This view was up held in the case Argyle motors ltd V Birkenhead Corporation 1974 in which extensive works of reconstruction to the approaches to the Mersey tunnel prevented direct access to premises used by motor car dealers. Compensation could only be claimed to the extent that the ensuing loss of profits effected the value of their property. As the premises were only held on a tenancy from year the loss of profits was significantly greater than any impact on the value of their interest but this was not compensatable.
Land Compensation Act 1973
Part I of the 1973 Act provides that where the value of an interest in land is depreciated by physical factors caused by the use of public works, then, subject to certain qualifications, and the making of a claim, compensation shall be payable by the responsible authority. The physical factors are noise, vibration, smell, fumes, smoke and artificial lighting and the discharge onto the land in respect of which any claim is made of any solid or liquid substance. The public works are any highway, aerodrome and any works or land (not being a highway or aerodrome) provided or used in the exercise of statutory powers. By section 9, compensation is also payable in respect of certain alterations to public works.
Compensation is not payable in respect of physical factors caused by the use of any public works, other than a highway, unless immunity from actions for nuisance in respect of that use is conferred (whether expressly or by implication) by an enactment relating to those works or, in the case of an aerodrome and physical factors caused by aircraft, the aerodrome is one to which section 77(2) of the Civil Aviation Act 1982 applies (conferring immunity).
How Relevant Is Section 10
This sets out the case law for the two acts. However these acts can be critically analysed, first looked at will be section 10 and the McCarthy tests. Perhaps the major stumbling block as far as this rule is concerned is that it dates back to 1874, one must ask the question that surely times have changed and what was generally just and equitable in 1874 may not necessarily be so now. Rule one of the test states that this section only applies to the execution of the works and not there use. If this is then compared to section 7 of the same act were land is taken, both aspects are covered. Why then it is needed for an extra act in section 1 of the Land compensation act 1973 to be introduced simply for the provision of the works use, when an extension of the McCarthy tests or a new rule would have been more relevant.
This part of this rule also leaves the valuer with the problem of interpretation. The example in Baums book uses the example "generally a house affected by a road widening scheme is depreciated in value by the use of the road rather than the actual construction process. However should the construction process coincide with an attempt to sell the house then it should be argued that any depreciation suffered falls with in the ambit of this rule." This rule claims even if the construction works were to continue for a number of year then it would still be un claimable. So the valuer must again be forced to use a liberal interpretation as apposed to a precedent.
Rule 2 of this test says that we are unable to claim compensation for losing trade unless it can be shown that this is effected directly on the business. Again the point must be addressed that in 1874 whilst compensation to loss of trade may have been a factor of some concerns the amounts of money that was put into business was not nearly on the same scale that it is today, so giving the change in the economy generally gives weight to the argument of the instruction of a new rule.
Why Is Section 7 Compensation Nearly Always Awarded And Section 10 Rarely
One major stumbling block that was overcome as regarding the restrictive ness of section 10 was the introduction of Section 1 of the 1973 act. The reason for this act being introduced was that it was becoming increasingly unlikely to be awarded any compensation under section 10. Examples of were no compensation has been awarded can be seen in the case of Argyle Motors Limited V Birkenhead Corporation (1974). This was were the construction of the Mersey prevented direct access to the premises used by a motor car dealer. Lord justice Hoffman stated that " Compensation could only be claimed to the extent that the ensuing loss of profits effected the value of their property. As the tenancy is only from year to year, the loss of profits is significantly greater than any impact on the value of their investment, but this was not compensatable. Another case showed that in Grosvenor Hotel Co V Hamilton (1894) that where the owner of a hotel had suffered a loss in business due to construction works , then the amounts of loss due to interference which was reasonable was not compensatable. This in its self seems to be very unfair given that the majority of time section 7 was awarded. The cases were section 7 compensation have been awarded are to numerous to list but some particularly significant cases were it has been awarded are Turris investments ltd Vs Centeral Electricity Investment Board (1981), Cooke Vs Secretary of State for Environment. This is going to be analysed in greater detail later on in the essay by analysing cases. It still seems strange though that even as late as 1973 that it was deemed fit to introduce a new law rather than simply extending section 10, or even abolishing section 10 completely and including the right to compensation for the execution of the works to be included in the 1973 act.
