Shewu and others v Hackney London Borough Council

Compulsory purchase — Compensation — Mortgage — Whether acquiring authority under any duty to redeem mortgage — Whether claimants entitled to compensation representing additional interest where authority fails to redeem timeously — Whether Lands Tribunal has jurisdiction to determine claim In January 1982 the respondent acquiring authority declared a housing action area. The claimant mortgagors had acquired one of the houses in the area in 1974 with the aid of a mortgage granted by another local authority. In 1984 the acquiring authority made a compulsory purchase order that included the property; the order was confirmed in August 1985. At that date mortgage instalments were in arrears. A notice to treat was served in February 1987. No notice to treat was served on the mortgagee authority. In April 1994 a notice of entry was served under section 11 of the Compulsory Purchase Act 1965. Entry was taken in November 1996. By 1994 the mortgage arrears totalled over £23,000, and, by 1996, they exceeded £28,000. On a reference by the acquiring authority to the Lands Tribunal, the parties agreed the compensation payable for the property at £85,000, being its market value on the date of entry. However, the tribunal decided that it had no jurisdiction to determine the date on which the acquiring authority should have redeemed the mortgage. The mortgage was redeemed in April 1998 for just over £33,000. The claimant mortgagors appealed contending that once their property was subject to the compulsory purchase order, they could not sell it; they were unable to redeem the mortgage; it was unreasonable of the acquiring authority not to have redeemed the mortgage earlier; and they were entitled to compensation representing the interest that had accrued from the date on which the authority ought to have redeemed the mortgage. Held: The appeal was dismissed. The acquiring authority were never obliged to redeem the mortgage or purchase it, although they were entitled to. Neither were they obliged to the claimant mortgagors to discharge their liabilities to the mortgagees under the mortgage. The taking of possession of the property by the acquiring authority does not have this effect. There is no basis for the mortgagors claiming compensation for the fact that the acquiring authority have not discharged the mortgage liabilities. Rule 6 of section 5 of the Land Compensation Act 1961 does not give any right. It only leaves unaffected any earlier judge-made law. No such earlier law provides for compensation of the type claimed. In any event, the compensation claimed was not loss or damage that flowed from, or was caused by, the compulsory purchase order. Prior to taking possession, there was no enforceable obligation on the acquiring authority to take possession of the property, and the mortgagors never acquired a contractual right against the authority that the authority should redeem the mortgage. The Lands Tribunal had no jurisdiction to decide whether the acquiring authority were under an obligation to redeem the mortgage. The following cases are referred to in this report. Cooke v London County Council [1911] 1 Ch 604 Martin v London Chatham & Dover Railway Co (1866) 1 Ch App 501 Simpsons Motor Sales (London) Ltd v Hendon Corporation [1963] Ch 57; [1962] 3 WLR 666; [1962] 3 All ER 75; (1962) 60 LGR 393; 13 P&CR 372; [1962] RVR 583, CA Simpsons Motor Sales (London) Ltd v Hendon Corporation [1964] AC 1088; [1963] 2 WLR 1187; [1963] 2 All ER 484; (1963) 62 LGR 1; 14 P&CR 386; [1963] EGD 207; 187 EG 581; [1963] 63 RVR 522, HL This was an appeal by way of case stated by the first two claimants, Abubakare Olayiwola Shewu and Salimot Adetola Shewu, from a decision of the Lands Tribunal, which had declined jurisdiction to determine the date on which a mortgage of their property should have been redeemed by the respondent acquiring authority, Hackney London Borough Council, following the inclusion of the property in a compulsory purchase order. Richmond upon Thames London Borough Council, as mortgagees of the property, were joined as third claimants. Peter Village (instructed by JP Scrafton) appeared for the appellants; Mary Cook (instructed by the solicitor to Hackney London Borough Council) represented the respondents; the third claimants did not appear and were not represented. Giving the first judgment, SCHIEMANN LJ said: The underlying problem that gives rise to this appeal by way of case stated from a decision of the Lands Tribunal (PHClarke Esq frics) concerns the liability of a mortgagor for interest on property that is compulsorily purchased from him by a local authority. Mr Peter Village, who appears on the mortgagors’ behalf, submits that the burden of paying interest on the mortgage should not fall on the mortgagors after one or other of a number of dates: The date of confirmation of the CPO — 30.8.1985 The date of the service of the notice to treat — 17.2.1987 The date of submission of the claim form — 9.10.1989 The date of the service of the notice of entry — 21.4.1994 The date of the taking of possession by the authority — 22.11.1996 He seeks to persuade the court to accept a date as early as possible. The value of the unencumbered freehold interest as at the date of taking of possession was agreed before the Lands Tribunal as being £85,000. It is common ground that this was the appropriate date to take as the valuation date. The outstanding amount on the mortgage was well below that. The tribunal held that it had no jurisdiction