BP Oil UK Ltd. v Kent County Council

In compulsory acquisition, statutory and contractual elements may coexist. An agreement must be construed according to its terms. A contractual promise by an acquiring authority to pay consideration calculated by reference to the statutory compulsory purchase code remains enforceable, even where the calculation resembles statutory compensation. The agreement may also add obligations, such as accommodation works. It is unnecessary to decide whether the agreement supplants statutory rights where it is implemented. The contractual claim is not barred by a limitation period applicable to a purely statutory compensation claim. The court indicated, without deciding, that interest from possession could fall within agreed consideration, while leaving the treatment of advance payments and any limitation on interest unresolved.

BP appealed from a preliminary decision of the President of the Lands Tribunal, which held that its compensation claim was statute barred. The compulsory purchase process involved notice to treat, notice of entry and entry onto the land on 8 August 1995. BP’s notice of reference was dated 24 January 2002, more than six years later.

BP relied on a February 1996 agreement under which Kent County Council was to acquire land and pay compensation assessed by reference to the statutory compulsory purchase code, including accommodation works. The central issue was whether the agreement created an enforceable contractual right to consideration, or merely preserved the statutory compensation claim.

Disposition. Carnwath LJ gave the judgment, with Mummery and Kennedy LJJ agreeing. The court allowed the appeal in substance and directed that the reference proceed under section 1(5) of the Lands Tribunal Act 1949. The transcript’s appended order records the contrary outcome, but expressly states that the order does not form part of the approved judgment.

1. Statutory and contractual framework. Entry under section 11(1) of the Compulsory Purchase Act 1965 gave the Council possession and use for the statutory purpose, but did not itself transfer title. Title could be secured through statutory mechanisms or by agreement. The statutory and contractual aspects therefore required no artificial dividing line.
2. Effect of the agreement. The February 1996 agreement imposed contractual obligations to transfer interests in land and required payment by way of consideration. Its terms governed its construction. The fact that the calculation replicated much of the statutory code did not deprive the payment clause of contractual effect, particularly because it made specific provision for accommodation works.
3. Limitation. A purely statutory compensation claim was outside the six-year period under section 9 of the Limitation Act 1980, consistently with Hillingdon LBC v ARC Ltd [1999] Ch 139. The agreement nevertheless gave BP enforceable contractual rights notwithstanding that limitation. It was unnecessary to decide whether the agreement supplanted the statutory rights if it was implemented according to its terms.
4. Unresolved matters. Whether an advance payment could be claimed under section 52 of the Land Compensation Act 1973 was academic because none had been sought. The court inclined to include interest from possession within agreed consideration under section 11(1), but did not finally decide the point. It also left unresolved whether an acknowledgment under section 29(5) of the Limitation Act 1980 could apply to compensation not yet determined, expressing reservations about treating such a claim as liquidated.
5. Jurisdiction and costs. The reference was contractual and therefore proceeded as an arbitration by consent under section 1(5) of the Lands Tribunal Act 1949, rather than solely as a statutory compensation determination under section 1(3). Costs followed the event, subject to a reduction of £1,000 plus VAT for the late limitation argument.

• Court of Appeal (Civil Division): Allowed the appeal in substance and directed that the reference proceed under section 1(5) of the Lands Tribunal Act 1949.
• President of the Lands Tribunal: On a preliminary issue, held that BP’s compensation claim was statute barred.