The major problem with rule 10 in particular is that there seems to be an absence of any cohesion in as far as the decision making process is concerned. As figure 1.1 in the index will show in the case of Clift vs The Welsh Office compensation was awarded under section 10 when there was a road widening scheme turning the front of their house into a rat run. The actual construction of the road and the vibrations caused by the road construction vehicles caused damage to the house. The house of Lords ruled in this case that compensation was to be paid and Lord Beldman quoted. "It is expected that people put up with a small amount of inconvenience from temporary and normal works, however there is no sufficient reason why the law should expect the neighbour no matter how patient to put up with actual physical damage to his property, the loss should fall on the door of the works rather than his unfortunate neighbour." And so compensation was awarded at the paltry sum of £600. However in a similar case of Davies Vs London borough of Harrow there house was also damaged by vibrations but the lands tribunal failed to award compensation. This shows a clear lack of consistency not to mention unfairness. It is also worth mentioning that the amount of compensation that was awarded in the Clift case was only £600 under section 10, this figure seems particularly low.
An interesting case was brought to light regarding compensation were no Land was taken. This case was during the construction of the Canary Wharf tower in the Docklands. Fig 1.2 shows how the case was brought forward by over 500 residents on the isle of dogs who had there television pictures disrupted whilst the Canary Wharf tower was being constructed. It was ruled by a four to one majority in the house of Lords that such a case did not amount to a claim being able to be pursued. Lord Goff of Chievely quoted "A man is entitled to build on his land subject to planning controls. That right was not restricted by the fact that the presence of the building might interfere with his neighbours enjoyment of his land. More was required then the mere presence of a neighbours land to give action to a private nuisance. It is only claimable under part 1 of the land compensation act 1973 if there is something emanating from the building, such as noise, dirt, fumes, noxious smells etc." So we are able to conclude from the evidence that if a multi story office building was built next door to you, so long as noise or smells came from the building you would not be able to claim any damages as a part 1 claim. This does though leave the question is a claim available if a building next door shuts off the light to your building.
The Norman Case
The Landmark case of Norman Vs Department of Transport shows how section 7 can be expanded rather than use the difficult section 10 to claim. In this case the Normans owned land adjoining the A35. The road was vested in the section 263 of the Highway Act 1980. The Normans served a blight notice in relation to the land that was underneath the road as this would be required in order for the building to take place. The government contested this as they said the subsoil was not part of the house and gardens. They also said that they owned the subsoil but did not occupy it. The courts ruled that the subsoil could not possibly form a separate hereditament as it would take a major feat of engineering in order to gain access and that occupation of part of the premises should be construed as occupation of the whole. This case is of wider significance, as this has opened up the possibility of far more claims for injurious affection, when a road is built and more than just the existing surface is altered. The compensation must take into account losses caused by the construction and the subsequent use of the works.
How Are The Valuations Calculated
There are differing views as to how the method of compensation is to be carried out when assessing a claim under section 10. A major land mark case in the house of Lords regarding this was Wildtree Hotels ltd v Harrow London Borough Council, in this case Lord Hoffman states "This reasoning (ie if the court of appeal) assumes that compensation under section 10 can only be assessed by considering the capital value of the claimants land at a given date and then deducting that sum from an estimate of what its value would have been if it had not been injuriously affected. there is nothing in the section which says that compensation to damages to the land has to be calculated in this way." So the traditional method of valuation which is shown below.
