B P OIL UK LIMITED v KENT COUNTY COUNCIL ACQ/12/2002

UPPER TRIBUNAL

LANDS CHAMBER

ACQ/12/2002

Case No ACQ/12/2002

Between

B P OIL UK LIMITEDApplicant

KENT COUNTY COUNCILRespondent

Before

reference – subsequent agreement less than 6 years before reference relating primarily

Venue 48/49 Chancery Lane, London WC2A 1JR

Date 23 July 2002

Hearing 20 and 21 May 2002

Property: Kent County Council, A299 Thanet Way Dualling, (Whitstable to Herne Bay), Compulsory Purchase Order 1992, Plot 92 - BP Oil (UK) Ltd

Catchwords: COMPENSATION – limitation – authority entering onto part only of land more than 6 years before reference – subsequent agreement less than 6 years before reference relating primarily to accommodation works – relevant date of entry for purposes of limitation held claim statute- barred

[1]Notice of reference in this case was delivered by the claimant BP Oil UK Limited on 28 January 2002. The land to which it relates is described in the notice of reference as “4042 sq m, half width of Canterbury Road, part of filling station and woodland, south east of Pigeon Lane, Link Service Station (closed), Eddington Roundabout, Thanet Way, Herne Bay, Kent.” The notice states that the reference is made under the Land Compensation Act 1961 section 1, the Highways Act 1980, the Acquisition of Land Act 1981 and the Compulsory Purchase Act 1965, “and an agreement on or about 16 February 1996”. The acquiring authority, Kent County Council, asserted that the claim is statute-barred, and I ordered that this contention should be determined as a preliminary issue. Following the hearing on 20 May 2002 I raised some further questions with counsel and they made written submissions on these.

[2]The basic facts were agreed, except in one respect. On 12 March 1992 KCC made the Kent County Council A299 Thanet Way Dualling (Whitstable to Herne Bay) Compulsory Purchase Order 1992. It was confirmed with modifications by the Secretary of State for Transport on 5 October 1994. Included in the CPO as Plot 92 was the land that is the subject of this notice of reference. A petrol filling station included a large forecourt and a shop/kiosk. There was access to it from the A299 Thanet Way east of the Eddington Roundabout and from Canterbury Road to the south of the roundabout. To the east of the Thanet Way access was an area of woodland. Plot 92 comprised an irregular strip of land along side Thanet Way. It consisted of open land in front of the petrol filling station, the area of woodland, and half the width of Canterbury Road.

[3]The purpose of the CPO was the improvement of the highway intersection by the construction of the new underpass with the roundabout above. A new slip road was to give access to the claimant’s site. Notice to treat and notice of entry were served on or about 20 January 1995. The factual dispute is as to when entry was effected by KCC or must be treated for the purposes of the relevant statutory provisions as having been effected.

[4]In February 1996 the parties entered into an agreement. It was contained in a letter of 8 February 1996 signed by the Head of Kent Estate Management, with a signed acceptance of its terms appended on behalf of BP on 16 February 1996. It stated:

“This agreement is between Kent County Council (KCC) and BP Oil UK Ltd (Freeholders) for sale of land by the latter and its purchase by the County Council for the purposes of the A299 Dualling Scheme (Whitstable to Herne Bay Section) for which the Council has received planning permission and has made Compulsory purchase and Side Roads Orders. The Orders were confirmed by the Secretary of State for Transport on 28 September 1994 and Notice to Treat and Notice of Entry have been served by the County Council. KCC accepts that due to the construction of the dualled roads, the Links Service Station will not be able to trade effectively unless the access and forecourt layout is 3 amended and works of re-organisation and reinstatement are carried out within the boundaries of the existing property.”

