Court of Appeal closes Land Compensation Act loophole
23| 08 | 11
Neil
Stockdale
A recent Court of Appeal decision closes a
Land Compensation Act (1973) loophole which previously made it
difficult for landowners to claim compensation for property
depreciation which was caused by the construction of new public
highways and roads constructed by house building developers.
Land compensation Act claims for
compensation
The Court of Appeal
in the case 'Thomas & Others v. Bridgend County Borough Council
[2011] EWCA Civ 862' was concerned with claims for
compensation under Part 1 of the Land Compensation Act for
depreciation caused by noise and other nuisance from the newly
constructed Hendre Relief Road. Previously certain rules under the
Land Compensation Act (1973) operated unfairly and barred
property depreciation claims for compensation.
Property depreciation resulting from
new highway development
The problem for the
landowner claimants in this case was that the Hendre Relief Road
opened on 9th July 2002 but the highway did not become maintainable
at public expense until 29th June 2006, almost four years
later. Any claims for property depreciation were
therefore effectively barred from proceeding under Section
19(3) of the Land Compensation Act 1973 which states that
claims cannot be made against a highway authority if that highway
does not become maintainable at public expense within three years
of opening.
The road itself had been
constructed pursuant to an agreement between the highway authority
and Redrow Homes, who under the terms of the agreement provided an
indemnity to the highway authority in relation to claims under Part
1 of the Land Compensation Act.
Developer delays in bringing new roads
up to highway authority adoption standards
The delay in the adoption
of the new road and public highway, as being maintainable at public
expense, was as a result of the developer failing to complete
minor works to bring the road up to the required highway authority
council adoption standard.
In this case
the Court of Appeal recoginsed that the developer, Redrow
Homes, clearly stood to benefit from its own delay in bringing
the road up to standard. Such a delay, which resulted in
adoption being beyond three years of the road opening, would
therefore prevent the landowner claimants’ putting in any claims
for compensation for depreciation for which they would otherwise be
liable.
There was no direct evidence
in the case that the delay was motivated by a deliberate intention
to avoid the compensation claims. However, the Court of Appeal
noted that the practical effect of the arrangements was remarkable
given that once the new road was opened there was little commercial
incentive for the developers to hasten progress towards adoption.
Though it appeared that Redrow Homes had good reasons to
delay it until the expiry of the three year period for claims under
Section 19(3).
Breach of landowner convention rights within Land
Compensation Act
The Court of Appeal considered the relevant
statutory background and the claimants’ argument that the provision
was in breach of the claimants’ convention rights under Article 1
(right to peaceful enjoyment of possessions) and Article 6 (the
right to a fair trial). The Court of Appeal rejected the claimants'
submissions in relation to Article 6 but found that the provision
was in breach of Article 1 and ruled that the claimants could
proceed for making a compensation claim.
The Court Of Appeal judge, Lord Justice Carmworth,
described the operation of the provision in the current
circumstances as "truly bizarre". He recognised that
the existing provision as outlined in the Act served to
prejudice the diligent road builder who completed the project on
time but reward the inefficient road builder who would be able to
evade liability altogether.
The Court of Appeal was able to close the loophole
by using powers under Section 3 of the Human Rights Act. Thus,
accepting that these powers were sufficiently wide to enable the
Court to re-interpret Section 19(3) of the Act.
In this case the Court of Appeal fell short of
providing a formal declaration as to the words to be read into the
Section, but indicated that a qualification could be added to the
relevant Section of the Land Compensation Act to provide that,
“claims cannot proceed unless the highways becomes maintainable
within three years, unless under an agreement made by the highway
authority before the relevant date, the highway should reasonably
have become so maintainable within that period".
Future implications for property developers constructing
new highways
This case obviously has significant implications for councils
and developers involved in the construction of public highways and
wider implications in terms of the Court of Appeal's approach to
the rights enshrined in Article 1 and the use of Section 3 of the
Human Rights Act to interpret legislation.