LANDS TRIBUNAL FOR NORTHERN IRELAND
LANDS TRIBUNAL & COMPENSATION ACT (NORTHERN IRELAND) 1964
LOCAL GOVERNMENT ACT (NORTHERN IRELAND) 1972
PLANNING (NORTHERN IRELAND) ORDER 1991
IN THE MATTER OF A REFERENCE
R/60/1999
BETWEEN
MAXOL OIL LIMITED - CLAIMANT
AND
DEPARTMENT OF THE ENVIRONMENT FOR
NORTHERN IRELAND - RESPONDENT
Re: Premises at Marine Highway, The Harbour, Carrickfergus, County Antrim
Lands Tribunal – The Honourable Mr Justice Coghlin and
Mr Michael R Curry FRICS IRRV MCI.Arb Hon.FIAVI
Belfast – 28th May 2004
1.
This application came before the Tribunal for the purpose of determining the issue as
to whether the claimant is entitled to compensation in respect of loss of anticipated
annual profit under the terms of a Solus Agreement as a consequence of an Order
obtained by the respondent on 7th May 1993 in accordance with the provisions of the
Planning (Northern Ireland) Order 1991 and the Local Government Act (Northern
Ireland) 1972 vesting the premises, together with other lands, in the Department.
Background facts
2.
The following are the relevant background facts:
a) By an indenture of lease dated 10th July 1981 Carrickfergus Borough Council
demised the premises to Kane Fuels Limited.
b) By an undated sub-lease Kane Fuels Limited demised the premises to
McMullan’s Limited for a term of 20 years and 360 days for use as an oil and
coal fuel depot.
c) By a further undated indenture of lease McMullan’s Limited demised the
premises to Kane Fuels Limited for term of 20 years and 357 days from 1 day
of September 1980 again restricting the use of the premises to an oil and coal
fuel depot. Clause 16 provided for the forfeiture of the said indenture of lease if
the lessee at any time ceased to be an “Authorised Distributor” of the lessor.
The indenture further provided that the lease should be read and construed as
if the Solus Agreement attached thereto had been incorporated into the said
indenture of lease and that the Solus Agreement was to be regarded as “a
prime factor in the terms of the said Lease”.
d) Attached to the indenture of lease referred to at (c) was a Solus Agreement
appointing Kane Fuels Limited as the authorised distributor of McMullan’s
Limited for a period of 20 years and 357 days commencing on 1 st September
1980 under which Kane Fuels Limited became bound to purchase its supplies
of petroleum products exclusively from McMullan’s Limited.
e) The limited company, McMullan’s Limited, subsequently passed a special
resolution changing its name to Maxol Oil Limited and a Certificate of
Incorporation of change of name was subsequently issued on 12 th June 1984.
Maxol Oil Limited is the present claimant.
f)
It was agreed between the parties that, at all material times, Kane Fuels Limited
was in occupation of the premises carrying on business as a fuel distribution
depot and that the applicant was not in occupation, its sole interest being as
sub-lessee and reversioner under the terms of the said leases.
g) Subsequent to the making of the Vesting Order an agreement was reached in
1995 between the District Valuer acting on behalf of the respondent and the
claimant valuing the claimant’s interest in the premises as reversioner and sublessee at £82,000. That agreement did not purport to deal with any alleged
interest that the claimant might have in loss of profits flowing from the Solus
Agreement and it is that issue that the Tribunal is now called upon to determine.
The relevant statutory framework
3.
The jurisdiction of the Tribunal to assess compensation is founded on Article 3 of the
Land Compensation (Northern Ireland) Order 1982 (“the 1982 Order”) and the rules
for assessing compensation may be found in Article 6 of that Order. Rules (2) and (6)
are of particular relevance to this reference and provide as follows:
“(2)
The value of land shall, subject to Rules (3) to (6), be taken to
be the amount which the land if sold in the open market by a willing seller
might be expected to realise;
(6) The provisions of Rule (2) shall not affect the assessment of
compensation for disturbance or any other matter not directly based on
the value of the land.”