[5]The letter then continued with five numbered points, as follows:

“(1) BP Oil has prepared an agreed scheme and secured the necessary consents for re-organised facilities as shown on Drawings Nos LSS/2/D, LSS/3, LSS/10/A, LSS/20/B, LSS/30 and WD1 0852 and a contract for these works will be let to Dakin Service Station Contractors (the Contractors). (2) KCC will transfer the freehold interest of the land coloured green on Drawing No. LSS40 to BP Oil UK Ltd to enable a revised access road to be constructed and will grant early possession of the land to the freeholders for this purpose. (3) Upon KCC proceeding with the A299 Dualling Scheme the freeholders will: (a) Yield up possession of the land shown coloured pink on Drawing No.7052/207 (which is required by the Council for incorporation into the highway) to permit construction of the new accesses to the re- organised facilities. (b) Transfer the freehold estate in the land shown coloured pink to KCC with the benefit of vacant possession. (4) KCC to pay to the freeholders by way of consideration for the loss of the land compensation to be agreed by assessed in accordance with the statutory Compulsory Purchase Code ie value of land taken, severance/injurious affection and disturbance (including temporary loss of profits if any) the cost of carrying out accommodation works together with legal costs in deducing title and making the conveyance of surveyors fees calculated in accordance with Ryde’s Scale (1991). The liability of the Council under this Clause shall expressly include payment of the sums quoted in a priced Bill of Quantities dated November 1995 (and attached to these Heads of Agreement) in respect of those items listed under the headings of “preliminaries”, “landscaping” and “external works” together with such of the “prime costs, provisional sums and contingencies” as are actually incurred by the freeholders. The Council shall additionally pay any sums which are not referred to in the Bill of Quantities but which are reasonably and necessarily incurred in carrying out and completing the works. The specification and estimated costs of any such works to be agreed in advance between Kent County Council and the Freeholders. The procedure shall be as follows: (a) The Contract will be awarded by BP to Dakin Service Station Contractors. 4 (b) The supervision of the proposed works and instructions to the Contractor will be the responsibility of BP and their agents. (c) Measurements of the completed works will be carried out and agreed between BP representatives, the Contractor and the County Council’s Project Manager. A member of the Project Manager’s team will be representing Kent County Council for the purpose of measurements and agreement of the completed items of works. (d) The County Council will monitor the Contractor’s progress of works and will keep records of all works as well as any potential problems which may or may not lead to any claims by the Contractor. However, the County Council shall be bound by and give effect to every instruction or decision of BP on this Contract. (e) Upon the submission of interim and final accounts certified by the freeholders Architects or other supervising officer, the County Council shall pay the Contractor such sums as are set out in the Bill of Quantities attached hereto. (f) The County Council shall pay the reasonable fees of any architects, engineers or consultants incurred in the preparation of and implementation of the works. (5) In the event of the parties failing to agree on the compensation to be paid the matter to be determined by the Lands Tribunal.”

[6]Subsequently, on 26 June 1996, KCC wrote to say that the plot plan of the CPO was incorrectly drafted and they required to take additional areas of land from BP. The total area was 4320 sq m coloured pink (as compared with the 4042 sq m in the CPO) and 60 sq m coloured green. On 15 November 1996, BP’s agents Stiles Harold Williams wrote to KCC referring to a follow-up letter to that of 26 June 1996 and saying:

“You provided us with an amended drawing, number 7052/684 which shows a revised area of land coloured pink. Our clients are prepared to dispose of this land to your Council and for the compulsory purchase to proceed on the basis that this area of land replaces the previous parcel for which compulsory powers exist. Our clients also prepared to dispose of the additional area of land coloured green on the plan. This land together with the land coloured blue, which is already in your Council’s ownership, is required to form part of the new highway and access to our clients’ property. Our clients' agreement to dispose of this land to your Council is subject to the following provisions:- (1) That BP Oil (UK) Ltd will be granted rights in perpetuity to have access over the land and rights for services to pass through the land. (2) That BP Oil (UK) Ltd will have rights in perpetuity to erect signs on the land. The erection of any signs would, of course, be subject to the usual planning and highways regulations. 5 (3) That the rights referred to above in paragraphs numbers 1 and 2 may be transferred to a third party in the event that BP Oil (UK) Ltd dispose of their interest in the property. This agreement is also subject to the land coloured blue (Plot 111) forming part of the public highway and remaining, in perpetuity, an access and visibility display to our clients’ property. The terms set out in this letter are on the basis that the disposal to your Council would be on the statutory Compulsory Purchase Basis. Would you please confirm your agreement, in principle, to these terms.”

