Hunter v Manchester City Council

Compensation–Unfit property–Owner-occupier payment–Owner who occupied part of house and let remainder entitled to full compensation on the concessionary basis This was an appeal by Mr Eric Melbourne Hunter, of Lindum Avenue, Old Trafford, Manchester, from a decision of the Lands Tribunal (Mr R C Walmsley FRICS) on July 23 1973 holding that he was entitled to be paid only £464 as compensation on the compulsory acquisition by the respondents, Manchester Corporation, of his dwelling-house in Stockton Street, Moss Side, Manchester. Mr H S Singer (instructed by Adam Burn & Metson, agents for Bieber, Travers & Libman, of Manchester) appeared for the appellant, and Mr N R B Macleod (instructed by L Boardman, of Manchester) represented the respondents. Giving judgment, LORD DENNING said: In 1954 Mr Hunter came here from Jamaica. In 1957 he bought a house in a slum area of Manchester, 98 Stockton Street, Moss Side, Manchester. It was a terraced property with two rooms plus bathroom upstairs. Twelve years later, in 1969, the Manchester Corporation made a survey of the area. They took the view that it should be a clearance area, because the houses were unfit for human habitation, and the most satisfactory method of dealing with them was by pulling them all down. Mr Hunter heard of the proposal, so he made arrangements to buy another house. He bought 4 Lindum Avenue, Old Trafford, Manchester. His wife and seven children moved into this property on July 10 1969, but he himself did not go with them at that stage, because he was advised by an estate agent that he had better remain in part occupation of 98 Stockton Street. So he let the downstairs of 98 Stockton Street to a Mrs Grenyion, and he himself continued to occupy one of the upstairs rooms, ‘where he slept, and sometimes his wife visited him there.’  That continued until July 1971. Meanwhile, on December 3 1969, the corporation had declared the area to be a clearance area. It took some time to get the proceedings through, but on May 10 1971 a compulsory purchase order was made, and on March 19 1972 this was confirmed by the Secretary of State. No 98 Stockton Street was included as a house to be pulled down. A month or two later, notice to treat and notice of entry were served, and the acquisition became effective in June of 1972. The question that arises is the amount of compensation to which Mr Hunter is entitled for the compulsory acquisition of his house. If he had never been in occupation of the house himself, but had always let it out to others, he would only get the site value. That is clear from section 59 (2) of the Housing Act 1957. The site value of this house was only £130. But he had been an owner-occupier for many years, and there are provisions in the Housing Acts in favour of owner-occupiers. They are contained in the fifth schedule to the Housing Act 1969. I will not read the details, because it is quite plain that Mr Hunter was a person who qualified for a higher payment. He satisfied paragraph 5 (1) (e) of the schedule, because he had been in occupation throughout the qualifying period, which in this case was April 23 1968 to December 3 1969, when the house was declared to be in a clearance area. He satisfied paragraph 1 (1)(b), because during that period the house was wholly or partly occupied as a private dwelling by Mr Hunter, who was a person entitled to an interest in the house. It was wholly or partly occupied by him throughout that period. He occupied it wholly from April 23 1968 until July 1969, and partly from July 1969 to December 3 1969. So Mr Hunter was a qualified person who had an interest in respect of which he was entitled to payment. The amount of the payment is given by paragraph 2. It is an amount equal to the full compulsory purchase value less the site value. The full compulsory purchase value was £1,800, less the site value, which would be £130. So the full payment under paragraph 2 would be £1,670. Now we come to the crucial point in the case. Paragraph 3 (1) says: The amount which would otherwise be payable under paragraph 1 of this schedule shall be reduced by such part, if any, of that amount as may reasonably be attributed to any part of the house occupied for any purposes other than those of a private dwelling at the date of the making of the compulsory purchase order. . . . The question is whether this means that the £1,670 is to be reduced. It is to be reduced if ‘any part of the house [is] occupied for any purposes other than those of a private dwelling at the date of the making of the compulsory purchase order.’  That date is May 1971. At that date no 98 was occupied in part by Mr Hunter in the upstairs room in which he slept, while the other part, the downstairs room, was occupied by Mrs Grenyion. Both those purposes are those of a private dwelling. In G E Stevens (High Wycombe) Ltd v High Wycombe Corporation [1961] 3 WLR 228 Diplock J said at p 233: I think occupation of a ‘private dwelling’ means occupation as the dwelling-house of a private person, or occupation by a person in his private capacity as opposed to being occupied for business purposes. It seems to me that when a man uses part of his house for his own dwelling purposes and lets the other part to a subtenant as a dwelling, the whole house is used as ‘a private dwelling’. So there is no ground for reduction. If part of the house had been used for business purposes, of course, there would be grounds for a reduction. What is argued for the Manchester Corporation is that we should look at the overriding intent. The overriding intent, it is said, was that an owner-occupier should only be compensated in respect of his own personal occupation of the house. He should not be compensated for parts which he lets off to tenants. That is an attractive suggestion, but I am afraid that