Sheffield Development Corporation v Glossop Sectional Buildings Ltd

Compensation for the acquisition of land — Whether claimant must be dispossessed following notice of entry before being entitled to compensation for extinguishment of business under section 46 of the Land Compensation Act 1973 In September 1989 the claimant company was informed that its property, used for manufacturing purposes, was required for a proposed primary distributor route by the acquiring authority. On August 31 1990 the claimant served a blight notice and by section 154 of the Town and Country Planning Act 1990 the authority were deemed to have served a notice to treat on November 1 1990. On November 16 1990 the claimant served a statement of claim and in January 1991 stated it would close its business on March 30 1991. On February 21 1991 the authority said they were unlikely to require possession before April 1992. On February 22 1991 the claimant applied to the Lands Tribunal for determination of the amount of compensation due under section 46 of the Land Compensation Act 1973. On July 3 1991 the claimant ceased trading. A compulsory purchase order was ultimately confirmed on August 11 1992 and possession was given to the authority after the hearing of a preliminary point of law before the Lands Tribunal on February 22 1993. At that hearing the authority contended that the tribunal had no jurisdiction to determine the compensation payable under section 46 because the claimant had ceased to carry on its trade or business before it had been required to give up possession of the land. The tribunal decided that section 46(1) was satisfied because at the date of the deemed notice to treat the claimant was carrying on a trade or business. The authority appealed, contending that a claimant must be ‘required to give up possession’ within the meaning of section 46(1) by the service of a notice of entry and no such notice had been served. Held: The appeal was dismissed. The distinction between a notice to treat and a notice of entry does not resolve the meaning of section 46. The cessation of business and the giving up of possession was in consequence of the process of acquisition. The requirement in section 46, that the claimant ‘is carrying on a trade or business . . . and in consequence of the compulsory acquisition . . . is required to give up possession . . . to the acquiring authority’, was satisfied. The following cases are referred to in this report. Harvey v Crawley Development Corporation [1957] 1 QB 485; [1957] 2 WLR 332; [1957] 1 All ER 504; (1957) 55 LGR 104; 8 P&CR 141, CA Newham London Borough Council v Benjamin [1968] 1 WLR 694 Prasad v Wolverhampton Borough Council [1983] Ch 333; [1983] 2 WLR 946; [1983] 2 All ER 140; (1983) 82 LGR 265; 47 P&CR 252; [1983] EGD 627; 265 EG 1073, [1983] 1 EGLR 10, CA R v Stone (1866) 1 LRQB 529 This was an appeal by way of case stated by the acquiring authority, Sheffield Development Corporation, from the hearing of a preliminary point of law in the Lands Tribunal (Judge O’Donoghue) in a reference by the claimant, Glossop Sectional Buildings Ltd, for the determination of compensation under section 46 of the Land Compensation Act 1973. Malcolm Spence QC and Mark Lowe (instructed by Nabarro Nathanson, of Doncaster) appeared for the acquiring appellant; Christopher Thomas QC and Robert Smith (instructed by Ronald England & Sons, of Sheffield) represented the respondent. Giving the first judgment at the invitation of Sir Stephen Brown P, ROSE LJ said: This is an appeal by way of case stated by the compensating authority against a decision of a Lands Tribunal given by Judge O’Donoghue on February 22 1993. It raises a short point as to the proper construction of section 46(1) of the Land Compensation Act 1973. The claimant company, as its name suggests, carried on business manufacturing conservatories, greenhouses and sheds and did so on three sites in Princess Street, Sheffield, of which it held the freehold interest in two cases and a long-leasehold interest in the third case. In 1988 the Secretary of State for the Environment exercised certain of his powers under the Local Government Planning and Land Act 1980. Under section 134 he designated Sheffield as an urban development area and under section 135 he established the appellant authority. In September 1989 surveyors, acting on the authority’s behalf, wrote to the claimant indicating that their property was in the path of a proposed primary distributor route. It would be necessary for the authority to acquire it. This could be done in advance of a compulsory purchase order by negotiation, which might be based on total extinguishment of the business if the claimant was within section 46. The claimant had been trading on the site since 1974 and was content to negotiate a sale accordingly. Correspondence between the surveyors acting for each side followed. In April 1990 the authority made and gave notice to the claimant of the Lower Don Valley compulsory purchase order, which embraced the claimant’s land. Thereafter the claimant complained of dilatoriness by the authority in the negotiations and on August 31 1990 served a blight notice under section 192 of the Town and Country Planning Act 1971 requiring the authority to purchase the land. In fact from a little earlier that month the Town and Country Planning Act 1990 had come into force, but nothing turns on that. The authority served no counternotice to the claimant’s blight notice and, in consequence, by effluxion of time on November 1 1990, the authority were deemed by virtue of section 196 of the 1971 Act and section 154 of the 1990 Act to be authorised to acquire the land by compulsory purchase and to have served a notice to treat. It is to be noted that such a deemed notice to treat cannot by virtue of section 167 of the 1990 Act be withdrawn on the authority’s behalf. 