Farrell v First National Bank Plc & Anor

On an appeal from the Lands Tribunal, an error of law may arise where the tribunal reaches a conclusion that was not reasonably open on the evidence. A tribunal must assess the evidence rationally and give proper weight to undisputed facts. It should not infer that a contractual interest was terminated from later financial difficulties where there is no evidence of default or termination and the contemporaneous evidence points the other way. Unexplained documents of little evidential value cannot displace stronger, undisputed evidence.

Sandwell Metropolitan Borough Council compulsorily acquired a house under a clearance-area order. The Lands Tribunal awarded only the agreed site value of £750, rejecting First National Bank’s claim to additional compensation payable in respect of Mr Farrell’s interest in the property. The Tribunal inferred that an earlier sale-by-instalments agreement might have ceased to subsist before the statutory qualifying date, principally because of two letters from a person who had apparently occupied the property and because of Mr Farrell’s later mortgage arrears.

First National appealed on a point of law. The central issue was whether the Tribunal’s conclusion that Mr Farrell lacked the necessary qualifying interest was reasonably open on the evidence.

1. Appeal allowed. The Court of Appeal held that an error of law can arise where the Lands Tribunal reaches a conclusion that was not reasonably open to it on the evidence.
2. The Tribunal expressly accepted that there was no evidence that Mr Farrell had defaulted under the 1985 sale-by-instalments agreement or that Mr Sander had terminated it. It nevertheless inferred that Mr Farrell may have defaulted from his almost total failure to make mortgage payments. That financial failure occurred in and after 1990 and could not rationally support the conclusion about the agreement during the earlier qualifying period.
3. The Tribunal gave excessive weight to two unexplained letters from Trudy Reid, apparently obtained from a different departmental file. The letters had virtually no evidential value. The Tribunal gave insufficient weight to the undisputed 1985 agreement, the 1988 transfer to Mr Farrell for £9,500, and his continued occupation of the property. Those matters supported the existence of the necessary interest throughout the qualifying period.
4. The second issue, concerning First National’s entitlement under sections 14 and 15 of the Compulsory Purchase Act 1965 to a payment under Schedule 23, did not arise. Section 588 of the Housing Act 1985 prevented double recovery, and the court had heard no argument on that issue. It was therefore neither necessary nor desirable to express a view on it.
5. The matter was remitted to the Lands Tribunal to award the agreed net compensation of £29,250, being £30,000 less the agreed site value of £750. The appeal was allowed with costs.

• Court of Appeal (Civil Division): Allowed the appeal from the Lands Tribunal and remitted the matter for an award of £29,250 with costs.
• Lands Tribunal: By order dated 7 January 2000, determined compensation at £750, the agreed site value.