GLASGOW CITY COUNCIL, per Legal and Administrative Services, City Chambers, George Square, Glasgow (Applicants)
against
PARATUS (No 403) LIMITED, 27 Lauriston Street, Edinburgh, per Messrs J Myles & Co solicitors, 7-9 South Tay Street, Dundee (Respondents)

Application for determination of disputed compensation in respect of

Egyptian Halls, 84-100 Union Street, Glasgow

EDINBURGH 20 February 2009

The Lands Tribunal for Scotland, having considered parties’ written submissions, (First) FIND the respondents liable to the applicants in their expenses of the application in so far as incurred after the date of the offer, viz. 10 January 2007, on the Sheriff Court scale which, failing agreement, shall be taxed by the Auditor of Glasgow Sheriff Court; (Second) SANCTION the employment of junior counsel; and (Third) CERTIFY Mr John McGee, Mr Neil Drysdale, Mr Hamish Munro and Mr Stephen McCluskey, as expert witnesses.

President

Note: It is not disputed that in the ordinary case of settlement of disputed compensation for the compulsory acquisition of property, the appropriate starting point is that the acquiring authority will have to meet the expenses of the claimant: Aberdeen District Council v Emslie & Simpson 1995 SC 264. The respondents found strongly on that decision and make no attempt to meet the submission for the applicants that the ratio does not apply in a situation where the compulsory acquisition has followed a claimant’s failure to comply with a LBRN. We return briefly to that point. On any view the principle is subject to the provisions of section 11 of the Land Compensation (Scotland) Act 1963 and to the overall discretion of the Court. Where a case falls properly within the terms of any of the provisions of section 11, the Tribunal will require to follow the statutory Rules unless for special reasons it thinks proper not to do so.

We are satisfied that in the exercise of our discretion we should attempt to follow the substantive intention of section 11. In other words, we should not be too quick to say that because a particular situation may not fall exactly within the strict terms of the Act, we should ignore the policy behind it. In the present case, the acquiring authority made an unconditional offer in writing of the sum of £25,000 in full and final settlement of their claim for compensation. This offer bore the date 10 January 2006 but was received by the Tribunal in February 2007 and there is little doubt that the effective date was 10 January 2007. Nothing turns on the precise date. The sum eventually awarded by the Tribunal was £25,000 with interest thereon at the statutory rates and, in addition, professional fees in the sums of £10,316.50 and £29,568.88.

The acquiring authority relied on the respondents’ failure to intimate to them, in terms of section 11(1)(b) a notice in writing containing the particulars required by subsection (2). In the earlier stages of the case, it was clear that the respondents took the view that it was not necessary for them to intimate a claim. They advanced the unusual proposition that it was up to the acquiring authority to produce their statement of claim. The substantive point was that, in the unusual circumstances of the case, it was a more sensible use of available resources for them to be allowed access to figures available to the authority rather than have to create and vouch their own claim. There is no doubt about the fundamental scheme of the Act. It makes detailed provision for expenses based on the assumption that it is for the claimant to set out a detailed claim. The expense of professional advice required to set out such a claim is a reasonable part of the claim and any difficulty in formulating the claim cannot, of itself, be a sufficient reason for departure from the statutory scheme. In other words, while it might make sense for parties to make such use as they could of each other’s material, the ultimate onus was on the respondents to present and establish their claim. They had to set out their own basis of claim. They could not succeed simply by selective attack on the applicants’ figures.

We stress these matters because it is important that nothing we say in the present case should detract from that approach. We discussed the proper approach in our Note of 12 April 2006 but allowed the respondents three months to lodge their claim. Although we think that the respondents’ approach was misconceived, we are unable to say that failure to follow the normal approach was wholly unreasonable in the complicated circumstances of the present case.

We have not found this an entirely straightforward issue but we have concluded that there are special reasons in the particular circumstances of the background to this claim which makes it appropriate to conclude that our award of expenses should not be based on the failure contemplated by section 11(1)(b).

However, we are satisfied that we must give effect to the substantive intention of section 11(1)(a). In the present case, we consider that the element of our award represented by the professional fees has no proper bearing on the substantive issue of liability for the expenses of procedure before the Tribunal. It is plain that no significant procedural expense was attributable to any dispute over that particular issue. There was never any real dispute about it. The attempts made by the claimants to rely on the award made under that head as freeing the Tribunal from the constraints of the statutory provisions, are quite artificial. The question of liability for the expenses of any litigation is a practical question. Expense has been incurred. Some fair way of allocating liability for that expense must be found. We decline to place weight this technical point which has no real substance.

The claimants also suggest that the offer was exceeded because interest required to be added. If it was the case that the claimants had had to litigate to obtain interest, that would, of course, be a point of real importance. There is nothing before us to suggest that this was so in the present case. Although it is for a party making an offer to make it clear what the offer includes, and an ambiguous offer might fail to attract the strict protection of the Act, we are entitled to exercise our discretion.