to determine how much interest was owed at any one time on the mortgage or who was responsible for paying that interest. It is against that holding that the mortgagors appeal. With that introduction I turn now to the history of the matter, which is not in dispute. In January 1982 Hackney London Borough Council declared an area in the borough containing some 600 houses, of which over half were in private ownership, to be a housing action area — that is, an area where living conditions are unsatisfactory and should be 2 improved. In relation to the houses in such an area, the local authority have a number of powers that they can use to cajole owners to improve their properties. A reserve power is the power to force the owner to sell to the council. By 1984 many of these houses had been improved with the aid of grants, but no progress had been made in relation to some. We are concerned with one of these, which belonged to Mr and Mrs Shewu and which, we were told, they had purchased in 1974 with the aid of a 100% 25-year mortgage on a repayment basis from another local authority at a price of £9,200. It seems that, in the early 1980s, they had gone to Nigeria, leaving a manager in charge and some tenants in residence. The manager apparently left in 1983 and Hackney thought that the house gave every sign of having been effectively abandoned by the Shewus. They did not make any application for a grant towards the improvement of the house. So the council made a compulsory purchase order in 1984, which covered the Shewus’ house and another. The Shewus did not object to the making of this order, but, since there was an objection by the owner of the other property, there was an inquiry. The inspector found that the Shewus’ house was a partially void two‑storey terrace house in bad repair. The CPO was confirmed on 30August 1985. At that point it seems that payments under the Shewus’ mortgage were in arrears. The local authority mortgagees were seeking possession, but did not pursue the proceedings once the CPO had been confirmed. They waited for Hackney to acquire the property, and expected the mortgage to be paid off in due course. The problems in this case arise from the fact that matters progressed extremely slowly. Hackney sent a notice to treat to the Shewus in Nigeria on 17 February 1987. At that time the amount outstanding on the mortgage was about £9,000. We do not know when this notice to treat reached the Shewus. In any event, they did not reply to it until 9October 1989. They did not have a solicitor to help them. They said that they were claiming £25,000 ‘being the last valuation did (sic) in 1976′. The council told them that they found this figure acceptable, but the Shewus wrote to say that they wanted a valuation as at a later time, and, so, no agreement was reached on £25,000. In 1993 a new claim form was sent on the Shewus’ behalf, this time prepared by solicitors and surveyors. It contained a claim of £105,000, as being the value of the claimants’ interest ‘together with contingent interest, surveyors’ fees and legal costs’. In answer to a request to state whether the claim included a claim for disturbance, the solicitors wrote that this was not applicable. On 21 April 1994 notice of entry was sent to Nigeria under section 11 of the Compulsory Purchase Act 1965 (the Compulsory Purchase Act). On 22November 1996 Hackney entered into possession. Meanwhile, Hackney were in communication with the mortgagees. Hackney did not send them a notice to treat for their interest but instead relied on being able to sort the matter out either by agreement or by use of the provisions of section 14 of the Compulsory Purchase Act. From time to time the mortgagees wrote to Hackney asking what progress had been made towards settling the matter, and kept Hackney informed of the continued rise in the amount outstanding on the mortgage. By 1989 this was over £13,000; by 1994 the figure was in excess of £23,000; by 1996 this figure had risen to over £28,000. The mortgagees throughout have been happy to have the mortgage redeemed. The Shewus, we were told, were not in a position to redeem it. Hackney referred the disputed compensation claim to the tribunal on 30 June 1994. The Shewus joined the mortgagees (Richmond upon Thames London Borough Council) as claimants before the tribunal, although the mortgagees had made no claim and indeed had not been served with notice to treat for their interest. Richmond are not properly described as claimants, although they were rightly joined in the reference given the contentions that the mortgagors were seeking to advance. The parties agreed that the market value of the freehold interest in the property as at 22 November 1996 was £85,000. The tribunal’s decision was in March 1998. The tribunal said in its decision: On payment by Hackney of the agreed compensation for the acquisition of the freehold interest the mortgage will be redeemed and the mortgage debt outstanding which is less than the agreed compensation will be deducted from the agreed sum and paid to (the mortgagees), leaving a net sum payable to the claimants. It is the contention of the claimants that, due to delay by Hackney in redeeming the mortgage, a date should be determined by the Lands Tribunal as the date when the mortgage should have been redeemed by Hackney. The lower sum of principal and interest outstanding on the mortgage at that time would then be deducted from the agreed (or perhaps a greater) market value (due to higher house prices at the earlier date), leaving