Saunders v Caerphilly County Borough Council
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1 Saunders v Caerphilly County Borough Council Philip Robson, Pupil, St John s Chambers Philip Robson provides a case analysis of John Richard Saunders v Caerphilly County Borough Council. Published on 26th June Where a landowner is subject to a compulsory purchase order and the acquiring authority exercise their right to enter and take possession of his land before completing the purchase, is there any time limit that prevents the landowner enforcing his right to be paid compensation for the land? The High Court had the opportunity to consider this question in the recently reported case of John Richard Saunders v. Caerphilly CBC [2015] EWHC 1632 (Ch). 2. It is worth summarising the long running dispute between the parties. Mr. Saunders is the freehold owner of Tyn-y-coed Farm, Maesycymmer in Caerphilly. A notice to treat was served on Mr. Saunders in September 1991, by the predecessor to Caerphilly Council ( the Council ) to purchase a strip of his land in order to build a road. Notice to enter was served in November 1991 and the Council entered the land and built the road, which remains in use. In 1996, an application was made to the Lands Tribunal to fix the final assessment. However Mr. Saunders withdrew this in 1997 at the suggestion and with the consent of the Council because both parties thought that they had reached an agreement. This turned out not be the case as the agreement required co-operation of third parties. Although an advance payment was made 1 the final assessment of the compensation due has not taken place to date. 1 Including a signed agreement undertaking to repay the advance payment or any difference if it transpired that no compensation was payable or was payable in an amount less than the advance. Page 1 of 6
2 3. The Council made offers in 2009 and 2012, with a final offer made on 31 July The offer was rejected. The Council told Mr Saunders that any claim after that date was statute barred. Despite this, a further offer was made in March 2012 and in June These offers were, once again, rejected and the proceedings were issued in October Mr. Saunders sought an order that the Council should refer the matter to the Lands Chamber of the Upper Tribunal for assessment. The claimant also sought an injunction restraining the Council from using the strip as a road, but in the event it was not necessary to consider this part of the claim. The Council says that these claims are barred by the Limitation Act 1980 ( the 1980 Act ). The questions for the court were: a. Whether s.9(1) of the 1980 Act is applicable to the claims made by Mr. Saunders; b. If s.9(1) is applicable, whether the authority is prevented from raising a defence on limitation. 5. Considering the first of these questions one notes the terms of s.9(1) of the 1980 Act: 9(1) An action to recover any sum recoverable by virtue of any enactment shall not be brought after the expiration of six years from the date on which the cause of action accrued. 6. Mr Saunders' case was that the service of a notice to treat creates a relationship in the nature of vendor and purchaser and that once the acquiring authority has entered onto the land, either party may compel the other to complete the purchase without limitation. The landowner's statutory right is to have the price fixed by the relevant tribunal, now the Upper Tribunal, pursuant to section 6 Compulsory Purchase Act 1965, which is the consolidated section that replaces section 21 Land Clauses Consolidation Act That it is settled law that such a right, albeit of a quasi-public nature, could be enforced by private action seeking a mandatory order - Fotherby v Metropolitan Rly Co (1866) LR 2 CP 188; Tiverton and North Devon Rly Co v Loosemore (1884) 9 App Cas 480. Until the price for the purchase of the land is fixed the landowner remains the legal and beneficial owner of the land. 7. Further that there was no limitation period that could apply to the court's prerogative jurisdiction to require a public authority to comply with its public duty to purchase the land. This was particularly so where it had already taken possession of the land, applying by analogy the private law cases on specific performance where it has been held that there is no room for a defence of laches to an action for specific performance where Page 2 of 6
3 the purchaser has already taken possession of the land - Williams v Greatrex [1957] 1 WLR The starting point adopted by HHJ Jarman QC, was the judgment of the Court of Appeal in Hillingdon LBC v ARC Ltd. (No.1) [1998] 1 WLR 174, subsequently upheld in the Court of Appeal 2. In that case experienced counsel had accepted that there was an implied "right to compensation" under the legislation, which was a cause of action to recover a sum recoverable by virtue of any enactment under section 9. The only question for the Court of Appeal was at what point in the compulsory purchase process is the date upon which such cause of action accrued, and consequently when the clock starts ticking. The judgment of the lower court and the Court of Appeal was that the cause of action arose upon entry onto land pursuant to section 11 of the Compulsory Purchase Act 1965 rather than when the amount of compensation was fixed, as argued by the claimant. Giving his judgment, Potter LJ said at paragraph 33: I consider that, when the realities of the position are looked at in a case of this kind, the right to compensation which arises as at the date of entry of the acquiring authority is an immediate right which, in the absence of agreement (as to which there is no obligation upon the parties), can only be enforced at the suit of the claimant by initiating proceedings to quantify the sum due; that in turn can only be done by the Lands Tribunal, just as much as it must be done by an arbitrator in other statutory contexts. While the exercise may be simply one of quantification, it is in reality an action to recover a sum of money, namely the amount of compensation due as assessed by the Lands Tribunal. 9. It was the Council s case in Saunders that Hillingdon LBC v ARC Ltd. (No.1) was binding authority. It was accepted that the Claimant had a statutory right to have the compensation fixed, which could be enforced by the court, and that once the price or compensation was fixed there would be a specifically enforceable agreement, but maintained that section 9 applied. 10. It was Mr. Saunders position that he was seeking to require the Council to comply with its statutory obligation to refer the question of the disputed compensation to the Lands Tribunal. The remedy he seeks was for specific performance of the Council's obligation to purchase the land and it did not matter whether the remedy was a public law remedy or a private law remedy. Under this argument, the limitation period would either not apply at all or would not apply by virtue of section 36(1) Limitation Act 1980 which provides that section 9 does not apply "to any 2 [1999] ChD 139 CA. Page 3 of 6