The submissions of the parties
4.
Mr Horner QC, together with Mr Egan, appeared on behalf of the claimant while Mr
Orr QC represented the respondent. The Tribunal is grateful for the clear and well
reasoned written and oral submissions advanced on behalf of both parties from which
it derived considerable assistance.
5.
On behalf of the claimant Mr Horner QC emphasised the fundamental importance of
the principle of “equivalence” referring the Tribunal to the classic judgment of Scott LJ
in Horn v Sunderland Corporation [1941] 1 All ER 480 and the discussion contained in
paragraphs 11.2 and 11.3 of Denyer-Green on “Compulsory Purchase and
Compensation”. Mr Horner QC argued that the principle of equivalence required a
person whose property had been compulsory purchased to receive adequate
compensation and this would not be achieved unless the claimant was compensated
for the loss of the benefit of the Solus Agreement. In his submission the two relevant
questions were:
(i)
Has a loss been sustained?
(ii)
Is that loss a direct consequence of the compulsory acquisition of the
property?
6.
On behalf of the respondent Mr Orr QC emphasised the fact that, at all material times,
the claimant was not in occupation of the premises and that no legal authority could be
produced to support the proposition that an non-occupier might be awarded
compensation for loss of profit.
The Tribunal’s conclusions
7.
The Tribunal accepts that, in order to obtain compensation, the claimant must show
that it has a relevant legal or equitable interest in the premises but it does not consider
it to be essential that the claimant should be in occupation (Wrexham Maelor Borough
Council v MacDougall and Others [1993] 2 EGLR 23; 69 P&CR 109 CA). In this case
the claimant clearly had such an interest as sub-lessee and reversioner and the
Tribunal does not consider that the case relied upon by the respondent, International
Traders Ferry Limited v Adur District Council [2004] EWCA Civ 288; All ER (D) 430
(Feb), is of assistance since in that case the Lands Tribunal specifically found as a
fact that the licences to use the facilities of the port had not “granted an interest in the
land to the claimant”.
8.
Had the claimant been in occupation then it would have been entitled to compensation
for “disturbance” in accordance with Rule 6 of the Rules set out in Article 6 of the 1982
Order. However, while non-occupation may exclude a claim for compensation for
disturbance, it does not follow that non- occupation will prohibit a claimant from relying
upon the latter part of Rule 6 and seeking compensation in respect of “any other
matter not directly based on the value of land”. In the Wrexham case the claimant
acknowledged that there was no reported case in which a claim to loss of earning, or
to loss of business profits, had been awarded to an owner who was not in occupation
but nevertheless submitted that none of the authorities excluded such a claim which
fell within the wording of Rule 6 and the general principles stated in Harvey v Crawley
Development Corporation [1957] 1 QB 485. In response to this submission Ralph
Gibson LJ, who delivered the judgment of the Court of Appeal, expressed the view
that it was surprising that the point had not been previous considered and suggested
that it might be uncommon for the owner of an interest which was compulsorily
acquired, who was not in occupation, to be able to point to some significant damage
consequent upon the taking of that interest, which was the natural and reasonable
consequence of the taking of the interest and not too remote, other than costs and
expenses.
However, despite the absence of authority, the Court of Appeal was
unable to identify, either from the language of the statute or the legislative history, any
discernible purpose or policy which might be served by excluding such a claim and, in
the circumstances, awarded the claimant compensation for loss of earning from his
service contract.
9.
