Langley & Ors v Coal Authority [2003] EWCA Civ 204

Case No C3/2002/1110Neutral citation no. [2003] EWCA Civ 204
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE LANDS TRIBUNAL
Venue Royal Courts of JusticeDate Friday 21 February 2003
Strand,
London, WC2A 2LL
Before
LORD JUSTICE PETER GIBSONLORD JUSTICE MANCEMR. JUSTICE HOOPER
Between
LANGLEY AND OTHERSRespondentsTHE COAL AUTHORITYAppellant
(Transcript of the Handed Down Judgment ofSmith Bernal Wordwave Limited, 190 Fleet StreetLondon EC4A 2AGTel No: 020 7421 4040, Fax No: 020 7831 8838Official Shorthand Writers to the Court)
Mr. John Wardell Q.C. (instructed by Messres Kennedys of London) for RespondentsMr. Paul Darling Q.C. (instructed by Messrs DLA of Sheffield) for Appellant
JudgmentAs Approved by the CourtCrown Copyright ©

Peter Gibson L.J.:

[1]This appeal and cross-appeal give rise to some points of construction on the Coal Mining Subsidence Act 1991 (“the 1991 Act”). They arise out of the award by Mr. George Bartlett Q.C., the President of the Lands Tribunal, of compensation to the owners of certain properties in Bolsover which were damaged by a landslip caused by mining subsidence. The Coal Authority (“the Authority”) sought permission to appeal from this court in respect of the award of compensation to the respective owners of 7 properties, nos. 37, 39, 45, 47, 49, 51 and 55 High Street, Bolsover. That application was refused on paper by Carnwath L.J. However on a renewed application to this court (Hale and Carnwath L.JJ.) permission was given on 31 July 2002 on the basis that, as the point raised by the Authority was of general significance, there was a compelling reason for this court to hear the appeal. The Authority agreed to be responsible for the Respondent owners’ costs of the appeal. The owners of another property the subject of the Lands Tribunal’s award, 43 New Station Road, Bolsover, cross-appeal against part of the award made to them, contending that it should have been higher. That cross-appeal is brought with the permission of Carnwath L.J.[2]It is convenient at the outset to refer to the history of the legislation and to the statutory provisions which govern the entitlement to compensation. Legislative history[3]Prior to the enactment of the Coal Act 1938 (“the 1938 Act”) the common law alone governed the relationship between those conducting mining operations and those who owned the land. The owners could sue for damages if the surface land was let down by the withdrawal of support through mining operations, unless the owners had by contract allowed the mine operator to withdraw support; such contracts might provide for compensation in such event to be payable to the owners. The 1938 Act provided for the acquisition or vesting in the Coal Commission of the fee simple in all coal and mines of coal and of rights to withdraw support. Where no such rights had been granted, the Coal Commission acquired the right to withdraw support, subject to an obligation to pay compensation for damage arising from the mining or, with the consent of the owner, to make good that damage.[4]On the nationalisation of the coal industry by the Coal Industry Nationalisation Act 1946, the interests then vested in the Coal Commission were transferred to the National Coal Board. The Coal Mining (Subsidence) Act 1950 set up a scheme to give relief to those whose dwelling houses were affected by damage from mining subsidence by providing for the National Coal Board to have a duty to carry out repairs or pay compensation. That scheme was repeated in more elaborate form in the Coal Mining (Subsidence) Act 1957 (“the 1957 Act”). The 1938 Act was replaced by the Coal Industry Act 1975 (“the 1975 Act”). The National Coal Board was succeeded by the British Coal Corporation. In 1983 a Subsidence Compensation Review Committee was set up to consider the repair and compensation system for coal mining subsidence damage. In its report the Committee recommended that the 1957 and 1975 Acts should be consolidated and extended to ensure greater consistency and that a voluntary code of practice, which enlarged the categories of compensation payable by the Corporation, should be made statutory. The Government accepted the recommendations in 1987 and in consequence the 1991 Act was enacted.[5]Since the enactment of the 1991 Act the British Coal Corporation has been replaced by the Authority under the Coal Industry Act 1994. The 1991 Act[6]S. 1(1) of the 1991 Act defines “subsidence damage” as any damage to land or any buildings, structures or works on, in or over land, caused by the withdrawal of support from land in connection with lawful coal mining operations.[7]S.2 imposes on the Authority a duty to take remedial action:
“(1) Subject to and in accordance with the provisions of this Part, it shall be the duty of the [Authority] to take in respect of subsidence damage to any property remedial action of one or more of the kinds mentioned in subsection (2) below. (2) The kinds of remedial action referred to in subsection (1) above are— (a) the execution of remedial works in accordance with section 7 below; (b) the making of payments in accordance with section 8 or 9 below in respect of the cost of remedial works executed by some other person; and (c) the making of a payment in accordance with section 10 or 11 below in respect of the depreciation in the value of the damaged property.” (a) the execution of remedial works in accordance with section 7 below; (b) the making of payments in accordance with section 8 or 9 below in respect of the cost of remedial works executed by some other person; and (c) the making of a payment in accordance with section 10 or 11 below in respect of the depreciation in the value of the damaged property.”
[8]By s. 3 the Authority does not have to take any remedial action unless the owner of the property has both given notice to the Authority of the damage within the period of 6 years from that owner first having the knowledge required for founding a claim in respect of the damage, and has afforded the Authority reasonable facilities to inspect the property.[9]S. 4 provides what the Authority must do in response to such damage notice: “(1) As soon as reasonably practicable—(a) after receiving a damage notice; …. the [Authority] shall give to the claimant, and to any other person interested, a notice indicating whether or not they agree that they have a remedial obligation in respect of the whole or any part of the damage specified in the damage notice. (2) Where the [Authority] give a notice under subsection (1) above indicating their agreement that they have such an obligation, they shall also give to the claimant, and to any other person interested, a notice— (a) stating the kind or kinds of remedial action available for meeting that obligation and, if more than one, which of them the [Authority] propose to take; and(b) in the case of a notice stating that the [Authority] propose to execute remedial works with respect to any damage, informing the claimant or that person that, if he makes such a request as is mentioned in section 8(3) below, the [Authority] may elect to make a payment in lieu instead of executing the works. (3) Where the [Authority] accede to any such request, they shall give to the claimant and any other person interested a revised notice under subsection (2) above stating that they propose to elect to make a payment in lieu instead of executing the works.” (a) after receiving a damage notice; …. (a) stating the kind or kinds of remedial action available for meeting that obligation and, if more than one, which of them the [Authority] propose to take; and (b) in the case of a notice stating that the [Authority] propose to execute remedial works with respect to any damage, informing the claimant or that person that, if he makes such a request as is mentioned in section 8(3) below, the [Authority] may elect to make a payment in lieu instead of executing the works.[10]By s. 5, subject to (so far as material) s. 11 (3), where the Authority have given such a notice of proposed remedial action with respect to any damage, they are required to meet their remedial obligation by taking the appropriate remedial action in accordance with that notice. S. 5(3) provides that where the Authority have power under s. 8 or s. 10 to elect to make a payment in accordance with that section in respect of any damage and have not exercised that power by stating in the notice of proposed remedial action with respect to that damage that they propose to make such a payment the Authority may exercise that power at any time subsequent to the date of that notice but only with the agreement of the claimant. Thus, if the Authority, when giving the notice of proposed remedial action pursuant to s. 4(2), fail to notify the claimant of their contingent election to make payment, they can only change their mind and elect subsequently with consent.[11]S. 6 requires the Authority to send to the claimant owner a schedule of remedial works at the same time as giving the notice of proposed remedial action (other than a notice stating that the only kind of available remedial action is the making of a payment under (so far as relevant) s. 11(3)). That schedule, by s. 6(2), must specify:
“(a) the works which the [Authority] consider to be remedial works in relation to the damage, that is to say, such works (including works of redecoration) as are necessary in order to make good the damage, so far as it is reasonably practicable to do so, to the reasonable satisfaction of the claimant and any other person interested; and (b) in the case of each item of those works, the amount of the cost which the [Authority] consider it would be reasonable for any person to incur in order to secure that the work is executed.”