a larger net balance payable to the claimants but with an outstanding mortgage debt still owing to (the mortgagees), for which the claimants would still be contractually liable, although as they now live in Nigeria enforcement would be more difficult. At the start of the hearing I expressed doubts as to whether the Lands Tribunal has jurisdiction to make the determination sought by the claimants and it was agreed that I would decide this question as a preliminary issue. Mr Scrafton, on behalf of the claimants, prepared a written skeleton of his submissions, but they appeared to be in support of a claim for compensation under r 6 of section 5 of the Land Compensation Act 1961 (the 1961 Act), ie compensation for ‘any other matter not directly based on the value of land’. Numerous well-known authorities were cited but I had some difficulty in relating them to the question of the determination of a date when the mortgage should have been redeemed, and, in particular, to the tribunal’s jurisdiction to deal with this issue. If a claim for compensation under r (6) had been made then these authorities might well have been relevant but I did not find them relevant to the narrower issues of jurisdiction. I sought clarification and Mr Scrafton confirmed that he is seeking a determination as to the correct date for the redemption of the mortgage and is not making a claim for compensation under r 6. The tribunal referred to section 1 of the 1961 Act and sections 6 and 14-17 of the Compulsory Purchase Act, and continued: I can find nothing in these provisions giving the Lands Tribunal jurisdiction to fix the date when an acquiring authority should have exercised their powers under section 14 of the 1965 Act to purchase or redeem the interest of the mortgagee in the land. The tribunal held that it had no jurisdiction to determine the date when Hackney should have redeemed the mortgage on the subject property. It therefore heard no evidence on the point. The mortgage was redeemed by Hackney in April 1998 for just over £33,000, shortly after the tribunal’s decision. The question upon which the decision of this court is required is whether the tribunal erred in law in holding that it had no jurisdiction to determine the date when the mortgage on the property under the mortgage should have been redeemed. Legal framework The jurisdiction of the Lands Tribunal in the present context springs from section 1 of the Land Compensation Act 1961 (the 1961 Act) and section 6 of the Compulsory Purchase Act. The former provides: Where by or under any statute… land is authorised to be acquired compulsorily, any question of disputed compensation… shall be referred to the Lands Tribunal and shall be determined by the Tribunal in accordance with the following provisions of this Act. The latter provides: If a person served with a notice to treat… and the acquiring authority do not agree as to the amount of compensation to be paid by the acquiring authority for the interest belonging to him or which he has power to sell… the question of disputed compensation shall be referred to the Lands Tribunal. In the present case, the only question of disputed compensation that was before the Lands Tribunal was how much the acquiring authority were obliged to pay for the interest belonging to the Shewus. The mortgagees were never served with notice to treat, and, therefore, the Lands Tribunal had no jurisdiction to determine what compensation, if any, was payable by Hackney to the mortgagees. The fact of the matter is that the acquiring authority had not set in motion any process for acquiring compulsorily the interest of the mortgagees. They no doubt rightly thought that this would not be necessary as between two local authorities. 3 The statutory provisions as to the assessment of the amount of compensation are contained in section 5 of the 1961 Act, which provides, as far as presently relevant: Compensation in respect of any compulsory acquisition shall be assessed in accordance with the following rules… (2) The value of the land shall… be taken to be the amount which the land if sold in the open market by a willing seller might be expected to realise;… (6) The provisions of rule (2) shall not affect the assessment of compensation for disturbance or any other matter not directly based on the value of the land. Once a compulsory purchase order has been made the land affected is frequently blighted. Yet, traditionally, an owner affected by this blight has been without a remedy until such time as a notice to treat has been served by the authority on him, and a price has been either agreed or determined by the Lands Tribunal. We were referred to Simpsons Motor Sales (London) Ltd v Hendon Corporation [1963] Ch 57 CA (affirmed on appeal [1964] AC 1088) where Upjohn LJ, delivering the judgment of the court, said at p82: First, when a notice to treat has been served, it is the duty of the acquiring authority to proceed to acquire the land within a reasonable time. Mr Molony, for the corporation, has argued that mere delay in proceeding to enforce the notice never disentitles the acquiring authority from proceeding thereunder, but that some additional circumstance is necessary before the owner can object to the enforcement of the notice to treat against him. We do not accept this proposition. If the acquiring authority do not proceed within a reasonable time to acquire the property and pay the compensation, they may well lose their rights to enforce the notice. It would be most unreasonable to permit an acquiring