ‘hereafter within this section’ or whether the definition was intended to apply also to section 35. Moreover, section 35(1), which is among the group of subsections referred to in section 35(4) and which sets out the formula to be applied, describes the amount which is to be arrived at as the ‘amount of a disturbance payment’. This showed that a payment under section 34(4) could reasonably be described as a ‘discretionary disturbance payment’ and that section 35(4) applied because it referred to any dispute about the amount of a disturbance payment. He invited us to examine the sidenotes and the heading to these two sections in support of this approach. His point was that the phrase ‘disturbance payments’ was used in the plural both in the heading and in the sidenote to section 34 in order to describe the subject-matter. So it was appropriate to regard section 34 as being concerned with two different types of disturbance payment, namely a ‘discretionary disturbance payment’, which is what a payment under section 34(4) amounted to, as well as the ‘disturbance payment’ which is defined in section 34(1). We are not persuaded that there is any such ambiguity and, in our opinion, the use of the plural in the heading and in the sidenote to section 34 is of no significance in view of the clarity with which section 34 is expressed. A sidenote is at best a poor guide to the construction of an enactment and such guidance as we may derive from the heading is outweighed by the definition in section 34(1). This confines the expression ‘disturbance payment’ to a payment to which there is an entitlement in terms of the Act. This approach is confirmed when one comes to section 34(5), which provides that a disturbance payment shall carry interest from the date of displacement until payment. That provision would be inappropriate to the discretionary payment to which subsection (4) refers. And the word ‘hereafter’ in section 34(1) is not qualified in such a way as to restrict the meaning which it gives to the words ‘disturbance payment’ to their use in that section only. So the same meaning should be given to these words in any following sections in which they appear, as being a reference back to what section 34(1) provides. In short, there is no statutory basis for the use of the expression ‘discretionary disturbance payment’ as a guide to the proper construction of section 35(4). We were invited, nevertheless, by Mr Moynihan to construe section 35(4) in what he described as a purposive manner with regard to the consequences of the competing arguments. It should be noted, as background to this part of his submissions, that Mr McNeill for the appellants accepted that the provision in section 34(4) that a payment under that subsection was to be determined in accordance with section 35(1) to (3) was mandatory. There was a discretion as to whether to make the payment but, once it had been decided to make it, the amount of it had to be determined in accordance with those subsections. Thus, there was no discretion as to how its amount was to be calculated, in contrast, for example, to the wide terms of section 83(1) of the Local Government (Scotland) Act 1973, which gives power to local authorities to incur expenditure which, in their opinion, is in the interests of their area or any part of it or all or some of its inhabitants. That being so, said Mr Moynihan, there would be an anomaly if a dispute as to the amount of a disturbance payment within the meaning of section 34(1) could be referred to the tribunal and a dispute as to the amount of a discretionary payment under section 34(4) could not. The provisions of section 35(1) to (3) applied to them both and in both cases they were mandatory. It was not to be thought that Parliament intended that a different result should be arrived at in each case. Yet that could well happen if, in the case of a discretionary payment, the only method open to resolve any dispute was that of judicial review. This argument reflects the comment by the tribunal in its opinion in this case that it would be surprising if Parliament gave no statutory remedy to a displaced person if an authority did not determine the payment in accordance with the provisions to which section 34(4) refers. But it is not obvious that the intention of Parliament was that the remedy in each case should be the same. It makes good sense, in the case of a disturbance payment, to make express provision for the determination of a dispute as to its amount. There is an entitlement to this payment under the statute in those cases to which section 34(1) applies. It is an amount which can be sued for, if necessary, if it is not paid. The effect of section 35(4) is to exclude all questions as to the amount of a disturbance payment from the courts, because these questions are to be referred to and determined by the tribunal. This is in accordance with a long tradition, in cases where compensation is due as of right in cases of compulsory acquisition by bodies with statutory powers, that determination of the amount to be paid is to be by arbitration and is not a matter for the court: see Lord McLaren’s comments in Lanarkshire & Dunbartonshire Railway Co v Main (1895) 22 R 912 at p 920. But a discretionary payment is in a quite different category. It is not something which can be sued for because it is in the discretion of the authority as to whether it is to be paid. The amount of the payment is prescribed by section 34(4) under reference to section 35(1) to (3). But it seems not unreasonable to leave it to the authority to resolve all questions of fact and degree — or of circumstances and degree, as they were described in Glasgow Corporation v Anderson 1976 SLT 225 — so long as the particular exercises which are described in section 35(1) to (3) are carried out. Questions as to what was or was not reasonable for the express purposes of these subsections would thus be left to them to decide. Their decision as to what was or was not reasonable might well be relevant to a decision as to whether or not the payment should be made. It might well be thought to be anomalous for an authority, having decided to exercise their discretion to make a payment under section 34(4) and having proceeded to do so upon their own view of what was