The Authority are further required to send with the schedule a notice stating that if the claimant does not agree with the schedule, he should notify the Authority within 28 days, and if such notification is given, the matter can be referred to the Lands Tribunal. The schedule comes into effect if no such notification is given at the end of the 28-day period, and in any other case when the schedule is agreed and determined by the Lands Tribunal.[12]By s. 7, where the Authority are under an obligation to execute remedial works in respect of any damage, the Authority are required to execute the remedial works as soon as reasonably practicable after the date on which a schedule of remedial works first comes into effect in relation to the damage.[13]By the combined effect of s. 8(1), (2) and (3) if the claimant makes a request informing the Authority that the claimant wishes to execute the remedial works in question himself or to have them executed on his behalf by a person specified in the request, the Authority may elect to make a payment instead of executing such works themselves. That payment is of a sum equal to the aggregate amount of the costs specified in relation to those works in the schedule of remedial works. The Authority is not to refuse unreasonably any request, and must make payment pursuant to s. 2(2)(b).[14]S. 10, relating to discretionary depreciation payments, provides (so far as material):
“(1) In any case to which this section applies the [Authority] may elect to make a payment equal to the amount of the depreciation in the value of the damaged property caused by the damage ("the depreciation amount") instead of executing any remedial works or making any payment in lieu. (2) This section applies to the following cases— (a) where the aggregate amount of the costs specified in the schedule of remedial works exceeds the depreciation amount by at least 20 per cent….”
[15]S. 11 relates to certain obligatory depreciation payments. S. 11 (3) provides:
“Where in the case of any property affected by subsidence damage— (a) remedial works have been executed; but (b) there is a depreciation in the value of the property caused by any damage the making good of which to the reasonable satisfaction of the claimant and any other person interested was not reasonably practicable, the [Authority] shall make in respect of the property a payment equal to the amount of that depreciation.”
[16]S. 14 (4) makes Sch. 1 apply for determining(a) the unit of property to be taken into account for any purposes of s. 11, and(b) the amount of any depreciation in the value of any such unit in respect of which a depreciation payment falls to be made.[17]Para. 2 of Sch. 1 provides (so far as material):
“(1) For any purposes of section 10 or 11 of this Act, the value of a unit of property at any time shall be taken to be the amount which it might be expected to realise in the state in which it is at that time on a sale effected at that time. (2) In the case of property comprising land or buildings the sale referred to in sub-paragraph (1) above is a sale of the fee simple in the open market and with vacant possession….”
[18]Para. 3 (1) of Sch. 1 provides:
“For the purposes of section 10 or 11 of this Act the amount of the depreciation in the value of a unit of property caused by any subsidence damage shall be taken to be the amount by which the value of the property at the relevant time is less than what would have been its value at that time (determined in accordance with paragraph 2 above) if it had not been affected by the damage.”
The relevant time for the determination of a depreciation payment under s. 10 is the time immediately after the date on which the Authority give to the claimant a notice of proposed remedial action. In relation to the determination of a s. 11 (3) depreciation payment the relevant time is the time immediately after the completion of the remedial works.[19]There are 4 other sections to which I should refer.[20]S. 18 provides what is to happen if after a damage notice has been given further subsidence damage to the same property occurs. In short, if what is required or permitted to be done under the Act pursuant to the damage notice has not yet been completed, the original and the further damage are treated as one, and there are provisions in the section to make effective the remedies in respect of the combined damage. I add that if damage has been repaired or compensated for and further damage occurs the Act will apply to that further damage as it did in relation to the earlier damage.[21]S. 29 provides for the making of regulations to alleviate cases of hardship suffered as a result of property being blighted by subsidence damage or the possibility of such damage. It contemplates that the action which may be required by the regulations is the purchase of the blighted property at its unblighted value or the payment of an amount equivalent to the difference between the value of any such property and its unblighted value. It is common ground that the regulations which have been made (The Coal Mining Subsidence (Blight and Compensation for Inconvenience During Works) Regulations 1994, S.I. 1994 No. 2564) have no application to the circumstances of any of the claimants in the present case.[22]S. 37 contains provisions to avoid double claims, that is to say proceeding with a damage notice at the same time as a claim for damage or compensation apart from the 1991 Act, but the claimant may elect, subject to subs. (2), which notice or claim he will proceed with for the time being. By subs. (2) where a person proceeds with such a notice or such a claim, he is not to be entitled to proceed with the alternative claim or notice unless it is determined that he is entitled to none of the relief claimed by the original notice or claim or the notice or claim is withdrawn before it is determined.[23]Finally, s. 40 provides:
“(1) Except as otherwise provided by or under this Act, any question arising under this Act shall, in default of agreement, be referred to and determined by the Lands Tribunal. (2) Where in any proceedings under this Act the question arises whether any damage to property is subsidence damage, and it is shown that the nature of the damage and the circumstances are such as to indicate that the damage may be subsidence damage, the onus shall be on the [Authority] to show that the damage is not subsidence damage. (3) The tribunal, court or other person by whom any question is heard and determined under this Act may make such orders as may be necessary to give effect to its or his determinations and in particular may by order— (a) require the [Authority] to carry out any obligations imposed upon them by this Act within such period as the tribunal, court or person may direct; (b) award damages in respect of any failure of the [Authority] to carry out any such obligations.”
The facts[24]I come now to the facts. Bolsover is a former coal-mining town. The older part of the town stands on a limestone escarpment along which the High Street runs. The 7 relevant High Street properties are on the south-west side of the High Street. Three of those properties have a business user of part of them. Beyond the back gardens of the 7 properties the land falls away across an area of open space, known as the Back Hills, to the curtilages of the houses in New Station Road. Three of the houses in New Station Road were the subject of an award by the Lands Tribunal, but we are only concerned with no. 43. I will consider that property after the High Street properties.[25]The Bolsover Colliery mine was sunk in the 1890s and coal was extracted until the 1980s from a number of seams. Many of the properties in the High Street have been the subject of subsidence claims and between 1971 and 1987 among the claims accepted were those in respect of nos. 37, 47, 49 and 55 High Street. A major landslip on the Back Hills occurred in 1936, the land slipping from the top of the escarpment at the rear of the High Street houses down towards the bottom of the slope in New Station Road. The landslip which gave rise to the present claims was similar. It began in the 1980s and further movements in the rear gardens of the High Street houses became widespread in early 1991. Large scale displacement occurred in the summer of 1993. Parts of the rear gardens slowly subsided 3 to 4 metres, taking with them boundary walls and outbuildings. A small cliff face left by the landslip is unsightly and in places dangerous. There is a fissure in the higher ground a few metres back from the face.[26]Except for the owner of 51 High Street all of the High Street claimants served damage notices in 1992. In February or March 1993 the Authority gave notices that they did not agree that they had a remedial obligation. In the case of no. 51 a damage notice was served in November 1994 and rejected in March 1995. Further damage notices were served by the other 6 High Street claimants in April 1995. They too were rejected by the Authority.[27]The claimants gave notices of reference to the Lands Tribunal in January 1996, specifying as the question for determination whether the Authority were in breach of their obligations under s. 2(1) and, if so, what consequential orders should be made under s. 40 (3). His Honour Judge Levy Q.C., sitting as a Member of the Lands Tribunal, in January 1999 determined that physical displacement of the garden land in the landslip was subsidence damage. That left, as the President found, four questions to be determined. (1) What, if any, of the damage to the buildings referred to in the claimants’ damage notices was subsidence damage?(2) What, if any, obligations under the 1991 Act had the Authority failed to carry out?(3) What, if any, obligations under the 1991 Act should the Authority be ordered to carry out?(4) Should damages be awarded? If so, how much?[28]On 13 July 2000 the Authority wrote to each claimant, giving notification pursuant to s. 4 (2) of the kinds of remedial action available for meeting the Authority’s remedial obligation. They sent a costed schedule of remedial works and gave notice that they proposed to make a payment in accordance with s. 10 in respect of the depreciation in value of the damaged property. An issue in dispute is whether the Authority were too late to make such an election. The President’s decision The 7 High Street properties

