Lands Tribunal for Scotland

OPINION

Alan McKechnie
v
South Lanarkshire Council (No 2)

Introduction and Summary

1. This is the applicant’s third application to the Tribunal to determine compensation in respect of a deemed compulsory purchase which followed service by him and eventual acceptance of a ‘Blight Notice’ in relation to subjects which were owned by him. The first application was the subject of a settlement agreement in 2000. In terms of that agreement the respondents purchased the subjects. In 2006 the Tribunal refused a second application on the basis that the previous settlement had been in respect of all the applicant’s claims. Reference is made to the Opinion dated 9 June 2006.

2. The present application appears to cover ‘omitted compensation’, by which is meant an alleged underpayment in respect of the value of one building within the subjects, on the basis that evidence of this only came to the applicant’s attention in 2007. The applicant relies on Section 117 of the Lands Clauses Consolidation (Scotland) Act 1845 (“the 1845 Act”). The respondents take three preliminary pleas to this application.

3. The Tribunal has decided as follows on the basis of the parties’ submissions on these preliminary pleas:-

(i) the plea of res judicata is well founded;

(ii) the plea of time bar is not well founded; and

(iii) the plea to the competency of the Tribunal deciding on the correct interpretation of the settlement agreement in 2000 is well founded.

In these circumstances, the application will be dismissed.

Procedure

4. This application was lodged in May 2008. The respondents answered, stating their three preliminary pleas. In due course, parties agreed, in terms of Rule 26 of the Lands Tribunal for Scotland Rules 2003, that these preliminary pleas could be disposed of by written submission and without an oral hearing. The Tribunal was prepared to proceed in that way. After delays occasioned by the applicant’s efforts to obtain legal advice and assistance, the Tribunal allowed parties to lodge written submissions of legal argument on the preliminary pleas. The respondents did not take the opportunity to expand on their submission. The applicant has lodged further voluminous documents in what can only be described as an extremely disorganised form. Only small parts of these, which were not easy to identify, covered his answers to the preliminary pleas. The Tribunal has endeavoured to understand the applicant’s claim and his position on the preliminary pleas.

5. The claim is apparently for compensation of £65,058, being the difference between the value of £40,942 which, according to the applicant’s analysis, was the figure allowed for the value of two properties, known as 1a and 1b, within the land subject to the Blight Notice, in the purchase price paid by the respondents in implementation of the 2000 settlement agreement, and the ‘true market value’ of £106,000 which he now ascribes to these two parts of the subjects. He explains that after many attempts since 2000 to obtain further information he finally learnt in 2007 that the respondents received £106,000 in settlement of an insurance claim following a fire at Nos. 1a and 1b in 2002. He relies on Section 117 to 119 of the 1845 Act, which make provision for situations in which, after the acquiring authority has taken possession of land which they have been authorised to acquire, it appears that through ‘mistake or inadvertency’ there is a right or interest in that land which they have failed to purchase or pay compensation for. This is the Tribunal’s best understanding, for the purposes of considering the preliminary pleas, of his position. He intermittently refers also to other bases on which he might be entitled to more than he previously received from the respondents, but after considering all the documentation lodged the Tribunal does not consider that the applicant intends to rely, or indeed has given fair notice of, any other basis of claim.

Authorities referred to:-

Horn v Sunderland Corporation [1941] 2 KB 26
Lands Clauses Consolidation (Scotland) Act 1845
Acquisition of Land (Assessment of Compensation) Act 1919
Compulsory Purchase Act 1965
Cripps, Compensation, 7th Edition
Rowan Robinson, Compulsory Purchase and Compensation – the Law in Scotland, 2nd Edition

Respondents’ Submissions

6. The respondents have stated their position very briefly, to the following effect:-

(i) Res judicata applies, in respect that “this Application is no different to that lodged with the Lands Tribunal on 9 August 2005”.