authority, having given a notice to treat, to sit on their rights and defer enforcement of the notice until it suits them… The following sentence is reproduced thus in the law report. One suspects that the words ‘is that’ should appear after ‘public purposes’ rather than after ‘Parliament’: The underlying assumption of Parliament is that in conferring compulsory powers upon statutory authorities for public purposes, the acquiring authority will act reasonably in the public interest, that is, not only in the interests of their own ratepayers or shareholders, as the case may be, but with due regard to the interests of the person being dispossessed. What is a reasonable time for this purpose must depend upon the facts and circumstances of each case. Although the lord justice refers to the ‘duty’ of the acquiring authority to proceed to acquire, he is, as the rest of that passage makes clear, using that phrase to signify that unless they proceed to acquire they will be disentitled from proceeding on the notice. He is not suggesting that a failure to proceed will result in an award of compensation or of damages. Just as a failure to proceed does not result in an award of compensation or of damages, so a delay in proceeding will not result in such an award. Because of the hardship that can be caused by delay, the position now is regulated by amendments to section 5 of the Compulsory Purchase Act, which were inserted by the Planning and Compensation Act 1991, which, broadly, provide for the notice to treat to lapse after three years, unless compensation has been agreed or referred to the tribunal, or the authority has taken possession or executed a vesting declaration. It was not suggested that those amendments applied to the present case. Land that authorities seek to acquire compulsorily is frequently mortgaged. Mortgagees pose a potential threat to acquiring authorities. They cannot contractually require the authority to make any payments in respect of the mortgage because the authority is not a party to the mortgage. However, mortgagees have rights against the land that can be exercised if payments under the mortgage are not kept up. Once the mortgagor has been dispossessed of his land he will not be keen to continue to make payments under the mortgage. Unless the mortgage is in due course cleared, the authority are likely to find their rights to do what they like with the acquired land inhibited by the rights of the mortgagees to enforce their security. Thus, in Martin v London Chatham & Dover Railway Co (1866) 1 Ch App 501 the mortgagee bankers sought to enforce their security in respect of land that had been compulsorily purchased. Lord Cranworth LC stated: In my opinion it was clearly the duty of the company to have given notice under the 18th section, not only to Sterne and Lane, but also to the mortgagees, as parties interested,… [the Bankers] are equitable mortgagees. No proceedings have been duly taken by any person under the statute to deprive them of their rights as equitable mortgagees; and to those rights they are therefore entitled as if nothing had been done… The company had a right , under the statute, to take possession, and had a right to convert the land, against all the world, into the railway which they have made. They had a right to do that under the provisions of the 85th section: therefore, if what they have done has diminished the value of the security, I do not think that the plaintiffs have any right, legally or equitably, to complain of that; neither have the company any right to complain if, having dealt with that piece of land without having a proper title to it, they are now in such a condition that a slice of their railway may be taken away from them, which would, in other words be a proceeding in the nature of a distress, compelling them to pay whatever can be lawfully demanded from them… If the company chose to deal with the owners of the equity of redemption, so to say, and not with the mortgagees, the mortgagees were helpless, and could do nothing. The Compulsory Purchase Act now gives special powers to acquiring authorities in relation to mortgagees. The Act deals separately with those cases where the value of the mortgaged land is less than the amount secured on the land and those cases where value of the mortgaged land is more than the amount secured. Section 15 provides: (1) If the value of any such mortgaged land is less than the principal, interest and costs secured on the land, the value of the land, or the compensation to be paid by the acquiring authority in respect of the land, shall be settled by agreement between the mortgagee and the person entitled to the equity of redemption on the one part and the acquiring authority on the other part, or, if they fail to agree, shall be determined by the Lands Tribunal. (2) The amount so agreed or awarded shall be paid by the acquiring authority to the mortgagee in satisfaction or part satisfaction of his mortgage debt… (6) The making of payment to the mortgagee… of the amount agreed or awarded shall be accepted by the mortgagee in satisfaction, or part satisfaction, of his mortgage debt, and shall be a full discharge of the mortgaged land from all money due thereon. (7) All rights and remedies possessed by the mortgagee against the mortgagor… other than a right to the land, shall remain in force in respect of so much of the mortgage debt as has not been satisfied by payment to the mortgagee… It is clear that in subsection (1) the reference to the value of the mortgaged land is a reference