The Tribunal derived particular assistance from the illuminating judgment delivered by
Keane J, as he then was, in Dublin Corporation v Underwood [1997] 1 IR 69 a case in
which the issue for the Supreme Court was whether the owner of compulsorily
acquired property, which he held as an investment, but did not occupy, was entitled to
recover his re-investment costs from the acquiring authority as part of his
compensation. The Corporation had appealed from a decision of the High Court by
Budd J in the course of which the applicable statute law and authorities had been
carefully and thoroughly reviewed. Keane J referred to the statement by Scott LJ of
his view of the law in Horn v Sunderland Corporation [1941] 2 KB 26 at page 48 and,
having done so, Keane J, at page 124, expressed the view that the Horn decision was
authority for the proposition that the principle of equivalence was to be preserved so
as to entitle the dispossessed owner to other items of personal loss in addition to the
market value of the land although it did not entitle a claimant to recover any more than
his total loss. After analysing a number of other English decisions and recording that
there was no Irish authority directly in point Keane J went on to hold, at page 129:
“The matter, accordingly, must be decided by this Court, as it was in the
High Court, as a matter of principle. In the High Court, Budd J was of the
view that the defendant was entitled to be compensated on the basis of
equivalence and that he should recover neither more nor less than his
total loss. This was also the view taken by Carroll J and it is fully in
accord with the statement of the law by Scott LJ in Horn v Sunderland
Corporation [1941] 2 KB 26.
I am satisfied that Budd was correct in
applying that principle in the present case. It would be patently unjust, in
my view, for the dispossessed owner to receive less than the total loss
which he has sustained as a result of the compulsory acquisition: such a
construction of the relevant legislation would be almost impossible to
reconcile with the constitutional prohibition of unjust attacks on the
property rights of the citizens.”
10. The Tribunal notes that the equivalent provisions in this jurisdiction to the prohibition of
unjust attacks on the property rights of citizens contained in Article 43 of the Irish
Constitution are probably to be found in Article 1 of the First Protocol to the European
Convention on Human Rights and the Strasbourg jurisprudence relating thereto. In
the circumstances, the Tribunal respectfully agrees with and adopts the interpretation
of the second part of Rule 6 and the principle of equivalence set out in the Dublin
Corporation case. In so doing the Tribunal recognises that the practical application of
this principle will have to reflect the particular factual circumstances of the individual
case and, where appropriate and relevant, take account of factors such as the duty to
mitigate etc
11. In summary, the Tribunal accepts that the Wrexham and Dublin Corporation cases
support the propositions that:
(i)
Compensation under the second part Rule (6) is not limited to loss to
occupiers;
(ii)
Compensation may extend to any personal loss attributable to the compulsory
acquisition, subject only to the ordinary principles of causation and
remoteness. In reaching such a conclusion the Tribunal is heartened to note
that similar views have been expressed by the Law Commission in its Final
Report No. 286 “Towards a Compulsory Purchase Code: (1) Compensation”
at Part IV paras 4.1 to 4.17.
12. The Tribunal concludes that the principle of equivalence is a practical standard which
is intended to be interpreted realistically, as far as possible, without relying upon
technical distinctions with a view to securing fair financial compensation – see Waters
and Others v Welsh Development Agency [2004] 2 All ER 915 HL. While the Tribunal
accepts that the owner who is not in possession of the premises is probably prohibited
from claiming “disturbance” the Tribunal is unable to discern any reason why, in
principle, the “tied” element of the Solus Agreement in this case should not be the
subject of compensation either as an additional element in assessing the market value
of the lease or as loss of profit under the second limb of Rule (6).
13. It will of course be a matter for the claimant to establish, on the facts, that his alleged
loss has been caused as a result of the compulsory purchase of his interest and that it
is not too remote in the circumstances. It may be relevant to inquire whether any
opportunity exists or existed to establish a suitable replacement business agreement
in the locality and the Tribunal also notes that, in the course of assessment, it may be
necessary to give consideration to the issue as to whether the Solus Agreement and
its incorporation into the lease complied with the provisions of Article 81 of the EC
Treaty and/or the domestic provision of the Competition Act 1998.
ORDERS ACCORDINGLY
22nd September 2004
The Honourable Mr Justice Coghlin and
Mr M R Curry FRICS IRRV MCI.Arb Hon.FIAVI
LANDS TRIBUNAL FOR NORTHERN IRELAND
Appearances:
Mr Mark Horner QC instructed by Comerton & Hill, solicitors, appeared for the
Claimant.
Mr Mark Orr QC instructed by the Departmental Solicitor appeared for the
Respondent.