30 On November 16 1990 the claimant served a notice of claim under section 46 and in January 1991 indicated in correspondence that it would close its business down on March 30 1991. On February 21 the authority wrote saying that they were not likely to require possession until April 1992 at the earliest and making the remarkable suggestion, apparently oblivious to the events of the immediately preceding 18 months, that the claimant could trade for another 14 months and relocation assistance would be provided. On February 22, that is to say the following day, the claimant applied to the Lands Tribunal for determination of the amount of compensation due to them under section 46. In May 1991 points of claim were served. On July 3 1991 the claimant ceased trading. The authority do not suggest that that cessation was due to anything other than the compulsory purchase order and the prospect of acquisition thereunder. On July 9 the authority served their points of defence, which asserted that the Lands Tribunal had no jurisdiction under section 46 because the claimant had ceased to carry on its trade or business before it had been required to give up possession of the land to the authority. In October 1991 the authority applied to the Lands Tribunal for determination of this point as a preliminary point of law and it is that determination adverse to the authority’s contention which is sought to be challenged by the present appeal. To complete the history, the compulsory purchase order was confirmed on August 11 1992 and possession was ultimately given up after the date of the hearing before the Lands Tribunal. Section 46(1) of the Land Compensation Act 1973 is in these terms: Where a person is carrying on a trade or business on any land and, in consequence of the compulsory acquisition of the whole of that land, is required to give up possession thereof to the acquiring authority, then if — (a)   on the date on which he gives up possession as aforesaid he has attained the age of sixty; and (b)   on that date the land is or forms part of a hereditament the annual value of which does not exceed the prescribed amount; and (c)    that person has not disposed of the goodwill of the whole of the trade or business and gives to the acquiring authority the undertakings mentioned in subsection (3) below, the compensation payable to that person in respect of the compulsory acquisition of his interest in the land or, as the case may be, under section 121 of the Lands Clauses Consolidation Act 1845 or section 20 of the Compulsory Purchase Act 1965 (tenants from year to year etc) shall, so far as attributable to disturbance, be assessed on the assumption that it is not reasonably practicable for that person to carry on the trade or business or, as the case may be, the part thereof the goodwill of which he has retained, elsewhere than on that land. It is common ground that save in one crucial respect all the requirements of that subsection are fulfilled; that is to say, Mr Parkin, who with his wife owns the shares in the claimant’s company, has reached and passed the age of 60. The annual value of the land is within the prescribed limit and the goodwill has not been disposed of by ceasing to trade or otherwise. The single bar to compensation under that section, if the authority are right, is that the company, having ceased to trade before being required to give up possession, is not ‘carrying on a trade or business’ within section 46. The judge rejected that contention. He held that, as at the date of the deemed notice to treat, the company was carrying on its trade or business. It was required to give up possession of the land ‘in consequence of the compulsory acquisition’. For the authority, Mr Malcolm Spence QC submitted that the judge was wrong. The kernel of his submission to this court is that, in order for section 46 to apply, the claimant must be ‘required to give up possession’, by which he means ‘served with notice of entry’ and this claimant was never so required because no such notice was ever served by the authority. The words ‘required to give up possession’ mean in section 46 the same, submits Mr Spence, as those words when they appear in section 121 of the 1845 Act to which section 46 refers and in section 20 of the 1965 Act to which section 46 refers. The judge, submitted Mr Spence, failed to appreciate the difference between a notice to treat and a notice of entry. A notice to treat requires the purchase of an interest in land and sets in motion the process of assessing compensation, but it does not require the giving up of possession. A notice of entry provides for the taking of possession. In this respect Mr Spence referred to the difference between, on the one hand, section 5 of the Compulsory Purchase Act 1965 and section 18 of the Land Clauses Consolidation Act 1845, which deal with notices to treat and, on the other hand, section 11 of the 1965 Act and section 85 of the 1845 Act, which deal with notices of entry. For my part, I have no hesitation in accepting that there is such a distinction. For well over a century since R v Stone (1866) 1 LRQB 529, it has been well recognised that there is a difference between a notice to treat and a notice of entry. But, in my judgment, that distinction does not resolve the meaning of section 46 for two reasons: first, section 46 makes no reference either to a notice to treat or to a notice of entry and the references in it to section 121 of the 1845 Act and section 20 of the 1965 Act are references to classes of persons, namely those on short-term tenancies, who are not entitled to a notice to treat as was this claimant owner. For such short-term tenancies a special code of compensation is provided which is dependent on a notice to quit as Stephenson LJ pointed out at p963H, in Prasad v Wolverhampton Borough Council [1983] 2 WLR 946, to which authority I shall shortly return. For this reason I derive no assistance from London