to its unencumbered value. Thus, in such cases the acquiring authority acquire the land for the value of the unencumbered freehold, and the mortgagee has no more rights over the land once that value has been transferred to the mortgagee. He can, however, continue to enforce his contract against his contractual partner, the mortgagor. If the mortgagor wishes to be rid of that liability he must pay off the mortgage. In the present case, the mortgagors were in the happy position that the value of the land exceeded what was owing on the mortgage. This situation is covered by section 14 of the Act: (1) The acquiring authority may purchase or redeem the interest of the mortgagee of any of the land subject to compulsory purchase in accordance with either of the two following subsections. (2) The acquiring authority may pay or tender to the mortgagee the principal and interest due on the mortgage, together with his costs and charges, if any, and also six months additional interest, and thereupon the mortgagee shall immediately convey or release his interest in the land comprised in the mortgage to the acquiring authority, or as they may direct. (3) Alternatively, the acquiring authority may give notice in writing to the mortgagee that they will pay all the principal and interest due on the mortgage at the end of six months, computed from the day of giving the notice; and if they have given any such notice, or if the person entitled to the equity of redemption has given six months notice of his intention to redeem, then at the expiration of either of the notices, or at any intermediate period, on payment or tender by the acquiring authority to the mortgagee of the principal money due on the mortgage, and the interest which would become due at the end of six months from the time of giving either of the notices, together with his costs and expenses, if any, the mortgagee shall convey or release his interest in the land comprised in the mortgage to the acquiring authority, or as they may direct. 4 (4) If, in a case under subsection (2) or subsection (3) of this section, on such payment or tender the mortgagee fails to convey or release his interest in the mortgage as directed by the acquiring authority, or fails to make out a good title to that interest to the satisfaction of the acquiring authority, it shall be lawful for the acquiring authority to pay into court the sums payable under subsection (2) or subsection (3) of this section, as the case may be. (5) When the acquiring authority have paid those sums into court, it shall be lawful for them to execute a deed poll in the manner provided by section 9(3) of this Act. (6) On execution of the deed poll, as well as in the case of a conveyance by the mortgagee, all the estate and interest of the mortgagee (and of all persons in trust for him, or for whom he may be a trustee) in the land shall vest in the acquiring authority and, where the mortgagee was entitled to possession of the land, the acquiring authority shall be entitled to possession of the land. (7) This section shall apply — (a) whether or not the acquiring authority have previously purchased the equity of redemption, (b) whether or not the mortgagee is a trustee, (c) whether or not the mortgagee is in possession of the land, and (d) whether or not the mortgage includes other land in addition to the land subject to compulsory purchase. It can be seen from subsection (7) that parliament envisaged both circumstances in which the equity of redemption had been purchased by the acquiring authority prior to coming to terms with the mortgagee and circumstances in which this was not the case. In either event, the acquiring authority are in a position by paying off the mortgagee to get rid of the threat posed by him. Further, it can be seen from subsection (3) that if the person entitled to the equity of redemption gives notice of his intention to redeem, the authority can step in and make the payment itself, and force the mortgagee to give up his interest. The scheme of the Act is that the acquiring authority are in a position where they can get rid of the charge by paying the mortgagee the lower of the value of the freehold interest or the amount owing on the mortgage. If the mortgagor has paid off the mortgage, he is entitled to the value of his interest in the land. If he has not, then: 1. If the amount owing exceeds the value of the land, he gets nothing from the authority, save a part-payment of his mortgage, because his equity of redemption is worth nothing, and no one in the market would pay anything for it — he does not need compensation for being deprived of it. 2. If the amount owing is less than the value of the land, he gets the difference between the value of the land and the amount outstanding on the mortgage — that is, in broad terms, the value of his equity of redemption. That is all he has to sell, and it is for the deprivation of that that he is to be compensated. Thus, very broadly, the seller to the local authority receives what he would receive were he to sell in the open market. In principle, a seller of land will not be entitled to the price until the price is agreed or determined. However, an acquiring authority are in a position under statute to enter before that date by serving notice of entry. They did so in the present case, and, in due course, entered. The statute provides that, in such circumstances, the acquiring authority must pay interest on the purchase price from the date of entry into possession. Parliament might have provided that