(ii) Esto the application is not res judicata, it is time-barred. It is submitted that the deemed compulsory purchase settled with the delivery of the conveyance in favour of the respondents on 12 August 2000, that title being registered on 4 September 2000. The respondents were then vested in the subjects. In terms of paragraph 36 of Schedule 15 to the Town and Country Planning (Scotland) Act 1997, it is submitted, the time limit for reference to the Tribunal is 6 years from the date at which the person claiming compensation first knew or could reasonably have known of the vesting of the interest. The applicant could reasonably have been expected to have known of the vesting of the respondents’ interest on 4 September 2000. The time for referral of this application accordingly expired on 3 September 2006.

(iii) Esto the application is not dismissed for either of these reasons, the respondents submit that the applicant seeks to have the Tribunal interpret a contract between the parties in April 2000 and the tribunal does not have jurisdiction to interpret contracts, that being a matter for the courts. The respondents submit that the sum of £225,000 negotiated and paid in settlement in 2000 was for full extinguishment of all the applicant’s claims and was more than the respondents’ valuation of the heads of claim, so that the applicant was not entitled to seek any further payment. If there was any dispute about interpretation of the settlement agreement, the Tribunal did not have jurisdiction and the application should be dismissed.

The respondents also claim expenses in the event of dismissal under any of these pleas.

Applicant’s Answers

7. In relation to the preliminary pleas, the answers which the Tribunal has been able to deduce from the applicant’s various submissions are summarised as follows;-

(i) It is submitted that this claim, unlike the claim for ‘total extinguishment of the business’ which was the subject of the Tribunal’s decision in 2006, has never been considered before. The application is purely for the building 1a and 1b. The Tribunal had never been asked to consider if the payment was fair or indeed ‘market value’. Further, the claim is res noviter: the applicant only obtained the information that the respondents obtained a payment “far in excess” of what they paid for the building 1a and 1b in 2007, that fact having previously been concealed. He had accordingly not been aware of the ‘true value’ of the subjects.

(ii) It is not clear that there is any time limit for a reference to the Tribunal following a notice to treat. Section 117 implies that there is no time limit. In any event, the applicant only learnt of this further entitlement in 2007, the relevant information having previously been concealed: time bar, if any, should run from 2007.

(iii) Both parties have agreed to the Tribunal considering the current pleas.

Tribunal’s Consideration

8. The Tribunal has had difficulty in considering the competing positions in this case. On the one hand, the respondents’ submissions are brief, and in particular they do not offer any analysis in support of the plea of res judicata or consider the difficulty about time bar in a case where there was no general vesting declaration. On the other hand, the applicant’s position has had to be gleaned from a mass of disorganised and repetitive papers.

9. Res judicata. The Tribunal cannot decide the issue of res judicata without an understanding of the nature of the present claim. The applicant characterizes this claim as a claim for ‘omitted compensation’ under section 117 of the 1845 Act (in England, Section 22 of the 1965 Act).

10. In the Tribunal’s opinion, the applicant’s attempt to characterise this claim as arising under that provision is misconceived. Section 117 may apply where, after an acquiring authority has taken possession of land, it emerges that there is another compensatable interest which by mistake or inadvertence has not either been purchased by the authority or compensated. The applicant’s interest was that of owner. It was purchased from him in 2000. What he is claiming is an additional element of compensation over and above what he received, in the form of a purchase price, in settlement of his original reference to the Tribunal in respect of his interest. He claims that part of the subjects were under-valued and therefore that there was ‘underpayment’. That seems to the Tribunal to have nothing to do with Section 117.

11. It is important to keep in mind that the reference back is not to the first application, which did not result in any judicial determination on which res judicata might be based, but rather to the Tribunal’s ruling in 2006 that the claims advanced in the second application were claims which had already been the subject of the settlement agreement. The applicant had characterised the claims in the second application as claims in respect of ‘total extinguishment of business’ and ‘increase in value of land due to planning decision opposite’ (this being an attempt to rely on a valuation of some neighbouring land arising out of a Certificate of Appropriate Alternative Development). It was agreed at the 2006 hearing that these two matters had been included in the claim advanced in the first application.