Value Of Land before development started £_____
Value Of Land Due To Injurious Affection £_____
___________________________
Compensation awarded
This case would appears to confirm therefore that section 10 does not provide that compensation must be assessed on a "before" and "after" basis. It is important to understand that Lord Hoffmans comments are in relation to section 10 only. Here the rules between compensation and section 7 differ as claims under section 7 are normally for hypothetical future loss rather than in respect of a loss in (as in section 10) which has actually occurred. Compensation under section 7 is usually assessed on a "before" and "after" basis without distinguishing between the separate heads of severance and injurious affection. A permanent loss in value to the retained land is therefore assumed so it is difficult to see the "before" and "after" valuation abandoned in respect of a future loss. For a "past" temporary loss in value, the injurious affection part of the claim might then merit separate assessment from the severance part, rather than then being brought together in the case of a future loss. A court might in the circumstances (following Wildtree as persuasive authority) adopt a hypothetical deduction for the letting value in the open market (as suggested by Hoffman on page 303 of the report) as an appropriate means of how the temporary loss can be assessed in that particular case. This does not necessarily mean that one is obliged to follow the valuation example quoted by Lord Hoffman, since again this is only an approach to the valuation of the loss. There may be other valuation principles which are equally capable of fairly assessing the loss which could be agreed by the court in the particular circumstances of the case. To conclude it would appear that the Wildtree case suggests that the before and after method of valuation is only an approach to valuing the loss rather than an appropriate requirement . the valuation principle (quoted by Lord Hoffman in Wildtree) of a hypothetical reduction in the letting value is an example of how loss can be assessed (especially in the case of past loss rather than future), but again this is only an example of assessing the loss rather than an actual requirement.
Proposed Changes
The law commission paper number 165 has highlighted a number of issues that are to be changed in the foreseeable future regarding compensation were no land is taken. The first point has been for a new provision of the 1973 act (to replace 1965 act s 10) will defer a right to compensation were a market value of an interest in land is depreciated by "physical factors" caused by the construction of public but only to the extent that a claim would have arisen at common law apart from the immunity conferred by the statute. Also a reform was suggested for the 1973 act part 1 (compensation for depreciation due to the use of public works) will be retained subject to the following
(i) section 2 (3) and (6) (rateable value limit of £24,600, currently applicable to interests other than dwellings or agricultural units)
(ii) section 4 (5) existing use only
(iii)section 5 requirement to presume that no permission would be granted for new development.
Other detailed amendments proposed by CPPRAG to be reviewed following consultation.
Conclusion
Prior to the 1973 act, not only was the public dissatisfied that it could only claim for the effects of the works in very limited circumstances, but also that claims for noise, dust and other nuisance during construction and from the subsequent road use were almost impossible. Given the need to control public expenditure, the land compensation act 1973 has gone some way to satisfy these public complaints in so far as, compensation is now claimable due to physical factors. But the point was raised earlier how relevant section 10 is and using the examples shown and the small amounts of compensation that were paid it seems that there was very little use for section 10, and any claim could be delayed and then claimed under part 1 at a later date including the pv of the claim over that time. This would be a far easier and more practical way of processing a claim and would save the added paper work of processing two claims in relation to the same property when ideally only one is strictly necessary. Regarding the reasons why section 7 compensation seems to be always awarded and section 10 very rarely, the only reasonable explanation for this is that it is easy to prove that your land has been taken from you and make a section 7 claim. But as we have discovered earlier in this essay when all reasonable steps have been made to ensure that the nuisance has been kept to a minimum a section 10 claim is not possible and this is left very much open to the opinion of the judge. The final point to redress is the method of valuation. There is no real method of valuation that has to be used but the before and method version seems to be the most popular. It would appear to make sense in view of the Wildtree case to have a valuation method specified to eliminate confusion in how the claim is to be valued. the perfect example to follow in this case would be section 5 of the Compulsory Purchase Act 1965. Here there is a structured method of valuation to follow.
I believe that the best improvements would be to create a new law or expand part 1 of the 73 act to include section 10 as it seems ridiculous to have two separate laws when it is possible to claim them together. This has already been proposed in the law commission paper and it only makes sense.
Finally all compulsory purchase work is deemed to be in the best interest of the community as a general and this is deemed in all cases when awarding compensation. Government run projects tend to be under funded so these points are usually considered by the Lands Tribunal and the house of Lords.
