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The issue
The issue
References under s.204 are uncommon and they are not mentioned specifically in the Tribunal’s Rules, including rule 10. Whether the Tribunal has a general power to award costs in such a reference (as opposed to a power to make an order for wasted costs or where a party has behaved unreasonably under rule 10(3)) therefore depends on whether the case falls within one of the categories in rule 10(6).
There is a degree of consensus between the parties that rule 10(6)(b) of the Rules provides a potential means by which the Tribunal could make an award of costs in the circumstances of this case. Rule 10(6)(b) provides that the Tribunal can make an award of costs in proceedings for injurious affection of land.
The meaning of the expression “injurious affection of land”, as used in section 10 of the Compulsory Purchase Act 1965 1965 Act, was considered by the House of Lords in Wildtree Hotels Ltd v Harrow LBC [2001] 2 AC 1. Lord Hoffmann, giving the leading speech, said this at paragraph 2:
‘The term “injuriously affected” connotes “injuria”, that is to say, damage which would have been wrongful but for the protection afforded by the statutory powers. In re Penny and South Eastern Rly Co 1857 7 E & B 660, 669 Lord Campbell said: “unless the particular injury would have been actionable before the company had acquired their statutory powers, it is not an injury for which compensation can be claimed.” In practice this means that a claimant has to show that but for the statute he would have had an action in damages for public or private nuisance.”
Lord Hoffmann continued, at paragraph 4:
“Compensation is payable only for damage to the plaintiff’s land or interest in land.”
In Kent County Council v Union Railways (North) Ltd & Another [2009] EWCA Civ 363 Carmwath LJ said at paragraph 43 that:
‘There is no doubt that in the modern law, as the heading to section 10 suggests, it has been treated as concerned with compensation, not for land taken, but for injury to other land which is adversely affected by the project (see e.g. Wildtree Hotels Ltd v Harrow LBC [2001] 2 AC 1).
The root meaning of “injurious affection” is therefore injury to land which has not been compulsorily acquired but which has nevertheless been adversely affected by works carried out elsewhere. Provision is made for compensation for injurious affection by sections 7 and 10 of the Compulsory Purchase Act 1965.
The respondent notes that by s.204(2), 2016 Act compensation for any breach of a restriction authorised by section 203 (1)(b)(i) is to be calculated on the same basis as compensation payable under sections 7 and 10 of the Compulsory Purchase Act 1965. Section 7 relates to compensation for severance of land, where damage is caused to land which has been retained as a result of the compulsory acquisition of other land belonging to the same owner. It is not directly relevant to this case. Section 10 makes further provision for compensation for injurious affection and provides, at subsection (1), that:
If any person claims compensation in respect of any land, or any interest in land, which has been taken for or injuriously affected by the execution of the works, and for which the acquiring authority have not made satisfaction under the provisions of this Act, or of the special Act, any dispute arising in relation to the compensation shall be referred to and determined by the [Upper Tribunal]
It can be seen therefore that s.204 is concerned with compensation payable in connection with injurious affection. The claimant concludes from this analysis that the compensation payable under section 204, 2016 Act for any interference with a relevant right or interest or breach of a restriction authorised by section 203 is compensation for injurious affection and therefore that in a reference to determine such compensation the Tribunal has power to award costs under rule 10(6)(b).
The claimant submits that compensation under s.204 was previously available under s.237(4) of the Town and Country Planning Act 1990. Its origins can be traced back through s.127 of the Town and Country Planning Act 1971, s.81 of the Town and Country Planning Act 1962, and s.22 of the Town and Country Planning Act 1944. The claimant concludes that although s.204 replaced the previous statutory provision but did not alter its substance and previous case law remains relevant.
The claimant refers to Holliday v Breckland District Council [2012] 3 EGLR 95 which is a decision of the Tribunal in relation to s.237(4) of the Town and Country Planning Act 1990, the predecessor of section 203, 2016 Act.
The claimant notes that in Holliday, costs were awarded in favour of the compensating authority and the claimant asserts that it is therefore implicit that the parties and the Tribunal (Mr George Bartlett QC, President, and Mr Paul R Francis FRICS) accepted that there was a power to award costs. That is no doubt true, but it does not assist in this case. The Tribunal’s current Rules were substantially amended in 2013 and when Holliday was decided the power to award costs was expressed in much more general terms (providing simply that the costs of and incidental to any proceedings shall be in the discretion of the Tribunal).
The claimant describes the Council’s submissions as attempting to draw a difference between proceedings for injurious affection and a claim where compensation is to be based upon the same principles as injurious affection, as “a distinction without a difference”. They say that the provisions under s.204 engage the fundamental right of protection under Art. 8 of the European Convention and this is why compensation is payable because the right is qualified where interference is in accordance with the law and necessary under one of the stated heads. Otherwise, they say, the protection is illusory. The claimant submits that the 2016 Act therefore did not change the underlying purpose of compensation enacted previously under the earlier planning acts.
The claimant also cites the later case of Midtown Ltd v City of London Real Property Company Ltd [2005] EWHC 33 (Ch), it was held by Peter Smith J at paragraph 34 that:
The purpose of the section is to facilitate the proper development of land by providing that easements and any other rights, which might prevent such development, are overridden and extinguished subject to a right of compensation. Under s 237(4) the compensation is assessed as if the rights were compulsorily acquired. Thus, the measure of compensation payable is the diminution in value of the interest affected and not (for example) by reference to a reasonable price that could be extracted for the giving up of the right;
The claimant says that the judgement is clear that compensation is assessed “as if” the rights were compulsorily acquired and concludes that this means that costs are to be awarded in the same way as if the claim was a compulsory acquisition claim. They state that to deny costs as part of such claim would represent a major change in the courts’ approach to compensation where private rights are overridden. This can only be done by Parliament and there is nothing to support the suggestion that the basis of compensation should have altered, including a successful party’s right to its costs. The claimant says that it follows that the Tribunal has the power to award costs in a claim under s.204 and has exercised this power under previous legislation which provided the same remedy.
I find the decision in Midtown more compelling, the reference to:
‘the compensation is assessed as if the rights were compulsorily acquired’
clearly equated the overriding of rights with the loss of value caused by injurious affection resulting from the compulsory acquisition of land. No land of the claimant’s has been taken in this case, so the case is not analogous to a claim for compensation for compulsory purchase to which section 7 of the 1965 Act would apply. The claimant’s case is that his land has been damaged, and its value has been reduced, or to use the antique language of the compensation code and the Tribunal’s Rules, it has been injuriously affected by the creation of the floodlit sports pitches on neighbouring land. To deny a claimant costs in circumstances where compensation is assessed on the same basis as injurious affection, where costs can be awarded, seems to me to be obtuse. That appears to me to equate to the situation that has arisen in this case.