12. Res judicata arises where there has been a prior determination by a competent tribunal, pronounced in foro contentioso, the subject matter of the two actions having been the same, the media concludendi (points in issue), having been the same and the parties having been the same. However, even where these requirements are satisfied, the plea may be avoided if there is res noviter veniens ad notitiam, i.e. new and material facts or possibly evidence which have come to a party’s knowledge and of which he was previously ignorant through no fault of his own.

13. In the Tribunal’s opinion, there has been a prior determination by a competent tribunal. Somewhat ironically, the respondents’ third plea in this application contends that this tribunal is not competent to determine the issue which it determined in 2006! However, in 2006 the Tribunal proceeded on the basis of parties’ agreement in that case that the contractual argument could be determined by the Tribunal. That decision is therefore in the position of a decision by an arbiter on a reference by agreement, which enables this requirement, which was not questioned by the applicant, to be satisfied. It is also clear that our decision in 2006 was in foro contentioso, i.e. on a defended rather than an undefended basis. The parties are also the same as previously.

14. The applicant submits that the subject matter was not the same. We do not agree. The subject matter was the applicant’s claim for compensation in respect of the deemed compulsory purchase of his interest as owner of the subjects. The fact that the present application relates only to part of the same subjects cannot alter this: the greater includes the lesser.

15. It is not quite so straightforward to decide whether the media concludendi, or points in issue, were the same. Two claims in respect of the same subject matter may be brought on different grounds, so as to raise different issues for determination by the court or Tribunal, without the second claim being res judicata. We can understand the suggestion that this is the position here, because the applicant is now claiming on a different basis, ‘omitted compensation’ on the basis of subsequently discovered material and in reliance of a different statutory provision.

16. We do not, however, consider that that is the correct way to view this claim. It seems to us that this claim amounts in effect to an attempt to dress up as something different a claim which is really simply another claim for compensation in respect of the value of the applicant’s ownership interest. It raises the same question as was posed in the second application, viz. whether the applicant is, despite the 2000 settlement agreement, entitled to further compensation in respect of that interest. It cannot be disputed that the value of the buildings 1a and 1b was part of the original claim for compensation, just as it was agreed at the last hearing that the claims for extinguishment of business and ‘increase in value’ had been part of the original claim. The actual formulation of the claim to additional compensation has changed, but the legal ground, properly analysed, is the same, viz. entitlement to compensation for loss of the value of the subjects at the relevant date upon compulsory purchase of the applicant’s interest. Further, the basic issue raised, whether the claim is open despite the previous settlement agreement, is in reality the same. That issue was determined in the last application. It therefore appears to the Tribunal that the requirements for the plea of res judicata are satisfied.

17. The applicant, however, claims res noviter. He states, and to an extent vouches, that after making repeated attempts to obtain more information, he finally discovered in 2007 that the respondents had some two years after the settlement of the first application received an insurance settlement of £106,000 in respect of a fire at this building, Nos. 1a and b. On the basis, apparently, of an assumption that this figure would fairly reflect the value of this building, and also on the basis of allocating a lower figure within the 2000 settlement figure to this part of the subjects, the applicant considers that he should be allowed to re-open his compensation claim.

