Smith & Anor v South Gloucestershire Council

Compensation under section 10 of the Local Land Charges Act 1975 is ordinarily assessed by reference to the date of breach. That rule is not conclusive where it would produce injustice. The court has a discretion to select a later date if the claimant acted reasonably and could not fairly remedy or realise the loss without compensation, particularly where the defendant denied liability and the delay was reasonably foreseeable. Where adequate compensation is necessary to enable the claimant to obtain a comparable replacement property, assessment at the compensation hearing may be appropriate.

The claimants purchased Beanwood Farmhouse after an official local land charges search failed to disclose an occupancy condition. The condition was later discovered during renovation. The Council accepted liability under section 10 of the Local Land Charges Act 1975, and the lower court assessed diminution in value at November 1998, when the condition was discovered.

The claimants appealed, arguing that compensation should instead be assessed at the September 2001 compensation hearing because they could not sell the property or obtain a comparable replacement without adequate compensation. The central issue was the appropriate date for assessing the statutory compensation.

1. Appeal allowed. Compensation was varied from £197,500 to £292,500, and the order for £44,760 interest was deleted.
2. The entitlement to compensation under section 10 of the Local Land Charges Act 1975 is equivalent to a cause of action in tort. The general rule is that damages are assessed at the date of breach, which would ordinarily have been the date of purchase.
3. That rule is subject to an exception where applying it would produce injustice. Following Alcoa Minerals of Jamaica Inc v Broderick [2002] 1 AC 371, the court has a discretion to adopt another date. The discretion is not confined to claims for physical repair costs.
4. The claimants acted reasonably after discovering the occupancy condition. They stopped renovation, sought professional advice, attempted unsuccessfully to have the condition removed, and reasonably refrained from selling while liability remained disputed.
5. It was reasonably foreseeable that they could not sell the property and purchase a comparable and suitable replacement without adequate compensation. The Council denied liability and made no substantial payment until shortly before assessment. In those circumstances, assessment at the date of the compensation hearing was the only just remedy.

• Court of Appeal (Civil Division): Allowed the appeal and varied the assessment of compensation.
• Chancery Division, Bristol District Registry: His Honour Judge Weeks, QC, held that the claimants were entitled to compensation and assessed diminution in value at November 1998.