In doing so, our main consideration is that there is no indication that there was ever any dispute over interest. The amount in issue would have been insignificant in the context of the overall dispute. It is, accordingly, unnecessary for us to express a concluded view as to whether the addition of interest has any bearing on the issue. We heard no submissions on the point and our attention was not drawn to any authority bearing directly on the matter. We do not seek to contradict any existing authority but we observe that section 11(1)(a) refers to the sum offered “as compensation”. As we have seen, the offer of 10 January 2007 was explicitly stated as an offer “of compensation”. Section 40 refers to interest “on any compensation”. We doubt whether an offer made in terms of section 11 is to be taken to include interest.

In short, we are satisfied that it is appropriate to approach the issue of expenses on the basis that, in a substantive sense the circumstances can be taken as falling within the provisions of section 11(1)(a) and that our award should be based on the approach appropriate to that provision. The applicants should be found entitled to expenses from the date of the offer unless there is some reason for a contrary finding. There may be cases where a distinction has to be drawn between the statutory test of special reasons and the considerations appropriate to an exercise of a broad judicial discretion. However, in the present case we are satisfied that there is simply no justification for any contrary finding.

Both parties invoked the background to the compulsory purchase as a reason justifying an award of expenses in their favour. The acquiring authority referred to the claimants’ failure to carry out necessary repairs timeously. The claimants blamed the failure of Union Street Properties Ltd to proceed with the restoration. They suggested that if that company had gone ahead with the work, the actual costs would have been available and it would have been a simple calculation to determine the “residual benefit”.

It is unnecessary for us to comment on the substance of either contention. We have not heard sufficient evidence to be able to make any assessment of blame. These matters were not raised as requiring our determination in the course of the compensation proceedings. We are satisfied that they have no bearing on the expenses of the procedure before us. Accordingly we have found no reason to depart from the view that the claimants should bear their own expenses and pay the expenses of the acquiring authority insofar as incurred after 10 January 2007.

We have had greater difficulty in relation to the expenses before that time. We think part of the fallacy underlying the claimants’ approach is illustrated by the submission that knowing the actual cost incurred by one particular developer would have allowed “a simple calculation”. The value had to be determined as at January 2003. Actual costings were not available at that date. An assessment was required. In any event the actual costs incurred by a particular developer while no doubt of some potential assistance would not have been determinative. As we have said we recognise that it made sense for the claimants to have the benefit of costing information available to the authority in making their claim, but have no doubt that the onus lay on the claimants to take steps to make an assessment for themselves.

As it seems to us, the main basis of the claimants’ submission rested on the proposition that the applicants acted in some way improperly or unfairly in selecting Union Street Properties Ltd and entering into an arrangement with them. This involved them exercising their powers in a way which excluded other potential developers including the claimants. It was asserted that “had they not done that, Mr Dyer would have been entitled to insist upon his involvement with the development plan and to share the fruits of that development. That essentially is what he was seeking compensation for”.

This may well reflect the claimants’ thinking. But it was not an issue before us. We have no basis which would justify any finding critical of the applicants. We are aware that the claimants sought to raise some such issues in proceedings before the Court of Session. We understand that they came to nothing. In any event, our task was simply to assess compensation based on the valuation of the subjects at the agreed date. We are satisfied that the vague suggestions of some impropriety on the part of the applicants or, indeed, the named developers, can play no part in our present determination.

The acquiring authority initiated the proceedings before us because they wished to bring matters to a head but it is apparent that the claimants had made their general position fairly clear. In the application, the applicants narrated that the claimants had valued their interest at around £150,000. There was no doubt about the broad basis upon which they made their assessment. The value of the developed building had been agreed. The question was the cost of achieving that value. As we have said it was clear that the claimants thought that the most efficient way to identify the residual figure was by reference to actual figures. They thought that the applicants had access to such figures. As we have said we do not think that attitude was entirely unreasonable although it appears to have blinded the claimants to the onus which remained on them.

Issues of expense must be determined on a broad view. It would seldom be appropriate to incur the expense of a separate proof of background issues simply to allow a clearer view of expenses to be reached. The background here was plainly unusual. The claimants may well have been trapped in a situation which required some co-operation which they did not get. We are not satisfied that the principle discussed in Emslie & Simpson can be set aside simply because of a background of problems in carrying out repairs. There may be cases where that factor is relevant. But we do not have information in the present case to justify such a conclusion. The substantive fact remains that the claimants were compulsorily deprived of their property and the opportunity to develop it in their own time.

In all the circumstances of the present case we consider it appropriate to make no award of expenses in respect of the period until the offer. As we have said, the acquiring authority is entitled to its expenses from that time.

LTS/COMP/2005/02


Extracted by me having a commission to that effect

Neil M Tainsh - Clerk to the Tribunal