The 7 High Street properties

[29]At the hearing before the President the High Street claimants claimed that the Authority should be required in each case to make a payment equal to the diminution in value of the property. Such an award, it was submitted, should be made as one of damages under s. 40 (3), but could also be made under s. 10. The measure of the diminution in value was said to be the difference as at the valuation date between the value of the property at that date and the value which it would have had if the landslip had not occurred. The Authority maintained the stance taken in their letters of 13 July 2000, that in each case they should make a depreciation payment only, since the cost of repairs would exceed the depreciation amount by more than 20%. The wide difference between the principal stances taken by the parties was set out by the President in Table 1 in para. 23: Table 1: Claims and offers High Street number 1 Claim (depreciation) £ 2 Coal Authority offer (depreciation) £ 3 Coal Authority cost of repairs £ 37 125,000 3,000 21,437 39 100,000 6,800 20,458 45 27,500 1,000 18,008 47 110,000 29,000 63,161 49 90,000 2,200 36,944 51 67,500 100 11,823 55 160,000 400 26,017[30]The High Street claimants sought an alternative order if they were wrong in their principal stance. In its final form the alternative claim contained these elements:(1) in respect of damage to dwelling-houses the Authority should pay the cost of remedial works;(2) in respect of damage to land the Authority should carry out a regrading scheme (or, in the case of no. 55, the Authority should insert soil nails) to prevent further ravelling of the face of the cliff;(3) the Authority should also make a depreciation payment under s. 11 (3) to each owner in respect of the residual depreciation in value of the property from damage which it was not reasonably practicable to make good. The reason for that third element was because it was acknowledged that the regrading would not restore the garden level to its previous position but would leave a steeper slope.

The President received written and oral evidence from a number of experts and witnesses.

[32]The President considered first what remedial works to the land were needed and their costs. The work would involve a scheme of regrading of the land so that a 30 degrees slope was achieved. The greenhouses at no. 39 would be removed and outbuildings at three other properties would be demolished. For no. 55, instead of regrading, soil nails would be inserted. The costs were agreed, subject to one correction made by the President, and the corrected figures (excluding the removal of greenhouses and outbuildings) are shown in the following table in para. 46: Table 2: Agreed costs of remedial works to land High Street number Cost of works £ 37 21,437 39 13,958 45 12,008 47 30,595 49 27,994 51 11,823 55 12,500 To these costs were later added further costs and fees and the costs of the removal of greenhouses and outbuildings, all of which were taken into the total costs to which I refer in the table in para. 34 below.[33]The President then turned to remedial works to buildings. He held in answer to the first of the four questions identified in para. 27 that all the damage which had been identified by the Claimants’ structural engineer, Mr. Cowen, was caused by mining subsidence. The President adopted the figures of another expert for the Claimants, Mr. Rathbone, for repair costs as maximum costs for making good that damage, but as neither the detail of the works nor their cost was agreed, he directed that schedules should be prepared.[34]The President then gave the following summary (taken from Table 3 in para. 61) of the costs of making good the damage to the land and buildings of the High Street properties in the light of his conclusions: Table 3: Costs Summary High Street number 9 Total costs £ 37 43,446 39 39,551 45 43,058 47 86,577 49 57,008 51 25,291 55 38,205 Much of the material which went into that table had been agreed by the experts.[35]Next the President considered depreciation in the light of the evidence of the rival surveyors, Mr. Fisher for the Claimants and Mr. Trussell for the Authority. A difficulty which arose was that the assumptions on which the experts gave their values differed. Mr. Fisher gave evidence of the open market value of each property as at January 2001, first, on the basis that the landslip had not occurred and, second, taking into account all the circumstances existing at that time. The latter “in present circumstances” value reflected the fact that further erosion appeared inevitable, that a surveyor acting for a purchaser would advise against a purchase unless an unqualified assurance as to the long term stability of the ground were given by an engineer, and that the purchaser would be unable to obtain full insurance cover and mortgage finance. In his opinion the properties were virtually unsaleable in the normal market and would only be bought by investors and speculators who would let the properties. His “in present circumstances” valuations were derived from a capitalisation of the obtainable rents. If insurance cover and a mortgage were available, he said that “a residual blighting effect” from the landslip would remain and would be reflected in a 20% reduction from the valuation of the properties on the basis that no landslip had occurred. Mr. Fisher drew attention to the fact that council tax bandings of the High Street houses had been reduced and that values had been depreciated over a fairly wide area near the landslip, though values of houses in roads where there had been no ground movement were recovering.[36]Mr. Trussell in reports dated 6 July 2000 valued the properties on two bases: first disregarding all effects of mining subsidence and secondly taking account of such subsidence, but treating the only defects caused by the subsidence as being loss of part of the land, and of the greenhouses and outbuildings at those properties where they were situated. Mr. Fisher in cross-examination pointed out that Mr. Trussell had made his valuations on a different basis, viz. on the footing that the Authority would be responsible for damage arising from any further movement and the market would make no allowance for the possibility of such further movement. Each of Mr. Fisher and Mr. Trussell then produced further reports with values on the same alternative assumptions.[37]Before going to what that further evidence showed, I should record what the President at this point held. He accepted Mr. Fisher’s “in present circumstances” valuation of the High Street properties, noting that the Authority chose not to call any evidence to gainsay it. The Authority called no valuation evidence, and Mr. Fisher’s valuations of the properties on the basis that no landslip had occurred were agreed.

