When is 'enough' legally enough?

John Pugh-Smith looks at the application of s.9 of the Limitation Act 1980 to a belated High Court claim to force a local authority to refer a compulsory purchase compensation dispute to the Upper Tribunal.

For any landowner whose land is compulsorily purchased, let alone a Welsh hill farmer, it is not just his human rights but also his need for adequate and timely compensation that are engaged. Equally, for the acquiring authority, budgetary certainty and closure are important considerations. The recent decision in Saunders v Caerphilly County Borough Council [2015] EWHC 1632 (Ch) raises all these considerations but also leaves the application of established limitation principles to this area of the law without sufficient clarity for now.

The, perhaps, bizarre facts begin in November 1991 when Caerphilly County Borough Council’s predecessor authority, Mid-Glamorgan County Council, served a notice to treat upon Mr John Saunders, a local farmer, in respect of a strip of his farmland to facilitate the construction of the A469 Lower Rhymney Valley Relief Road. Shortly thereafter the authority entered the strip and built the road which has been used as part of the highway network ever since. The new road had the effect of severing the main access to the west of the farmhouse and farm buildings; and access is now obtained from the west through an underpass under the road. The road also severed the drainage system from the farmhouse and farm buildings, the former now being dealt with by means of a discharge into a tank but with no effective drainage from the buildings.

Mr Saunders instructed a solicitor, a surveyor and eventually counsel to deal with his claim. On his behalf a reference was also made to the Lands Tribunal but later withdrawn in the expectation, by both parties, that a settlement had been reached. The authority also made a substantial advanced payment. However, terms were never finalised, and, by July 2012 the authority indicated that it reserved the right to raise the issue of whether the claim was now statute-barred. However, at no stage did the parties call upon help from an independent mediator or evaluative surveyor. By October 2014, as it had still not been possible to reach a settlement Mr Saunders issued High Court proceedings requiring the authority to refer the assessment of compensation to the Upper Tribunal. At the hearing in early June 2015 the principal preliminary issues were whether the Limitation Act 1980 s.9(1) was applicable to Mr Saunders’ claim, and, if so whether the council was prevented from raising a defence based on limitation.

In his recent judgment His Honour Judge Milwyn Jarman QC, sitting in Cardiff as an additional Chancery Division judge, supported the council, initially, by holding that the expressions “action” and “cause of action” in s.9 of the 1980 Act were extremely wide and so were applicable to Mr Saunders’ claim. Furthermore, the Act’s policy of preventing stale claims was equally applicable to claims against public authorities for sums payable by them pursuant to statute; that a cause of action might accrue for the purposes of s.9 even though a constituent element of it might have to be determined by someone other than a court of law; and that an action could be for a “sum recoverable by virtue of [an] enactment” even though the liability in question was not and could not be quantified when the action was commenced. As the right to compensation for compulsory purchase was an immediate right arising upon entry, that was an action to recover a sum of money, namely, the amount of compensation to be determined by the Tribunal.

Such an approach, unsurprisingly, reflects the reasoning of the Court of Appeal in the leading CPO limitation case of Hillingdon LBC v ARC Ltd (No.1) [1999] Ch. 139 which has since been applied in the Tribunal and in the courts, including the Court of Appeal, for example, Bridgestart Properties Limited v London Underground Limited [2005] EWCA Civ 793. It also rejected the approach taken by Mr Saunders’ counsel, based on what he termed ‘Victorian’ authorities, decided under the Lands Clauses Consolidation Act 1845, that the nature of Mr Saunders’ claim was for prerogative relief to require the authority to comply with its statutory obligation to refer the question of the disputed compensation to the Tribunal and was being made with a view to seeking the private law remedy of specific performance of the obligation to purchase the strip.