interest should be paid from the date of the giving of the notice of entry, but it has not so provided. However, delay in receiving compensation can clearly harm an owner, possession of whose land is taken. Unless he is wealthy, he will be prevented from buying an alternative property or paying off a mortgage that is of no future use to him. So, parliament has provided in section 52 of the Land Compensation Act 1973 for advance payments of 90% of what the acquiring authority accept is going to be payable by way of compensation. That provision was not activated in the present case. Mortgagors’ submissions Mr Peter Village, on behalf of the mortgagors, submitted, in essence, that his clients, since the confirmation of the CPO, had not been in a position to realise their property. Until such time as Hackney redeemed the mortgage, the Shewus were liable under a mortgage that they could not pay off. Hackney had delayed a long time, and that delay had caused the Shewus damages (namely a liability for interest) for which they ought to be compensated. He submitted that it was unreasonable for Hackney not to redeem earlier and that the Lands Tribunal had jurisdiction to determine whether this were so, and, if it were so, to award the Shewus compensation for the damage that had been caused to them by this delay. That damage he said was a matter of calculation — the amount of interest accrued between the time when Hackney ought to have redeemed and the time when, in fact, they redeemed. He submitted that, by reason of the delay, Hackney were now liable to pay more for the land than it was worth, and that the Lands Tribunal had jurisdiction to decide how much more. He submitted that the mortgagees were entitled to a notice to treat, relying on Cooke v London County Council [1911] 1 Ch 604. However, in argument, I think he accepted that that case is not authority for any proposition wider than that, absent a notice to treat in relation to his interest, a mortgagee is not to be prejudiced by the exercise of compulsory powers in relation to the mortgagor’s interest. He pointed out that the mortgagees had an interest as well as the freeholder, and that the mortgagees had been joined as claimants, and he submitted that the tribunal had jurisdiction to decide matters of disputed compensation. He submitted that the tribunal had erred in not realising that there were two separate compensatable interests in play here — the freeholders’ and the mortgagees’. He submitted that, since all the acquiring authority were prepared to pay his clients was £85,000, less what they had paid to the mortgagees, whereas the Shewus claimed that more ought to be paid to them, there was a question of disputed compensation that the Lands Tribunal had jurisdiction to decide. He submitted that what his clients were claiming fell within section 5 r 6 of the 1961 Act. He was, however, unable to produce any statutory provision or precedent in support of such a submission. Finally, Mr Village submitted that Hackney, in refusing to bear the interest costs on the mortgage, were in breach of the Shewus’ rights under the First Protocol to the European Convention on Human Rights. This provides: Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No-one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law. Conclusion I can deal shortly with this last point. I suspect that, on reflection, MrVillage accepted that this article was of no relevance to the present case, for he did not press the point. For my part, I cannot see any, and I say no more about it. In my judgment, Mr Village’s submissions should fail both as a matter of substance and as a matter of jurisdiction. I deal first with the substance. It is important to keep conceptually separate the mortgagors’ liabilities to the mortgagees, the acquiring authority’s liabilities to the mortgagees and the authority’s liabilities to the mortgagors. The Shewus entered into a mortgage contract with the mortgagees. The Shewus’ liabilities to the mortgagees cannot be taken away without the mortgagees’ consent or the authorisation of statute. There was no such consent, and there is no statutory authorisation for the removal of the mortgagees’ rights prior to payment. MrVillage has not contended the contrary. Hackney, when they redeemed the mortgage, did, of course, pay off the outstanding capital and interest. They wished, at that point, to acquire title to the land, and this was the only method by which this could be achieved. However, Hackney were never obliged to redeem the mortgage or to purchase it. Hackney were merely entitled so to do. So, it is confusing to refer to the mortgagees as having a compensatable interest. Nor have Hackney any obligation to the Shewus to discharge their liabilities to the mortgages under the mortgage. Such an obligation was 5 not assumed by contract nor is it imposed by statute. The fact that the acquiring authority move into possession of the property does not have that effect. There is no reason in principle why it should. Section 15(7) of the Land Compensation Act makes clear that moving into possession and acquiring title does not have that effect. The Shewus are entitled to compensation for having their interest in the land compulsorily acquired. But there is, in my judgment, no basis for claiming compensation for the fact that the acquiring authority have not discharged the Shewus’ mortgage liabilities. In so far as the Shewus have any complaint, it is that Hackney failed earlier to exercise a power either to acquire the mortgagees’ interest or to pay off the mortgage. That power is given, not for the benefit of the mortgagor, but for the benefit of the acquiring authority. In my judgment, the Shewus cannot sue for any breach of statutory duty or failure to exercise this power. As I understood him, Mr Village accepted that this was so. Rule 6 of section 5 of the 1961 Act does not itself give any rights. It merely seeks to leave unaffected earlier judge-made law. No earlier judge-made law provides for compensation of the type that Mr Village seeks on behalf of his clients nor am I persuaded that it is justified, in principle, to make such compensation. Hackney entered into possession on 22 November 1996. Prior to that time, they were under no enforceable obligation either to enter into possession or to acquire the Shewus’ interest. Hackney had a statutory right to do so at a time of their own choosing but no obligation. Correlatively, the Shewus were entitled to let the property or sell it or pay off the mortgage. There was no agreement for Hackney to buy the Shewus’ interest in the property, and there was no statutory obligation to do so. If there was no obligation to acquire the Shewus’ interest, there was even less obligation to acquire the mortgagees’ interest or to pay off the Shewus’ mortgage. The Shewus never acquired a contractual right against Hackney that Hackney should redeem their mortgage nor does statute impose any such duty upon Hackney. If Hackney had acquired the mortgagees’ interest, that would not have had the effect of releasing the Shewus from their obligations under their mortgage — it would merely have substituted a different mortgagee to whom they were indebted. The position after 22 November 1996 is not different. The Shewus are entitled to £85,000 and interest on that sum as from that date. That entitlement would not have arisen without the mortgagees’ 100% loan, and it would be unjust to the mortgagees to deprive them of their security while permitting the Shewus to keep the profit on the house without requiring them to repay that loan and the interest thereon. A person whose property is being compulsorily purchased can do a number of things to hurry along the process of acquisition. If he cannot agree a price, he can refer the dispute to the Lands Tribunal. The Shewus did not do so. If he needs money to pay off the mortgage he can, after the authority have taken possession, ask for compensation on account. The Shewus did not do so. We have not been told whether there is a difference in the rate of interest payable to the Shewus on the £85,000 since the date of possession and the rate of interest payable by them under their local authority mortgage, and, if so, whether that difference leaves the Shewus better off or worse off. In my judgment, if that difference leaves the Shewus better off, then they can keep the difference; if it leaves them worse off, then they must bear the loss. So far as jurisdiction is concerned, it was evidently sensibly agreed between the parties at the Lands Tribunal hearing that Hackney should, out of the £85,000, pay off the mortgage debt, and there was no dispute as to the amount of that debt. I can see circumstances in which it might be appropriate for the Lands Tribunal to concern itself with the terms of a mortgage. A dispute might arise between a mortgagee and an acquiring authority if the authority were seeking to acquire the mortgagee’s interest. However, that was not the case here. Although the mortgagees are described as claimants, they are not. An early redemption might result in a penalty charge, which might be recoverable by the mortgagor as a consequence flowing from the compulsory acquisition. But that is not so in this case. The question with which the Lands Tribunal was asked to concern itself was whether or not Hackney were under an obligation to pay off the Shewus’ mortgage debt or to assume liability, either to the mortgagees or to the mortgagors, for the continued payment of interest as from a particular date. In my judgment, the tribunal was quite right to decline jurisdiction on the basis that this did not constitute the resolution of a dispute concerning ‘the amount of compensation to be paid by the acquiring authority for the interest’ belonging to the landowner. I acknowledge that claims for disturbance and suchlike are within the jurisdiction of the tribunal, but that position has been reached on the basis that compensation under r 6 is part of the value of the land to the seller and required to make him a willing seller, as required in r 2. In any event, if the tribunal had assumed jurisdiction to decide the question, the correct answer in law is that the authority were not liable to the Shewus to assume responsibility for any part of the capital or interest that the Shewus were contractually liable to pay to the mortgagees. I would dismiss this appeal. Agreeing, JONATHAN PARKER J said: In this case the parties (that is to say Mr and Mrs Shewu, Hackney and Richmond, although Richmond have never formally made a claim) agreed that, for the purposes of r 2 in section 5 of the Land Compensation Act 1961, the correct date for valuing the land the subject of the compulsory purchase order was 22 November 1996 (the date on which Hackney took possession), and that the value of the land at that date was £85,000. On the face of it, that agreement determined all questions of compensation arising under the order. However, the Shewus sought a ruling from the Lands Tribunal as to the date on which Hackney ‘should’ have redeemed