The President however continued in para. 71:

“What I cannot accept, however, is that the amount of the depreciation in the values of these properties for the purposes of the 1991 Act is to be measured by deducting these “in present circumstances” values from the agreed “without the landslip” values. Under para. 3(1) of Schedule 1 the amount of the depreciation is the amount by which the value of the property is less than what would have been its value if it had not been affected by the damage. What has to be left out of account in making this comparison is not the effect on value of the landslip but the effect on value of the damage to the particular property under consideration. The measure of depreciation is the effect that the damage suffered by the property had in terms of the value of the property.”
Something has gone wrong in the third sentence of that paragraph, but the conclusion in the final sentence is clear.

The President continued:

“72. The landslip covered a substantial area of the Back Hills as well as properties in High Street and New Station Road, a number of which had to be demolished. The evidence is that this affected house prices in Bolsover over quite a wide area, and that many houses, physically unaffected in any way by the landslip, had their council tax bandings reduced in recognition of this. The reason for these falls in value was that the landslip created in the minds of prospective purchasers the fear that the houses might be damaged by some similar occurrence in the future. This is the effect that has been referred to as blight. 73. What the valuer has to do in determining the amount of depreciation under the Act in the present case, in my judgment, is to disregard this general blighting effect that the landslip has had and to decide how much less the property is worth in its damaged state than it would have been worth undamaged. If, undamaged, it would have been worth less by reason of this general blighting effect, that reduced value is its undamaged value for the purposes of the Act. The amount of depreciation is the difference between this value and the actual value of the property in its undamaged state. 74. If the effect of the damage to the property is to create in the minds of prospective purchasers, their advisers and insurers and mortgages, the fear that further damage might be suffered in future, I see no reason, either on the basis of the wording of the Act or in the light of its purposes, why this should not be taken into account if it is a factor that in practice diminishes the value of the property. I therefore dismiss the approach adopted by the Authority, who say that the fear of future damage must always be entirely discounted in measuring depreciation. In the case of each of the High Street properties I am satisfied that the damage to the land, which has left what Mr. Fisher calls a cliff face with a fissure across the remaining higher ground, has substantially reduced the value of the property. This is due not only to the unsightliness and the hazards that have resulted and the loss of usable land, but, more significantly, to the doubts that the damage creates in the mind of prospective purchasers and their advisers as to the future stability of the land on which the house stands. I am satisfied that the removal of the visible outward signs of damage will substantially remove the reduction in value that has occurred. This is a matter that I return to later.”
[40]It is clear from those paragraphs that the President has held that the “general blighting effect” has to be disregarded when determining the amount by which property has depreciated. What is in issue on this appeal is whether the President has taken into account some particular blighting effect on the particular properties and whether that invalidates his conclusions.[41]I return to the further reports of Mr. Fisher and Mr. Trussell on depreciation. Mr. Fisher, to conform with what he considered to be the highly artificial assumptions made by Mr. Trussell, produced two sets of depreciation figures. The first assumed that the escarpment was stable and that regrading and demolition works had not been and did not have to be carried out. The second assumed that the escarpment was stable and that regrading and demolition works had been carried out or, in the case of no. 55, that soil nails had been inserted. Mr. Trussell produced a further set of figures, setting out the residual depreciation, assuming that remedial works had been carried out by the Authority, and that no further movement would be experienced. The results were shown in the following Table in para. 76: 42. Table 6: Depreciation arising from damage to land In existing state After re-grading High Street number Mr. Fisher £ Mr. Trussell £ Mr. Fisher £ Mr. Trussell £ 37 16,000 3,000 16,500 Nil 39 11,750 7,200 10,000 11,500 45 4,350 1,000 2,750 350 47 27,500 29,000 32,000 27,500 49 8,750 2,200 5,500 350 51 4,250 100 1,500 Nil 55 5,000 400 2,000 400[42]The President found it surprising that both valuers should take the view that the depreciation in the value of the property in its existing state was similar to the depreciation in value that there would be after the remedial works had been carried out. He said that the crumbling face of the cliff was unsightly and dangerous and he could not believe that a purchaser would pay the same or almost the same as he would if the land had been regraded to remove the unsightliness and danger. He accepted Mr. Fisher’s “in existing state” valuation as not overestimating at all the present damage to the properties, but after regrading the reduction in value, in his view, would be significantly less.[43]The President then in para. 79 indicated the different approach he proposed to take. In the cases of the four purely domestic properties he took a percentage reduction in the undamaged value of the property, less 20% for blight, and he gave his assessment of what was appropriate in each case. In the case of the properties with some commercial user, he applied a reduction of a different percentage, having regard to the features of those properties. The resultant figures are shown in column 5 of the table in para. 44 below. He said in para. 81 that once the visual effect of the landslip was removed, there would be no greater inhibition to mortgaging or insuring the properties than for those other properties nearby in Bolsover which were blighted although undamaged. He saw no reason why, like those other properties, the damaged properties should not recover their value subject to the residual depreciation arising from the fact that the land would not have been restored to its original level. He repeated his acceptance of Mr. Fisher’s evidence of a 20% reduction in value for the general blighting effect.[44]The President expressed his conclusions in Table 7 in para. 82: 46. Table 7: Values as determined High Street number 1 Unblighted undamaged value £ 2 Blighted undamaged value £ 3 Damaged value £ 4 Depreciation amount £ 5 Section 11(3)(b) depreciation 37 175,000 140,000 50,000 90,000 4,200 39 145,000 121,800 45,000 76,800 6,000 45 42,500 34,000 15,000 19,000 2,750 47 145,000 116,000 35,000 81,000 23,500 49 130,000 104,000 40,000 64,000 3,500 51 97,500 78,000 30,000 48,000 750 55 225,000 174,400 65,000 109,400 2,000[45]Column 1 contained the value of each property undamaged and unaffected by the blighting effect of the landslip. Column 2 showed the value that each property would have if all the damage was remedied, but subject to the 20% reduction for blight. Column 3 was Mr. Fisher’s “in existing circumstances” values. Column 4 was the difference between columns 2 and 3 and represented what President found to be the depreciation amount for the purposes of s. 10. Column 5 represented the residual depreciation payment to be made under s. 11(3)(b).[46]The President then turned to the remedies to be granted under s. 40 (3). He noted that the 1991 Act conferred on the Authority rights of election. He rejected the claimants’ argument that the Authority could be ordered to elect to make a payment under s. 10 and noted that there was no evidence that had the Authority accepted that the damage found by the President to be subsidence damage was subsidence damage, they would have made a s. 10 payment. The President referred to the letters dated 13 July 2000 by which the Authority had purported to elect under s. 10 to make a depreciation payment in an amount assessed by Mr. Trussell, but said that under the decision of this court in McAreavey v Coal Authority (2000) 80 P&CR 41 the Authority lost the right to elect if it was not exercised as soon as reasonably practicable after receiving the damage notice, and that on any footing to elect in July 2001 was far too late and the election was on the basis of depreciation payments that were far too small.