it does not fit in with the words. Nor is there any such overriding intent. We were referred to Ministry of Housing and Local Government Circular 68/69, but the intent is well put in a comment in the Encyclopedia of Housing vol 1 p 2641: The object of this [provision] is to mitigate hardship to those persons who have been driven by the extreme shortage of housing to buy unsound and substandard dwellings to live in themselves. These words apply to the present case. Mr Hunter in 1957 bought this old house in Moss Side in Manchester, no doubt at its then value, because he had nowhere else to live. Twelve years later, when it was going to be pulled down, he naturally looked for another house. In order to buy another house he ought to be able to provide some of the money out of the compensation he gets for his interest in the old house which was going to be pulled down. Although he learned early in 1969 that the house was in an area that was proposed to be a clearance area, he had to remain partly in occupation until the clearance area was declared in December 1969 fully to qualify. But once he did so, it is quite right for him to get compensation for his interest in the old premises even though he let part of it meanwhile to help other people in their housing needs. In my opinion, seeing that this house at the date of the compulsory purchase order in May 1971 was still being used as a private dwelling, there is no ground for reduction. I would only add this, that Mr Hunter appeared in person before the Lands Tribunal, and we have been better placed, because he was represented by counsel before us. On the argument before us, I think the Lands Tribunal did not construe the provisions rightly. The compensation should be determined at the full amount of £1,670. ORR LJ: I agree; and in adding nothing to what my Lord has said, I intend no disrespect for the Lands Tribunal or for the very able argument we have had from counsel on both sides in the case. SCARMAN LJ: I also agree. The respondents submit that the effect of the fifth schedule to the Housing Act 1969 is that an owner-occupier of a house to be demolished can receive compensation over and above the site value only to the extent of his own occupation at the date of the compulsory purchase order. The wording of paragraph 3 (1) is, I think, a great difficulty in the way of this submission, which is really based upon a view of the overriding intent of the provisions of the Housing Act, a view which upon analysis is, I believe, unsound. Mr Macleod, who argued the case very attractively for the respondents, drew our attention to section 68 of the Housing Act 1969, under which it is clear that payments are to be made under the fifth schedule in respect of owner-occupied housing in certain circumstances, and he invited us to infer from that provision and others that the policy was that full compensation should be made available only if the whole of the house was owner-occupied by the person entitled to compensation at the date of the compulsory purchase order. I think that that inference is negatived both by the provisions of the Housing Act 1957, the predecessor of the Housing Act 1969, and by the provisions of the fifth schedule to the 1969 Act. It is clear from the qualifying provisions of each Act that compensation is payable in respect of houses that are owner-occupied as to part only. Then one sees in the schedule to the 1969 Act–the schedule, of course, with which we are concerned–that a person who so occupies a house, that is to say, wholly or partly himself, and has an interest in that house, is entitled under paragraph 2 to the full compulsory purchase value, unless his compensation has to be reduced under paragraph 3. Now, the qualifying period for that entitlement ends with what the statement calls ‘the relevant date’. The relevant date is very significant: it is the date on which the house was declared as being within a clearance area (in this case, December 3 1969). From that moment on it appears to be reasonable that an owner-occupier–almost certainly a family man–should be looking around for accommodation and should have a reasonable expectation that part of the capital needed for his alternative accommodation will come from the compensation for the loss of the house which sooner or later he is going to be compelled by law to vacate. Paragraph 3, upon which the respondent corporation relies, and which does provide in certain subsequent events for a reduction of the compensation available to an owner-occupier, appears to me to do no more than ensure that some one who has qualified for compensation is not going to be permitted to make a profit out of his situation. If the house remains in use as a private dwelling, of course he is not going to make any great amount of money if he lets it: he will be restricted by the Rent Acts. If he takes lodgers, he may lose all or part of his compensation on the ground that the house, or part of it, is being put to a business use. If he does put the house after the relevant date to a business use, then the effect of the paragraph is that, to the extent of that use, his compensation is to be diminished: but if he goes on allowing the house (and it is in the public interest that he should) to be occupied as a private dwelling until such time as it has to come down, then the paragraph contains nothing to deprive him of compensation upon the expectation of which he may well have made utterly admirable and reasonable family arrangements. I think therefore, upon a proper analysis, the policy of the Act coincides with the actual wording of paragraph 3 (1) of the schedule, and I, like my Lord, would allow the appeal. The appeal was allowed, and the decision of the Lands Tribunal varied to provide for compensation of £1,670. Leave to appeal to the House of Lords was refused.