Borough of Newham v Benjamin [1968] 1 WLR 694, to which Mr Spence referred the court. That case was concerned with short tenancies for which, as Widgery LJ at p701H pointed out in similar terms to those which I have already referred of Stephenson LJ, section 121 provides a simple and comprehensive code. The second reason why, to my mind, Mr Spencer’s submission does not resolve the construction of section 46 is that the words ‘in consequence of the compulsory acquisition’, which appear in section 46 and as will shortly appear also in section 37 of the same Act, do not appear in either the 1845 Act or the 1965 Act: it seems that some meaning must be given to them, on the assumption that Parliament introduced them for a purpose. Section 37, so far as is material and omitting irrelevant words, provides as follows: (The headnote is: ‘Disturbance payments for persons without compensatable interests’). (1)  Where a person is displaced from any land in consequence of — (a)   the acquisition of the land by an authority possessing compulsory purchase powers; . . . he shall, subject to the provisions of this section, be entitled to receive a payment (hereafter referred to as a ‘disturbance payment’) from (i)  . . . the acquiring authority; In Prasad v Wolverhampton Borough Council Stephenson LJ identified at p953D what that case was about. Omitting immaterial words, he said: The claimants were displaced . . . from their house . . . which was acquired by an authority possessing compulsory purchase powers. But were they displaced ‘in consequence of its acquisition?’  The answer depends on the true construction of those words in their context. For unless they were displaced in consequence of the council’s acquisition of their land they were not entitled to a disturbance payment under section 37 of the Act of 1973. The Court of Appeal in Prasad, to whom it is to be noted that the case of R v Stone was cited, decided that the requirements that a claimant under section 37 must be displaced from land in consequence of the compulsory acquisition was to be treated as a causal but not necessarily temporal requirement and that accordingly compensation was recoverable by a complainant who had moved, even before he was given notice to treat. Stephenson LJ in the course of his judgment referred at p955 to certain passages in the judgments in Harvey v Crawley Development Corporation [1957] 1 QB 485. At p492 Denning LJ, omitting immaterial words, said: . . . costs . . . reasonably incurred . . . in getting another house, they can fairly be regarded as a direct consequence of the compulsory acquisition 31 and Romer LJ said: It seems to me that the authorities to which our attention was drawn do establish 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. Those passages are not central to the problem presently confronting this court, but they have a bearing on matters as will emerge later. Stephenson LJ went on at p962H to say: A man may be dispossessed when he gives up his right to possession; the date of dispossession may readily be considered the date when he receives notice to treat. A man is displaced when he gives up actual possession; the date of displacement may more easily be said to be the date when he leaves the place, removes from the land, quits the land. And that is what Mr Brown submits that displacement and the date of displacement are. If the person threatened with inevitable dispossession, displacement, removal, having to quit the land — call it what you will — because of compulsory acquisition acts reasonably in moving to other accommodation before he is given notice to treat, or before his land is actually acquired by compulsory purchase, he is then displaced in consequence of the acquisition; he then has to quit his land and quits it; his reasonable expenses are expenses in moving from land from which he is already displaced and the loss he will sustain thereafter by reason of the disturbance then of his trade or business is consequent upon his having to quit the land. Another way of reaching the same result is to regard acquisition as a process, often prolonged, which begins with a resolution by an authority . . . and is completed by the authority’s entry under a confirmed compulsory purchase order. A little lower at D: By whichever route the construction of the sections leads to the inclusion of expenses and loss reasonably incurred before acquisition is completed, it does not contradict any provision that acquisition means acquisition by notice to treat, or that the date of displacement means the date of the notice to treat, because there is no reference to the notice to treat or its date in the sections. Fox LJ at p966H said: The service of a notice to treat is not therefore, an ‘acquisition’ of the land any more than is the compulsory purchase order. It certainly has important consequences (the landowner, for example, can insist upon the purchase price being determined) but it is simply a step in the process of acquisition just as the order is. Kerr LJ at p968B said: As shown by the authorities reviewed in the judgment of Stephenson LJ, it is in itself highly improbable that Parliament intended in 1973 that the words ‘in consequence of’ should, in this context, have a purely temporal, as opposed to a causative, meaning. Moreover, as pointed out in the judgment of Fox LJ, the service of the notice to treat is no more than one, albeit essential, step in the total process of ‘acquisition of the land by an authority possessing compulsory purchase powers’. Unlike, for instance, section 53 of this Act in relation to agricultural land, sections 37 and 38 contain no reference to notices to treat but refer merely to ‘acquisition’ in the present context. However, ‘acquisition’ is a process which in itself is not completed by the service of a notice to treat. So why should the service of this notice be the crucial moment by reference to which