The President said in para. 80:

“It would, in my judgment, be open to the Tribunal to make an award of damages in the depreciation amount but only when that amount truly represented what the claimant had lost through the Authority’s failure to carry out their obligations under the Act.”
He said that if the Authority had carried out the works to regrade the land, to the extent that there was depreciation caused by the fact that the land was not restored but was only regraded, a payment equal to the amount of the residual depreciation would have fallen to be made under s. 11 (3) and that if he ordered the Authority to carry out the regrading works, it would be appropriate also to order the payment of that amount by way of an award of damages.[48]The President rejected the claimants’ argument that damages in the amount of the total depreciation should be awarded to compensate them for distress and inconvenience. He also rejected a further argument based on the Human Rights Act 1998 that the claimants should be paid by way of damages the difference in the values of their properties before and after the landslip including any blighting effect of the landslip even though it might not be attributable to the damage suffered by the property. He said that the 1991 Act provided a system of remedies for damage caused by mining subsidence that is not unfair and added (in para. 92):
“Neither the Act itself nor regulations made under section 29 provide for the payment of compensation for blight (although under section 29 (2)(b) regulations could make such provision), and I do not find it possible so to construe the provisions as enabling this Tribunal to make an award that reflects depreciation due to blight.”
[49]The President in para. 93 referred to the right of the Authority to make a depreciation payment under s. 10 when the costs specified in the schedule of remedial works exceeds the depreciation amount by at least 20 per cent. He said that it was clearly relevant to the order which he should make to consider whether the relationship between remedial costs and the depreciation amount exists. He therefore compared the depreciation (taken from column 4 of Table 7) plus 20% with the costs (taken from Table 3) in Table 8, para. 93: 52. Table 8: Section 10(2)(a) comparison High Street number 1 Depreciation + 20% £ 2 Total costs £ 37 108,000 43,446 39 92,160 39,551 45 22,800 43,058 47 97,200 86,577 49 76,800 57,008 51 57,600 25,291 55 131,128 38,205[50]This shows that save for no. 45, the figures in column 2 are below those in column 1. The President said that in those 6 cases the Authority could not resist making payments in lieu if requested to do so by the claimants, and the right order was that the Authority should make a payment in lieu in respect of the damage to the buildings when the works were carried out. In respect of damage to the land, the claimants did not ask to carry out the regrading works themselves, and he thought it appropriate that the regrading should be carried out by the Authority as a single operation. In the result in respect of each of the 6 properties he ordered the Authority to carry out the regrading, and, in the case of no. 55, to insert land nails, to make a payment in lieu for the remedial works to buildings, and to pay damages to reflect the residual depreciation as shown in column 5 of Table 7. As for no. 45 he said that as the costs of the remedial works were greater than the depreciation plus 20%, he would order the Authority to pay damages in the depreciation amount of £19,000 (as shown in column 4 of Table 7), but he expressed the hope that the Authority would choose to treat no. 45 on the same basis as the other properties by carrying out the remedial works to the land. We are told that the Authority have agreed to do that. 43 New Station Road[51]Owners of three properties in New Station Road were also claimants. Of these I need only refer on this appeal to Mr. and Mrs. Cordery as the owners of 43 New Station Road with its ¾ of an acre of land. They had built a bungalow there in 1959 and in the following years had landscaped, terraced (with 9 retaining walls) and planted the garden, which had a garden shed, summer house and pond, stone paths and steps, a rockery, a rose garden, lawns and shrubs and trees. The garden was effectively destroyed by the landslip. On 21 November 1994 they served a damage notice. On 24 March 1995 that was rejected. A reference was made to the Lands Tribunal. In 1998 Mr. and Mrs. Cordery had the garden restored and claimed £71,633.53 as the amount spent on restoring it. The Authority said that that was out of all proportion to the value of the house and they submitted that £10,000 should be awarded as representing what was reasonable.[52]There was no valuation evidence relating to this property. Mr. Cordery, though not a valuer, had in cross-examination expressed the view that the property was worth £100,000. There was no evidence as to the depreciation amount. The figure of £10,000 was suggested by Mr. Darling Q.C. for the Authority as reasonable costs of remedial works. The President inferred from the Authority’s stance that if the cost of the remedial works had been £10,000, they would not have sought to exercise any right of election. Mr. Cordery did not consider the value of the property in relation to the remedial works, and the President inferred that he spent £60,000 in restoring the garden of a house worth £100,000 only because his insurers provided the money to do so. The President had no doubt that the damage to the garden needed to be made good to some extent if the value of the house was not to be diminished. But he said that it was not reasonable to go for this purpose beyond the removal of the damaged walls, buildings and paths, regrading the land and grassing it. He found the contractor’s schedule of works contained items covering those reasonable works amounting to a little under £10,000 and he awarded £10,000 accordingly. The Authority’s appeal[53]Mr. Darling challenges two points, and only those points, on the President’s decision on the 7 High Street properties:(1) the President’s approach to assessing depreciation and in particular his approach to the effect on value of the risk of future damage as opposed to damage that has already occurred;(2) the President’s decision that the Authority’s right to elect to make a depreciation payment was lost when they rejected the damage notice.[54]Mr. Wardell Q.C. for the claimants supported the President’s conclusions on the figures for depreciation. If those conclusions were wrong, he renewed the argument which he had advanced to the President on Article 1 of the First Protocol to the European Convention on Human Rights. Mr. Wardell supported the President’s decision on the second point.[55]It was the premise of Mr. Darling’s submission on depreciation that the 1991 Act does not allow an award that reflects depreciation due to blight. That, he said, was apparent from s. 29 and other provisions of the 1991 Act which make clear that the scheme is to compensate claimants for the cost of damage which has already occurred. It was also the position at common law: when a surface owner seeks damages for subsidence owing to the working of minerals under or adjoining his property, the depreciation in the value of the property attributable to the risk of future damage must be left out of account (West Leigh Colliery v Tunnicliffe [1908] AC 27). It is unnecessary to labour the point because Mr. Wardell did not argue that blight should be taken into account.[56]The main issue was whether the President was drawing a distinction between a general blighting effect, which he estimated at 20% in the light of Mr. Fisher’s evidence and which must be disregarded, and a particular blighting effect which could be and was taken into account. Mr. Darling pointed in particular to the President’s remarks in para. 74 which I have cited in para. 39 above. There, Mr. Darling said, the President has accepted that some blighting effect can be taken into account. He submitted that the President ought to have used, for the purposes of comparison with the cost of remedial works, the depreciation amounts calculated on the basis that blight was not to be taken into account at all. He said that the President accepted Mr. Fisher’s depreciation figures in Table 6 put forward on the assumption that the escarpment was stable and that regrading and demolition works had not been and did not have to be carried out. Those, he said, were on the correct basis for valuing the depreciation. He argued that if the President were right, depreciation was allowed to be increased by blight when not all the damage is remedied by the remedial works. He pointed to the surprising fact that, on the President’s figures and taking no. 37 as an example the depreciation was found to be £90,000, even though the costs of remedial works totalled £43,446 and s. 11(3)(b) depreciation was £4,200. The difference, he suggested, was due to the fact that blight was taken into account.