Richmond’s mortgage, with a view to increasing their share of the agreed compensation. The Lands Tribunal held that it had no jurisdiction to determine that issue. In my judgment, the Lands Tribunal reached the right conclusion, for the following reasons: 1. The fact that the land was subject to a mortgage did not affect its value for the purposes of r 2. The interest in the land that fell to be valued under r 2 was the interest that Hackney were acquiring, that is to say the unencumbered fee simple. This is, in my judgment, consistent with the reference in section 6 of the Compulsory Purchase Act 1965 to ‘the interest belonging to [a person served with a notice to treat], or which he has power to sell…’ (my emphasis). The fact that for an acquiring authority to acquire an unencumbered fee simple where land is subject to a mortgage it is in practice necessary for the compensation to be applied, first, in or towards redemption of the mortgage is, in my judgment, irrelevant for the purposes assessing ‘the value of [the] land’ under r 2. 2. Section 14 of the Compulsory Purchase Act 1965 confers on an acquiring authority the power to ‘purchase or redeem the interest of the mortgagee of any… land’. It does not impose a duty to do so. The Shewus’ claim, if it has any substance, appears to me to be in the nature of a claim for compensation for failure to exercise a statutory power. At all events, it cannot, in my judgment, be said to involve ‘any question of disputed compensation’ for the purposes of section 1 of the Land Compensation Act 1961. 3. Nor, in my judgment, could the Shewus’ claim be presented as a claim under r 6 to additional compensation — over and above the agreed figure of £85,000 — for some ‘other matter not directly based on the value of land’, since the loss or damage in respect of which compensation is sought did not flow from (ie was not caused by) the compulsory purchase order. In the circumstances, it is not necessary to address MrVillage’s detailed arguments in support of the Shewus’ claim. I would only comment on what he described as his ‘long-stop’ argument, to the effect that, at the very least, Hackney should be liable for mortgage interest as from the date when they went into possession (22 November 1996). For my part, however, I can see no basis for that claim. To uphold it would, in my judgment, be to insert an additional element into the statutory scheme. As Schiemann LJ has pointed out, the Shewus are entitled to interest on the agreed compensation as from the date on which possession is taken; and, as from that date, they also had the right 6 under section 52 of the Land Compensation Act 1973 (which, as it happens, they did not invoke) to require an advance payment of compensation. For those reasons, therefore, and those given by Schiemann LJ, I too would dismiss this appeal. Also agreeing, EVANS LJ said: I agree that the member was correct to hold that the Lands Tribunal had no jurisdiction to decide the issues that the appellants sought to raise before him. The agreed market value of the house when the acquiring authority took possession of it on 22November 1996 was £85,000. He was not concerned with the rights and liabilities of the owners, as mortgagors, and the mortgagees (also a local authority) under the terms of the long-outstanding mortgage. He duly determined the market value of the property in the agreed figure. It appears from his decision that there was some misunderstanding between him and the solicitor for the appellants, because he said that he was told that there was no claim for compensation under r 6, whereas Mr Village tells us that such a claim was intended to be made. Mr Village included this claim in his submissions to us, and, in my judgment, for the reasons given by my lords, it should fail as a matter of law, even if jurisdiction were established. The decision records what appears to have been an agreed method of apportioning the payment of ‘the agreed sum’ (sc £85,000) between the owners and the mortgagees: On payment by Hackney of the agreed compensation for the acquisition of the freehold interest the mortgage will be redeemed and the mortgage debt outstanding (which is less than the agreed compensation) will be deducted from the agreed sum and paid to Richmond, leaving a net sum payable to the claimants. Apart from the owners’ contention that the mortgage should have been redeemed at an earlier date, which the tribunal had no jurisdiction to decide, there was a possible further ground for contending that, as between themselves and the acquiring authority, the owners should not be responsible for mortgage interest after the date when the authority took possession of the property. Their contractual liability to the mortgagees remained, but they could perhaps have argued that the acquiring authority, if they chose not to redeem the mortgage, were liable to indemnify them against the further interest payments that they became liable to make to the mortgagees. The statutory right to be paid interest by the authority from the date when possession was taken might preclude such a right to indemnity, but, even if there were a claim, possibly under r 6, it would be limited to the difference, if any, between the contractual and the statutory rates. For the reasons given by Schiemann LJ, I doubt whether the claim could succeed, and, in any event, it is not open in the present case, where the payment made by the authority was apportioned in the manner referred to above. I too would dismiss the appeal. Appeal dismissed.