only a subsequent displacement would qualify for compensation under these provisions. Mr Spence sought to distinguish Prasad essentially on the ground that the court was there concerned with displacement under section 37 in the context of a notice of entry having been served at the same time as the notice to treat. That, Mr Spence told us, would be the usual practice of authorities. I, for my part, am unable to accept that distinction because the claimant in Prasad had in fact left his premises prior to either notice having been served upon him. The court was, as I have indicated, considering whether displacement was or was not the consequence of compulsory acquisition, notwithstanding that no notice to treat had been served. It can also be said, as it was by Mr Christopher Thomas QC on behalf of the complainant in his submissions and, in my view, rightly said, that the second half of section 46 subsection (7) is fatal to Mr Spence’s attempts to distinguish Prasad. That subsection is in these terms: This section shall apply in relation to any disturbance payment assessed in accordance with section 38(1)(b) above as it applies in relation to the compensation mentioned in subsection (1) above, and shall so apply subject to the necessary modifications and as if references to the giving up of possession of land to the acquiring authority in consequence of its compulsory acquisition were references to displacement as mentioned in section 37 above. It seems to me that if, as the court held in Prasad, the words ‘in consequence of acquisition’ in section 37 are properly to be construed as a causal requirement in relation to displacement, the same words in section 46 in relation to a requirement to give up possession must be similarly construed. It is also to be noted that in Prasad it had been conceded by the authority that, had a notice to treat been served, the claimant there would have been within section 37. Furthermore, the construction of section 37, which refers, as I have indicated, to actual displacement, must as Mr Thomas submitted and I for my part accept, apply a fortiori when, as under section 46, the reference is to a stage earlier than actual disturbance, namely the time of requirement to give up possession. It is that feature which to my mind renders unsound Mr Spence’s attempted reliance on a short passage in the judgment of Stephenson LJ in Prasad at p965B. There are, of course, in section 46 additional words not to be found in section 37, namely ‘where a person is carrying on a trade or business’. Clearly those words must, as it seems to me, be construed in the context of, rather than in isolation from, the words which follow in that subsection. In particular, I see no reason to construe the present tense of the words ‘is carrying on’ any differently from the words ‘is required to give up’: see on that matter Stephenson LJ in Prasad at p964A. In the present case, at the time when the compulsory purchase order was made, when the irrevocable notice to treat was deemed to be served, when the notice of claim to compensation under section 46 was made and when the matter was referred to the Lands Tribunal, the claimant was carrying on his trade or business. The notice to treat was, as it seems to me, a step in the process of compulsory acquisition, which had started with the making of the compulsory purchase order and in the present case it was, as I have indicated, an irrevocable step. It was the overall process of acquisition which to my mind required this claimant to give up possession. The history of this matter, which I earlier set out, demonstrates to my mind that the claimant behaved reasonably in closing down his business when he did. That cessation, in my judgment, like the giving up of possession, was also the consequence of the process of acquisition. It follows that, in my judgment, the judge was correct in this passage, which appears at p8 of his judgment: It is not proper to seek to equate the provisions of section 46 with those of section 121 of the 1845 Act or those of section 20 of the 1965 Act. It is clear that these two latter provisions are exceptional in that they are expressly designed to provide compensation only if the short tenant can show that he still retains a compensatable interest at the moment when he actually gives up possession. In the circumstances of the present case it seems to me that the ‘causal’ approach of the Court of Appeal in Prasad is the correct approach. The question posed in the case stated by the Lands Tribunal, which it is unnecessary to read, should therefore, in my view, be answered in the negative, that is to say, the tribunal did not err in law. I would dismiss this appeal. Agreeing, STAUGHTON LJ said: This appeal should be dismissed for the reasons given by Rose LJ. The relevant statutory provisions are scattered about in different Acts of Parliament. The arguments, it seems to me, are arcane; so it is a relief that we are able to reach what I regard as a sensible conclusion. The development corporation made a compulsory purchase order. They gave notice of it to the company. The company served a blight notice. That became effective. At that stage compulsory purchase by32 the corporation became irrevocable so far as they were concerned. Not all their piety nor wit could lure it back to cancel half a line, nor all their tears wash out one word of it. To expect Mr Colin Parker, if he wanted compensation for the loss of his business, making greenhouses, sheds, conservatories and garages, to keep it limping along until such time as the corporation should choose to serve a notice of entry, which might be for no more than 14 days, seems to me in the circumstances unreasonable. I am relieved that we have not found it necessary that he should do so. SIR STEPHEN BROWN P also agreed and did not add anything. Appeal dismissed with costs. Leave to appeal to the House of Lords refused.