[57]Mr. Wardell submitted that the President did in fact accept the Authority’s submissions with regard to blight. He told us that no distinction had been drawn by experts or counsel between general and particular blight. The evidence had been directed to the value of the claimants’ properties. He submitted that what the President in para. 74 was considering was the impact that the damage to the property would have had on the minds of prospective purchasers, their advisers, insurers and mortgagees. He said that Mr. Fisher’s valuations were entirely in accord with the requirements of paras. 2 and 3 of Schedule 1. He stressed that the valuation figures produced by Mr. Fisher for the properties “in existing circumstances” were accepted by the President in the absence of valuation figures from the Authority. As for Table 6, he pointed to the artificiality of the assumptions which were only made by Mr. Fisher reluctantly and then only so that the President had figures from the rival experts on comparable bases. Further, the President had chosen to make little use of Table 6, and had preferred his own methodology explained in paras. 79 and 80.[58]I own to being troubled by the way the President has expressed himself in para. 74 and by the apparent contrast with the “general blighting effect” in para. 73. However, reading the decision as a whole, including his unequivocal rejection in para. 92 of making an award reflecting depreciation due to blight, I am not persuaded that in reaching his conclusions the President fell into the error of which he is accused by Mr. Darling. The President had three firm sets of figures from Mr. Fisher: his values of the properties without the landslip, his figures of the properties “in present circumstances” and his figure for blight. The first set of figures were not disputed. His figures for “in present circumstances” were only challenged on one point and that challenge was dismissed, and no evidence to the contrary was called. When in para. 71 the President rejected as the amount of depreciation the simple deduction of the values of the properties “in present circumstances” from the values of the particular properties without the landslip, he did so because the measure of depreciation was the effect that the damage suffered by each property had in terms of the value of that property. He accepted Mr. Fisher’s evidence of a 20% reduction in value for the temporary blighting effect even though full insurance cover and a mortgage were available. There was no evidence, as I understand it, that a larger or any other deduction should be attributed to blight. In those circumstances the President, in reaching his conclusions, was entitled to accept the figures given by Mr. Fisher. Para. 74 seems to me to be an attempt to explain why, even after leaving blight out of account, the appearance of the property in its damaged and dangerous state would be bound to have a strongly adverse effect on the minds of a purchaser and his advisers. But even if the President went too far in that paragraph, in referring to fear of future damage as a factor to be taken into account (though he says the effect would be removed substantially by the remedial works), the depreciation amounts in column 4 of Table 7 remain unimpugned, as do the figures for depreciation under s. 11 (3)(b), based as they were on the President’s own methodology.[59]I would therefore dismiss the Authority’s first ground of appeal. It follows that it is unnecessary to consider either Mr. Wardell’s bold attempt to obtain assistance from the Convention or Mr. Darling’s second ground of appeal, by which he seeks to distinguish the majority decision in McAreavey, and I say nothing on either point. Mr. and Mrs. Cordery’s appeal[60]Mr. and Mrs. Cordery submit through Mr. Wardell that the fundamental error made by the President was that he introduced a gloss on the extent of the repairing obligations owed by the Authority in that he held that the reasonable cost of repairs should be assessed by reference to the Coal Authority’s right of election under s. 10 and therefore the diminution in the value of the property. There was no election by the Authority and accordingly, Mr. Wardell argues, the obligation of the Authority under s. 6(2) was to do such works as are necessary in order to make good the damage, so far as it is reasonably practicable to do so, to the reasonable satisfaction of the owners, the amount of the cost of each item of these works being the amount which the Authority considers it would be reasonable for any person to incur in order to secure that the work is executed. Mr. Wardell accepts that in considering reasonable practicability, cost is not irrelevant, but he submits that it was plainly reasonable for Mr. and Mrs. Cordery to reinstate what had taken over 30 years to build and that it was not unreasonable to do more than merely remove damaged walls and structures and regrade and grass the land.[61]Mr. Darling’s response was to remind this court that appeals from the Lands Tribunal are on points of law. He said that the President had made findings of fact as to what was reasonable and made no error of law. He drew our attention to Edwards v National Coal Board [1949] 1 KB 705 on the meaning of “reasonably practicable”. There, in the context of a statutory defence to breach of statutory duty when it could be shown that it was not reasonably practicable to avoid a breach, this court held that the risk of accident had to be weighed against the measures necessary to eliminate the risk and that the cost of taking the measures was a factor to be taken into account.[62]I agree with Mr. Wardell. In my judgment, the President erred in law in his approach. In a case such as this where there has been no election by the Authority, their duty to execute remedial works remains and is not affected by the amount of the costs which would have had to be taken into account if there were to be a right of election. Nothing in the Act requires or justifies the imposition of a limit on the duty to repair by reference to the diminution in value of the property. Even the right of election, were it applicable, is conditional on the costs exceeding depreciation by 20%; but in any event that is irrelevant to the present case. The test of reasonable practicability looks primarily to whether the works are feasible. I accept that cost does fall to be taken into account in considering whether the works are reasonably practicable but only to the extent that making good the damage should not be done in some extravagant way. The owners were entitled to have the damage to the garden as it was before the subsidence made good to their reasonable satisfaction and I can see no reason why they should not be entitled to see the terraces and other features of their garden restored. In Ruxley Electronics Ltd. v Forsyth [1996] AC 344 it was said by Lord Lloyd at pp. 370-1 that an estate owner who contracts for a folly to be built is entitled to claim for defective workmanship even if the folly reduces the value of the estate, provided that the cost of reinstatement is not unreasonable. Similarly in this case Mr. and Mrs. Cordery were entitled to have their garden restored to their reasonable satisfaction. No argument has been presented to us that the cost of reinstatement was unreasonable other than by reference to the value of the property.[63]I would add that the material relied on by the President for arriving at his award seems to me, with all respect to him, unsatisfactory. If the Authority wished to challenge the amount claimed by Mr. and Mrs. Cordery on grounds dependent on facts such as the value of the property, they should have adduced such facts including a proper valuation of the property.[64]For these reasons I would allow the appeal of Mr. and Mrs. Cordery.