18. Res noviter can have effect where an additional fact, or, possibly, additional evidence, which could not reasonably have been discovered earlier and which is material to the justice of the cause, has emerged. For the purposes of discussing this point, the Tribunal can proceed on the factual basis set out by the applicant and can accordingly accept that he could not reasonably have discovered the information about the insurance settlement before 2007. The Tribunal does not, however, accept that this additional evidence is material to the justice of the cause, for two separate reasons. Firstly, it does not address the issue decided in 2006: it makes no difference to the argument that the 2000 settlement agreement extinguished the applicants’ claim for compensation in respect of his interest in the subjects. Secondly, in any event, the Tribunal does not consider that the applicant has done enough to indicate that the new evidence could demonstrate a different value at the relevant date, apparently 2000. There is no indication of any professional opinion to that effect and there would seem to be some obvious problems in the assumption made by the applicant: there is no indication that the insurance was based on market value and indeed correspondence produced by the applicant suggests otherwise; it does not by any means necessarily follow that a value of a part of the subjects assists in valuing the whole; and the evidence apparently relates to 2002, without any indication of value movements between the relevant date and then. The Tribunal has not of course heard full evidence and submission on these points but considers that if this plea is to be upheld so as to defeat res judicata more would have to be done to set up the materiality of the new information.

19. The plea of res judicata accordingly succeeds and the application should be dismissed for that reason.

20. Time Bar. The Tribunal has not, however, been persuaded that this application is time-barred. Accepted that, contrary to the applicant’s assertion, this is not really a claim based on a Section 117 failure or omission to purchase or pay compensation for an interest in land, it is not clear that the provision relied on by the respondents, Para 36 of Schedule 15 of the Town and Country Planning (Scotland) Act 1997, applies. An accepted blight notice results in a deemed notice to treat. Para 36 does refer to deemed notices to treat, but this is a reference back to Paras 6 to 8, which are based on general vesting declaration procedure. As the applicant points out, Professor Rowan Robinson expresses doubt whether there is a statutory time bar following notice to treat procedure (‘Compulsory Purchase and Compensation’, at 3-16). Not having received full submissions on this matter, the Tribunal is reluctant to express any concluded view on it in this case: on the one hand, some purposive interpretation of a provision might make it possible to decide that there is time bar in such a case; on the other hand, full consideration of the various statutory provisions might support the view that there cannot have been a parliamentary intention to impose such a bar. At all events, the Tribunal is not able to uphold the respondents’ plea on the basis of the submissions made in this case.

21. Jurisdiction. As already mentioned, it seems slightly strange that the respondents, having in 2006 agreed to the Tribunal considering (and indeed answering in their favour) the issue of construction of the 2000 agreement, they should in this application resist that and take a plea to the jurisdiction. However, that is what has happened and the Tribunal considers that the respondents are correct: in the absence of parties’ agreement, the Tribunal to whom a reference of a disputed claim for compensation is made does not have jurisdiction to determine the contractual issue whether the claim has in fact been discharged by prior agreement of the parties. Therefore, if this issue properly arose for decision again – we have held that it does not, because it is res judicata – the Tribunal would be exceeding its jurisdiction if it were to go on to decide it. The applicant’s submission in answer seems to miss the point: the respondents have not agreed to the Tribunal deciding any issues other than the three preliminary issues, including this plea of no jurisdiction, raised.

22. Very often, when such a jurisdiction problem arises in relation to one issue raised in proceedings before the Tribunal, the solution is not to dismiss the application but to sist it so as to enable the issue to be decided in the ordinary court. In this case the applicant has not requested that and in any event the application is being dismissed for another reason.

Decision

23. For the reasons given, the Tribunal dismisses this application.

Expenses

24. The respondents seek an award of expenses. Prima facie, this seems a likely outcome following the Tribunal’s dismissal of the application. However, the applicant has not answered on this point and the Tribunal will allow him a period of 21 days in which to make any submissions in answer to the respondents’ claim for the expenses of this application (but not on any other matter).

25. Finally, we would mention that the applicant has mentioned certain further possible ways of stating a claim for further compensation and has suggested that he wishes to reserve such claims. He should not, however, assume that he is permitted to make such reservations. He should understand that such further claims are likely to meet the same sort of difficulties as this one and he risks liabilities in expenses. Whether there is any other remedy or avenue open to him in the circumstances is not a matter for the Tribunal.