reasonable entirely in accordance with section 35(1) to (3), to be at risk of the amount of the payment being reviewed in every detail by the tribunal. They might then find that the amount to be paid was greater than had been assumed when the discretion was exercised simply because the tribunal took a different view of the facts. Assuming that a petition for judicial review would be competent in those cases where the payment is at the discretion of the37 authority — and Mr McNeill conceded this point, at least in those cases where the authority had already agreed to make the payment — this would still leave all questions which were pure questions of fact and degree to the authority. That seems to us to be consistent with the nature of a discretionary payment under section 34(4), as to which the displaced person has no right of action under the statute. It is also consistent with the wording of section 34(4), which says that the amount of the payment is to be ‘determined’ in accordance with section 35(1) to (3) — determined, that is to say, by the authority, since the absence of a reference here to section 35(4) seems to us to exclude its determination under that subsection by the tribunal. In our opinion, this is not one of those cases where it can be said that to apply the words used by the legislature according to their ordinary meaning would produce a result which cannot have been intended by Parliament. It has been recognised that it may be permissible for a word to be struck out and another substituted for it where without such substitution the provision is unintelligible or absurd or totally unworkable or where by giving effect to the words used in it the operation of the statute would be rendered insensible, absurd or ineffective to achieve its evident purpose: see R v Federal Steam Navigation Co Ltd [1974] 1 WLR 505 per Lord Reid at p 509B and McMonagle v Westminster City Council [1990] 2 AC 716 at p 726E. But that is not the situation in the present case and we do not think that we would be justified in departing from the clear language of the statute which we would require to do if we were to give effect to Mr Moynihan’s argument. We were referred to a decision of the Court of Appeal in Gozra v Hackney London Borough [1988] 2 EGLR 20 in which, contrary to the opinion which we have formed in this case, it was held that the Lands Tribunal had jurisdiction to determine a dispute as to the amount of a discretionary payment. That was a case where the claimant was a weekly tenant of a dwelling-house who, on being rehoused, claimed a disturbance payment. It was agreed that the payment could be made only under section 37(5) of the Land Compensation Act 1973, which is in the same terms as section 34(4) of the Scottish Act of 1973 except for the section numbers. It provides that the amount of the payment under that subsection is to be determined in accordance with section 38(1) to (3) of the English Act. A preliminary question was raised as to the jurisdiction of the tribunal to determine the amount of a payment made or decided upon under section 37(5) which was in dispute. All three members of the Court of Appeal were of the opinion that the disputed question was referable to the tribunal. That decision, which is not binding on us, is entitled to respect and we would be disposed to follow it if we could, since the legislation is, for all practical purposes, identical. But we regret that we are unable to do so because we disagree with the opinions which were expressed. Under reference to the construction of the statute which we favour, Nourse LJ said at p 21: As a matter of cool statutory interpretation, that submission has some sterile appeal to it. But I do not think that it can be the function of the court to put such a construction on the Act unless the material provisions absolutely require it. As the Lands Tribunal pointed out, it would produce an incongruous difference of remedy for settling disputes as to the amount of section 37(1) payments on the one hand and section 37(5) payments on the other, even though they have to be determined according to precisely the same criteria. Not only would the remedy be different. In the case of a section 37(5) payment the remedy would be that of judicial review, a remedy far inferior to an absolute right to have the amount of the payment determined by the Lands Tribunal under section 38(4). Having identified the problem in this way, he found the solution to it, with which Mann LJ and Lord Donaldson of Lymington MR both agreed, in holding that, since section 37(5) required there to be determined the equivalent of an amount equal to a disturbance payment, a dispute as to that amount was referable to the tribunal as being a dispute about the amount of a disturbance payment. We find ourselves unable to agree with this approach. It seems to us that the decision overlooks the significance of the point that the question whether to make the payment is entirely at the discretion of the authority and that, in contrast to a disturbance payment, there is no entitlement to sue for this amount. The reference to the remedy of judicial review as a far inferior remedy seems to recognise, in our view correctly, that the amount of a discretionary payment could not be the subject of a dispute in the courts, since no action could be raised to recover it. But it does not seem to us to be incongruous in these circumstances that the only remedy in the event of a dispute should be that of judicial review, leaving all matters of fact and degree to the determination of the authority. Nor does it seem to be unreasonable that disputes about a disturbance payment, for which there is a right of action, are to be referred to the tribunal for determination there rather than in the exercise of its ordinary jurisdiction by the court. For these reasons we consider that the decision reached by the tribunal in this case was unsound and we shall allow this appeal. We answer the single question of law for City of Glasgow District Council and the first question of law for Yoker Housing Association both in the affirmative. We find it unnecessary to answer questions two to five for Yoker Housing Association, since these questions were not argued and are in any event superseded by our decision.