Lord Justice Mance:

[65]I agree with Peter Gibson LJ in the result and in his reasoning on Mr and Mrs Cordery’s cross-appeal. But I set out briefly my reasons for reaching the same result on the main appeal as he does by a different route.[66]S.10 of the Coal Mining Subsidence Act 1991 provided for the Authority to have, in certain circumstances, a right to elect to make payment equal to the amount of the depreciation “caused by the damage” (the “depreciation amount”) instead of executing any remedial works or making any payment in lieu. Where remedial works have been executed, but the making good of all damage is not “reasonably practicable” then s.11(3)(b) also provides for a payment of an amount equal to the amount of any depreciation in the value of the property “caused by the damage”. In Schedule 1, paragraph 3 provides that the amount of the depreciation shall be taken to be the amount by which the value of the property at the relevant time (defined for present purposes as immediately after the Authority gives a notice of proposed remedial action with respect to the damage) is less than would have been its value (determined in accordance with paragraph 2) if it had not been affected by the damage. Paragraph 2 provides that the value of a unit of property at any time shall be taken to be the amount which it might be expected to realise in the state in which it is at that time on a sale effected at that time.[67]Section 10 became material in this case, because, although the President found that there was no valid election (following McAreavey v. Coal Authority (2000) 80 P & CR 41), he determined that it would be open to him nevertheless “to make an award of damages in the depreciation amount but only where that amount truly represented what the claimant had lost through the Authority’s failure to carry out their obligations under the Act” (paragraph 90). In other words, if the Authority could and would, if it had performed, have made an election, that could be taken into account.[68]Under the provisions set out in paragraph 66, the President was correct to eliminate from his blighted undamaged values (Table 7 col. 2) the 20% element of “general” blight that affected undamaged properties in the neighbourhood, because of any buyer’s appreciation of the risk of a future landslip. That blight was not caused by damage, but by the apprehension of future damage. In referring to “undamaged” properties, I think that one must also include properties which have been damaged and repaired. In the present case, the President held that, once repairs had been undertaken, the blighted undamaged value that any undamaged property in the neighbourhood would have had would be at least substantially restored (paragraph 74). The scheme of the Act involves, first of all, the doing of remedial works, and if full remedial works can be and are undertaken, there is no further right thereafter to further compensation because the fact of past repaired damage would worry purchasers and reduce a property’s market value.[69]The other half of the comparison required by s.10 and Schedule 1 paragraph 3 involves ascertaining “the value of the property” immediately after the Authority gives a notice of remedial works at the relevant time”. As I read the President’s award, the figures in Table 7 cols. 3 and 4 (which the President accepted) take into account “not only …. the unsightliness and the hazards that have resulted and the loss of usable land, but, more significantly, …. the doubts that the damage creates in the minds of prospective purchasers and their advisers as to the future stability of the land on which the house stands” (paragraph 74). Indeed, the “more significant” factor of doubts created in purchasers’ minds is the only sensible explanation of the difference between, on the one hand, the depreciation amounts in Table 7 col. 4 and, on the other, the totals of repair costs (Table 3 col. 9 or Table 8 col. 2) plus residual depreciation under s.11(3)(b) (Table 7 col. 5).[70]To take the example of No. 37 High Street, the President accepted total depreciation of £90,000, whereas repair costs (£43,446) plus residual depreciation (£4,200) would only have totalled £47,646. After repairs and re-grading, the President was however “satisfied that the removal of the outward signs of damage will substantially remove the reduction in value that has occurred”. In other words the expenditure of £43,446 would have reduced the diminution in value from £90,000 to around £4,200. The “more significant” factor of purchasers’ doubts (or “special” blight as it was called before us) would have gone.[71]Mr Darling submits that the President should, when assessing the value of any property as damaged, have left out of account any reduction in value attributable to the “more significant” factor of special blight. In other words, he should have taken a higher damaged value than he would have done if special blight was a potentially compensatable element of loss. Mr Darling points out that any future damage would itself give rise to a claim for compensation under the Act. So, he submits, that it would lead potentially to double recovery to take special blight into account here.[72]I would reserve my position on the relevance of special blight. Mr Darling was able to argue, at first sight attractively, that the statute should be read as reflecting the common law approach established in West Leigh Collery Co. Ltd. v. Tunnicliffe & Hampson, Ltd. [1908] AC 27. But I note that the issue there was whether a surface owner could recover both the cost of repairs necessary due to subsidence and the depreciation that his property had suffered attributable to the risk of future subsidence. Since repairs were contemplated, such depreciation would appear to have included, and quite possibly to have consisted mainly or exclusively of, what has in this case been called general blight. Here, in contrast, we are concerned only with special blight in circumstances where the statute only contemplates an award of depreciation as an alternative to repairs of either the whole or part of the damage.[73]In these circumstances, I shall do no more than identify two possible difficulties about Mr Darling’s submission, which would merit further consideration in a case where the point is critical. First, it would seem a difficult task when assessing the market value of a still damaged property for the purposes of s.10 or indeed s.11(3)(b) to eliminate from consideration some of the effects of such damage on a potential purchaser’s mind. It is a different and more conventional task to assess the market value of an undamaged property after a landslip affecting neighbouring properties.[74]Second, I am not entirely certain that it would be fair to eliminate such effects from consideration in the context of s.10 or s.11(3)(b). S.10 constitutes an alternative type of remedial action which the Authority may elect to take if the cost of remedial works exceeds the depreciation by 20%. If it does so elect, then a householder does not get his or her house repaired. Instead, they get depreciation, which is by definition (if an election has been possible) insufficient to repair the house and so quite possibly (as in this case, on the President’s findings) insufficient to remove the “more significant” part of the house’s loss of value in its damaged state. However, if they decide to move or to sell their house in its undamaged state, they will only get sufficient to buy an equivalent undamaged property if any reduction in value due to special blight has been included in the depreciation amount. In this context, it is of interest to note the provisions of s.10 requiring the Authority to make a depreciation payment where the damage leads to a notice to treat for compulsory purchase or a demolition or closing order. The depreciation payment would not then enable the householder to move to an equivalent undamaged house, unless it could take into account any reduction in damaged value due to special blight. Likewise, s.11(3)(b) compensates householders for residual loss deriving from unrepaired damage, and it might be said that, if special blight is eliminated, they will not receive sufficient to enable them to acquire an equivalent undamaged house. I express no concluded views on these matters however.[75]Even if the President ought to have excluded from consideration the “special” blight, this does not seem to me to enable the appellant Authority to succeed in this case. The way in which the evidence developed, particularly on the Authority’s side, was far from satisfactory. The Authority has to show that remedial costs would have exceeded the depreciation amount by at least 20%. Its case is that Mr Fisher’s “In existing state” figures in Table 6 can be taken as the depreciation amount. These are of course far less than the remedial costs found in Table 3 col. 9 and Table 8 col.2. But they are also based on assumptions, as the President made clear in paragraph 75, in particular “that the escarpment was stable and that re-grading and demolition works had not been and did not have to be carried out”. Mr Fisher stated in his relevant supplementary report that he considered the figures that he was being asked to produce “to be highly artificial, especially those” now given under the head “In existing state” in Table 6.[76]The crumbling cliff face, with fissured ground above it, was positively dangerous. An assumption that no works were required was unrealistic. It is impossible to conclude, as Mr Darling invited us to, that all a householder or purchaser would have had to do is put up a fence and keep well away. Nor does there appear to have been before the President any evidence that it might have been possible to undertake any lesser or less costly remedial works those reflected in Table 3 col. 9 and Table 8 col.2. On this basis, any depreciation amount would have on the face of it to take into account not merely Mr Fisher’s “highly artificial” figures for “In existing state” in Table 6, but also the cost of remedial works. The depreciation amount would thus, by definition, exceed the cost of remedial works, and there would be no possibility of the cost of remedial works exceeding the depreciation amount by 20%. Mr