4 claim for specific performance of a contract or for an injunction or for other equitable relief". 11. The judge referred to paragraph 7 of the judgment of Carnwath LJ in BP Oil UK Ltd. v. Kent County Council [2003] 3 EGLR 1: However entry under s 11 [CPA 1965] does not give the authority title to the land. In some cases this may not matter very much. For example, in this case they apparently have been able to use the land as part of the road for a number of years without obtaining full title. In other cases, where for example the authority wish to transfer the land to a developer, early acquisition of title may be important. The Compulsory Purchase Acts contain procedures for securing title, even without the co-operation of the vendor, for example by a vesting declaration (under the Compulsory Purchase (Vesting Declarations) Act 1981) or, where the notice to treat procedure is followed, payment of compensation into court, followed by a deed poll (Compulsory Purchase Act 1965 s 9). Apart from those procedures, the normal pattern will be for the authority to enter following notice to treat and notice of entry, and for compensation to be agreed or determined by the Tribunal, following which there is the equivalent of a contract for the sale of the land which can be specifically enforced (see Capital Investments Ltd v Wednesfield UDC [1965] Ch 774, [1964] 1 All ER 655, 794 per Wilberforce J). The 1965 Act makes clear that, even where land is subject to compulsory purchase (in the sense that compulsory purchase has been authorised by an order: see s 1(3)), the authority may enter into agreement with those interested for the acquisition of the land for a consideration in money or money's worth. [Emphasis added] 12. In that case, the claim was brought more than six years after entry onto the land, but the parties had previously concluded a contract by which they agreed to refer the question of compensation to the tribunal. Carnwath LJ held that once an agreement has been made between the council and the private landowner, that agreement was enforceable and the Tribunal had jurisdiction to determine the dispute under its arbitral jurisdiction. Carnwath LJ expressly left open the question of whether, if the contract was frustrated, the parties could fall back on their statutory rights - i.e. to have the dispute referred to the Tribunal pursuant to section HHJ Jarman QC took the view in his judgment in Saunders, that this case fell somewhere between Hillingdon and BP Oil. In Saunders a reference to the Tribunal was made in time (and subsequently withdrawn on the erroneous assumption that an agreement had been reached) unlike in Hillingdon. Unlike in BP Oil, an agreement for the compensation had not been agreed between the parties. 14. In determining whether the limitation period in s.9 applied, the judge concluded that: Given the extremely wide ambit of section 9, in my judgment it is wide enough to embrace the claims as formulated in this case. In my judgment in reality what Page 4 of 6
5 Mr. Saunders seeks is to recover a sum of money, namely the amount of compensation determined by the Tribunal. I determine that section 9 does apply to Mr. Saunders claim. 15. Having decided that the limitation period in s.9(1) of the 1965 Act is applicable to claims of this sort, the judge moved to the second question. Between the parties was whether there was a legitimate expectation 3 that the compensation question will be referred to the Tribunal irrespective of a time bar as advanced by Mr. Saunders; or, an estoppel as advanced by the Council 4, and that no representations were made that would debar the Council from raising a limitation defence. 16. In the end, the judge arrives at a conclusion without expressing a preference for either of the arguments above. He concluded that a letter from the Council in 2008 amounted to clear communication that if matters were not agreed, then it would be referred to the Tribunal. Into this he implied that no limitation point would be taken. Given that the negotiations continued after this into 2012, he concluded that it would be unconscionable for the council to now take the limitation defence. 17. The judge did not therefore have to decide whether the claim had been acknowledged in writing so as to extend the limitation period under section 29(5) Limitation Act 1980 on which point he did not express a view. Why does this matter? 18. The interaction between the landowner and the public authority under the compulsory purchase scheme blurs the lines between public and private law. The judgment in this case, in expanding the public law approach, continues a precedent that favours a Council who are unwilling or late in exercising their duties under compulsory purchase agreements and paying the private landowner the money he is owed. 19. Accepting that in this case Mr. Saunders will be able to refer the case to the Lands Tribunal for an assessment of the compensation he is due, that is purely because of the unique nature of the protracted negotiations and direct representations between the parties. In future cases where parties do not reach an agreement, unless a claim is brought within six years, the landowner risks losing his right to have compensation determined to the benefit of the Council s coffers. It remains arguable, however, that this decision is inconsistent with a very long line of authority on compulsory purchase stretching back to the early 19th century in which it has been 3 In terms of R. v. North and East Devon Health Authority ex p Coughlan [2001] QB Relying on Hillingdon LBC v. ARC Ltd. (No. 2) [1999] 3 EGLR 97. Page 5 of 6
6 held that the nature of compulsory purchase is that either party can compel the other to purchase the land. 20. It does in any event seem unlikely that this decision has any effect on the right of an acquiring authority to refer any question of disputed compensation to the Upper Tribunal after 6 years have passed from entry in order to complete the compulsory purchase of the land. Indeed it was Mr Saunders alternative case that he could effectively have compelled the authority to do this, even if his claim was statute barred, by enforcing his rights as owner of the land to seek an injunction to prevent the authority using the road, there being old authority that this is the ultimate sanction for the unpaid vendor of land subject to compulsory purchase 5. Philip Robson St John's Chambers 26th June 2015 philip.robson@stjohnschambers.co.uk 5 Allgood v Merrybent and Darlington Rly Co (1886) 33 Ch D 572; Wing v. Tottenham and Hampstead Rly Junction (1868) LR 3 Ch App 741 Page 6 of 6
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