Moreover, unlike in the ARC litigation against Hillingdon LBC, no estoppel arguments (by conduct or convention) were raised by Mr Saunders. Nor was any substantive point taken under the European Convention of Human Rights that the authority’s limitation defence would deny Mr Saunders’ right to a fair hearing under article 6 or to the proper protection of property under article 1 of the First Protocol. Indeed, the Cardiff judgment is entirely silent on the ECHR aspect. Rather, it was argued that Mr Saunders had a substantive legitimate expectation argument that the question of compensation will be referred to the Tribunal notwithstanding the expiry of the time limit; that a court must prevent a public authority relying on its strict rights to defeat a legitimate expectation where to do so would be an abuse of power or an affront to the public conscience, and, that where the public interest has to be balanced against a private interest, then if the public interest is to be preferred the response must be proportionate.

In response, the authority submitted that the proper test was whether the authority was estopped from denying that s.9 applied (by convention or conduct), which was how the language was used by the Court of Appeal in Hillingdon (No 2) [2003] 3 EGLR 97. Attention was drawn to the fact that there had been no promise or representation which would debar the authority from now relying on s.9; that Mr Saunders had, throughout, been represented by experienced solicitors and at one stage by counsel and that he had readily accepted, in cross-examination, that he had been kept fully informed. There was also no indication why the matter had not been referred back to the Tribunal in 1996, as it could have been under the rules then in force, and no explanation had been given for the delay between 2012, when the issue of whether the claim was time barred was first raised, and 2014, when the present claim was issued.

Nevertheless, the Judge took the view that it would be unconscionable in all the circumstances for the authority now to take the limitation defence. He relied upon a letter from the authority’s Head of Legal Services in 2008 which, in his judgement, amounted to clear communication that if matters were not agreed, then they would be referred to the Tribunal. Implicit in that indication, he found, was that no limitation point would be taken. Not only that, but the authority had suggested that the parties should continue to negotiate and that commencing proceedings at that stage would serve no productive purpose, which was the basis upon which negotiations continued until July 2012, when the authority for the first time raised the limitation point and reserved its rights in respect of it. Thereafter, the Judge found, despite a lapse of nearly two more years, that Mr Saunders had been entitled to a reasonable time to consider his position; that it was perhaps not surprising that he should in those circumstances wish to instruct new solicitors, who would need some time to come to a view as to what had gone on during a period of almost 20 years; and that it had not been unreasonable for the High Court proceedings not to have been commenced until early October 2014.

Whilst the outcome may appear just, such a benevolent approach still runs counter to the basic principles of limitation and glosses over the emphasis within the Civil Procedure Rules to act promptly and proportionately. It skates over the fact that, while only one reference may be made to the Upper Tribunal, that remedy is the primary course of redress laid down by statute for the disaffected landowner. It also discounts the fact that, where a prospective claimant has been given a clear warning that his claim for compensation is liable to be defeated by limitation, and, still no corrective action is taken promptly, it cannot be “unconscionable” for the acquiring authority to take advantage of the limitation defence available to it under the general law. Certainly, that was the more robust approach taken, recently, by the Deputy President of the Lands Chamber, Mr Martin Rodger QC, in Khan v Tyne & Wear Passenger Transport Executive [2015] UKUT 43 (LC) where, over a shorter time period and even allowing for an unrepresented claimant, the Tribunal still rejected his reference as being too late.

So, whilst it can be argued that the Saunders case turns on its own particular facts and does not make new law, the judgment is instructive in three particular respects.

First, acquiring authorities should now be seen to “take the lead” over compensation matters including giving early and regular warnings about the expiration of time limits, and even making the Tribunal reference themselves. Otherwise, their conduct could be characterised as being “unconscionable”.

Secondly, despite the application of the ECHR (since the enactment of the Human Rights Act 1998) to CPO matters the judiciary remain reluctant to rely upon the provisions and application of Convention rights.

Thirdly, the use of ADR techniques, including independent evaluative mediation, probably remains key to preventing compensation disputes from becoming so protracted.

With the Government’s announcement in the recent Budget that it intends to reform the land compensation system, perhaps this is another area which could be usefully reviewed and clarified.

John Pugh-Smith is a barrister at 39 Essex Chambers and acted on behalf of the defendant, Caerphilly County Borough Council. John can be contacted This email address is being protected from spambots. You need JavaScript enabled to view it..