Justice Hooper:

[77]I agree with Peter Gibson L.J. in the result and in his reasoning on Mr and Mrs Cordery’s cross appeal.[78]I would also dismiss the Authority’s appeal. Whether one approaches the figures in the manner adopted by Peter Gibson LJ in paragraph 58 of his judgment or by Mance LJ in paragraph 74 of his, the appeal does not succeed.[79]I also share the doubts expressed by Mance LJ in paragraphs 72 and 73 of his judgment about the position of what was called in argument “special blight”. The figures in this case show the potential unfairness if the Authority’s approach is right. I take no. 37, owned by Mr and Mrs Aston as an example. The property on the President’s findings had a value of £175,000 before the landslip. The blight caused by the landslip reduced the value to £140,000, a reduction of 20%, so the President found (table 7, page 51). If the remedial obligation upon the Authority were to carry out the works, the Authority would have to bear the cost of the remedial works in the sum of £43,446. The Authority would also have to pay £4,200 for residual depreciation, making a total of £47,446. Before the Tribunal hearing Mr and Mrs Aston were informed that the total amount which the Authority proposed to pay to extinguish their liability was £3,000, a figure produced by Mr Trussell. Their damaged house and what was left of their garden in its damaged state was worth on the open market no more than £50,000. If Mr and Mrs Aston sold the property not wishing, or not able to afford, to pay the £43,446 necessary to do the repairs (including just under £27,000 for the land), they would be left with only £53,000 to buy another house. It is now said by the Authority in its Notice of Appeal that they should receive a total of £16,000, which would not even meet the costs involved in making the garden secure (just under £27,000).[80]Paragraph 2 of Schedule 1 makes it clear that the value of the property is the amount which the property might be expected to realise on a sale at the relevant time in the open market in the state in which the property is at the time of the sale. The amount of depreciation is determined by subtracting the value of the property in its damaged state from the value of the property at that time if it were not affected by damage paragraph 3(1).[81]Mr Darling accepted during the course of argument that the formula in the Schedule is concerned only with the value in the market of the property in its damaged state and its value in the market if it were not affected by damage. He submitted that the wording of the Schedule did not reflect what he submits is a central feature of the Act, namely that liability for future subsidence damage must be ignored when fixing a depreciation amount because any future subsidence damage will itself be the subject matter of compensation. This, he submitted, was in line with the common law: West Leigh Colliery v. Tunnicliffe [1908] AC 27.[82]Mr Darling submitted that the words of section 10(1) make it clear that, notwithstanding the Schedule, fear of future subsidence damage must be excluded in determining the value of the property in its present damaged state in the open market. He also submitted that the President was right to decide that the risk of future subsidence damage, i.e general blight, must be excluded in determining the amount which the property would realise in the open market if it were not affected by damage (paragraphs 71-73).[83]The purpose of section 10 is to deal with circumstances in which the cost of the remedial works is such that it is uneconomic or impracticable to execute those works having regard to the current damaged value of the property. Whereas any payments which are made for the execution of remedial works under section 8 must be spent on those works, a section 10 payment is given unfettered by any such obligation.[84]The Authority is given the right (or privilege as Mr Darling called it during argument) to elect to make such a payment in the circumstances set out in that section. The election to make such a payment is a right given only to the Authority and not to the claimant. The claimant cannot require the Authority to make such an election. Apart from the conditions in section 10, there is a further important condition in section 5. If the Authority does not tell the claimant in its initial notice of proposed remedial action under section 4 (2) that it intends to make a section 10 payment, it cannot thereafter make such a payment without the claimant’s consent (section 5 (3)). Likewise if the Authority has informed the claimant that it intends to make a section 10 payment, it cannot thereafter decline to do so without the agreement of the claimant (Section 5 (5)).[85]The words in section 10 upon which Mr Darling relies are “caused by the damage” in the definition of the expression “depreciation amount” as the “payment equal to the amount of the depreciation in the value of the damaged property caused by the damage” (underlining added). He submits that fear of further subsidence damage to the property is not “caused by the damage”.[86]He gave as an example an undamaged house, a house damaged slightly by subsidence damage for which a remedial repair was reasonably practicable and a house damaged in such a way that, whereas it was reasonably practicable to do one repair, it was not reasonably practicable to do a second repair. Because of the impracticality of doing that second repair, the third house would benefit from a section 11(3)(b) payment.

(b) provides:

“11 (3) Where in the case of any property affected by subsistence damage-- (a) remedial works have been executed; but (b) there is a depreciation in the value of the property caused by any damage the making good of which to the reasonable satisfaction of the claimant and any other person interested was not reasonably practicable, the Corporation shall made in respect of the property a payment equal to the amount of that depreciation.”
[87]The depreciation would, however, be limited to the kind of loss suffered by the claimants in the present case- they had lost much of their gardens and some outhouses that would lead to a permanent depreciation in the value, for which there should be compensation under section 11(3)(b) (at least unless the Authority elects to proceed via section 10). Section 11(3)(b) cannot, so he submits, introduce compensation for losses caused by future subsidence damage. If it did introduce compensation for losses caused by future subsidence damage, only the third house would be able to take advantage of that compensation for reasons that would be accidental, namely the nature of the damage suffered. The other two houses would not benefit. The recovery of such losses by the third house would make a “nonsense” of the scheme. Mr Darling also relies on the words “caused by the damage” in the last line of section 11(1).[88]Mr Darling submits that the words “the amount of the depreciation in the value of the damaged property caused by the damage” in section 10 must mean the same as the words in section 11(3)(b) “depreciation in the value of the property caused by any damage”.[89]Mr Wardell did not address us on this issue. Having briefly summarised Mr Darling’s arguments, it is not necessary for me to say any more than to express my reservations about the Authority’s suggested approach to the determination of the open market value of the property in its damaged state.

Order

As per draft order. (Order does not form part of the approved judgment)

Cited in 3 later judgments