Wrexham Maelor Borough Council v Macdougall & Ors

For a disturbance payment, lawful possession means physical occupation with an intention to exclude unauthorised intruders. It does not require legal title or an equitable interest, although the claimant must lack a compensatable interest under another enactment. A licensee qualifies only where the licence gives physical possession; its revocability may affect the amount payable. An owner not in occupation cannot claim compensation for disturbance, but may claim consequential loss under the provision preserving compensation for any other matter not directly based on land value. Such loss must be a natural and reasonable consequence of acquisition and not too remote. A service agreement is not itself compensatable, but actual loss of earnings may be.

The Council appealed under section 3(4) of the Lands Tribunal Act 1949 from a decision of Mr C.R. Mallett, FRICS, sitting as the selected member of the Lands Tribunal. The dispute arose from the compulsory acquisition of leasehold offices occupied by companies conducting an insurance business.

The Lands Tribunal awarded compensation to Crest for disturbance and goodwill, and to Mr Macdougall for loss connected with his service agreement. The appeal concerned the meaning of lawful possession, the operation of section 46 of the Land Compensation Act 1973, the recoverability and remoteness of the individual’s loss, and alleged double counting.

Lord Justice Ralph Gibson gave the leading judgment, with Lord Justices Mann and Nolan agreeing. The appeal was dismissed.

1. The appeal was confined to points of law. The Court could not reopen the Lands Tribunal’s factual findings unless a relevant error of law was shown. The late evidence concerning a single insurance-renewal letter did not establish irrationality or justify disturbing the finding that Crest’s business had been extinguished.
2. Under section 37 of the Land Compensation Act 1973, lawful possession means physical occupation with an intention to exclude unauthorised intruders. It is not limited to possession founded on a legal or equitable interest. Permission from the owner with the legal right to possession may suffice. A licensee can therefore qualify where the licence gives physical possession, although the fragility of the licence may affect the amount under section 38(2). Mere permission to enter or perform acts on land is insufficient. Crest was accordingly entitled to claim, subject to having no compensatable interest under another enactment.
3. Section 46 was an assessment provision, not a separate basis of compensation. It did not require the undertakings to be stated or given when possession was taken. The member was entitled to decline to decide whether the Council’s proposed undertakings were unreasonable, since no issue arose that they were outside the Council’s statutory power. Hansard could not assist under Pepper v Hart (1992) 3 WLR 1032: section 37 was neither ambiguous nor obscure, and the Minister’s statement was not sufficiently clear.
4. Loss of the service agreement was not itself compensatable as an acquired asset. The relevant question was whether the acquisition caused actual loss of earnings, allowing for mitigation and any probable restoration of earnings. Such loss was not too remote merely because the earnings came from the claimant’s own company. The Court held that the claim was not barred by non-occupation and that the member’s conclusion was open to him. Rule 6 in section 5 of the Land Compensation Act 1961 was not confined to costs, so consequential loss could fall within its words even though it was not disturbance compensation.
5. The awards did not involve double counting. The goodwill award assumed that the service agreement continued to age 65, while the individual award represented the separate consequential loss assessed on that basis.

• Court of Appeal (Civil Division): In [1993] EWCA Civ 24, the Council’s appeal on points of law was dismissed and the Lands Tribunal’s awards were upheld.
• Lands Tribunal: Mr C.R. Mallett, FRICS, decided the compensation claims on 14 May 1992. The Council appealed under section 3(4) of the Lands Tribunal Act 1949.