Hillingdon London Borough Council v ARC Ltd

A statutory claim for compensation following entry onto compulsorily acquired land accrues when the acquiring authority enters and takes possession. The six-year limitation period under section 9(1) of the Limitation Act 1980 therefore begins on entry, although the compensation has not been agreed or quantified.

Reference of disputed compensation to the Lands Tribunal is machinery for quantifying an existing right. It is not a condition which postpones accrual. A reference by the claimant to that judicial tribunal is itself an action to recover the statutory compensation for limitation purposes.

An acquiring authority entered land under section 11 of the Compulsory Purchase Act 1965 in April 1982. The dispossessed lessee did not refer its disputed compensation claim to the Lands Tribunal until September 1995.

The Lands Tribunal declined jurisdiction to decide whether the claim was time-barred. On an originating summons, a deputy High Court judge declared that the cause of action had accrued on entry and that the six-year period under section 9(1) of the Limitation Act 1980 had expired. His decision was reported at [1998] 1 WLR 174.

The lessee appealed. The central questions were when the statutory compensation claim accrued and whether section 9(1) applied to a reference to the Lands Tribunal.

1. Appeal dismissed unanimously. Lord Justice Potter gave the leading judgment. Lord Justice Mummery agreed, and Lord Justice Nourse agreed for the reasons Potter LJ gave.

2. The right to compensation arose immediately when the acquiring authority entered and took possession under section 11 of the Compulsory Purchase Act 1965. It was a right to be paid such compensation as might be agreed or assessed by the Lands Tribunal. It was therefore a cause of action for a sum recoverable by virtue of an enactment within section 9(1) of the Limitation Act 1980.

3. The absence of an agreed or assessed amount did not postpone accrual. A statutory cause of action may accrue although the sum remains to be quantified and although a disputed element must be determined by a tribunal other than a court. Section 6 of the 1965 Act supplied procedural machinery for quantification; reference to the Lands Tribunal was not a substantive condition completing an otherwise inchoate right.

4. Turner v Midland Railway Company [1911] KB 832 did not determine what amounted to a cause of action under section 9. Its reasoning concerned an action in debt under the earlier statutory regime, before legislation extended limitation to sums recoverable by virtue of an enactment. The Scottish decision concerning payment after agreement or assessment addressed a different question, while the decision concerning statutory interest did not decide when the underlying compensation right accrued.

5. Although unnecessary to the disposition because the lessee had commenced neither tribunal nor High Court proceedings within six years, the court gave guidance on the necessary proceeding. The Lands Tribunal exercised the judicial arm of the state within a specialised jurisdiction, determined the acquiring authority's monetary liability and operated under court-like procedural rules. It was therefore a court of law within section 38 of the 1980 Act. A claimant's reference of disputed compensation to it was an action to recover that compensation within section 9(1).

6. The claim relating to the 1982 entry was consequently time-barred. The appeal was dismissed with costs, and leave to appeal to the House of Lords was refused.

1. Court of Appeal: The lessee's appeal was dismissed unanimously. The declaration that its compensation claim was time-barred was upheld.

2. High Court, Chancery Division: A deputy judge declared that the cause of action accrued when the authority entered the land, that the six-year period under section 9 of the Limitation Act 1980 had expired, and that the claim was time-barred: [1998] 1 WLR 174.

3. Lands Tribunal: The tribunal declined jurisdiction to determine the preliminary limitation issue raised by the acquiring authority.