[7]KCC replied on 26 November 1996 saying:- “I am grateful for your confirmation that your client is prepared to proceed on the basis of the revised drawing and sell the additional areas to the County Council by agreement. I can confirm that for the purposes of our negotiations the acquisition of these additional areas will be treated as if it were compulsory and compensation determined on the same basis. Your agreement to permit the County Council to retain ownership of Plot 111 (the blue land) is also noted. This land and the Green Land will become part of the publicly maintainable highway. The conditions numbered 1, 2, 3 in your letter are acceptable to the County Council and will be incorporated in the Transfer documents.”

[8]The case for the acquiring authority is that, following the service of notice to treat and notice of entry, they entered on Plot 92 on 8 August 1995, so that the cause of action arose on that date and the notice of reference, delivered as it was more than 6 years later on 28 January 2002, was out of time. The case for the claimant is that, if KCC did enter on the land on 8 August 1995, this did not amount to taking possession. Further or alternatively, it is said, the effect of the agreement of February 1996, paragraph 3(a) of which required BP to yield up possession of the land, was to make inadmissible any evidence that possession had already been taken by then; and, as far as the additional areas of land included in the November 1996 agreement were concerned, there could have been no lawful entry before 26 November 1996.

[9]M Andrew Tait, for the council called two witnesses. The first, Geoffrey Maurice John Frost, had been employed as an assistant engineer in the council’s Highways and Transportation Department at the relevant time. He said that he moved in to the site offices at Eddington on 31 July 1995, 200 metres to the west of the subject land. His role was to assist the project services engineer in land and accommodation works matters. He produced a plan showing the fencing of Plot 92 and a letter of instruction dated 20 July 1995 to the main contractor, Hochtief Kier Joint Venture, referring to amendments to the temporary fence lines, with a corresponding memorandum to KCC staff dated 26 July 1995. Mr Frost also produced a copy of the site diary of Alan Breck, a site colleague of his who was responsible for checking the contractor’s setting out of the roadworks elements of the scheme, including fence lines, on the eastern half of the scheme. The diary records that Mr 6 Breck checked the fence on Plot 92 on 8 August 1995. Dates of entry records showed 7 August 1995 as the date of entry, but Mr Frost said that he believed 8 August was the correct date.

[10]Mr Frost produced photographs from KCC archives. An aerial photograph taken on 23 June 1995 showed the site untouched, while one taken on 25 September 1995, showed boundary security fencing enclosing most of Plot 92 to the east of the Thanet Way entrance to the filling station, the removal of the trees within that part of the plot and the stripping of top soil from it. Photographs taken at ground level on 23 October 1995 showed parts of the fenced area.

[11]Mr Frost said that on 17 October 1995 he attended a meeting with BP at the site. He produced minutes of the meeting, which had been sent to BP. They recorded that Mr Jarvard, BP’s consultant, had said that BP had no record of notice of entry or notice to treat having been served. Mr Frost, in a letter of 18 October 1995 to Mr Jarvard, had confirmed that the notices had been served on 20 January 1995.

[12]In cross-examination Mr Nicholas Nardecchia for BP pointed out to Mr Frost that in a letter to Stiles Harold Williams dated 12 October 1995, five days before the meeting on site, Mr Wickens, KCC’s Head of Estate Services, had said in a manuscript postscript:

“I understand that there is an urgent requirement for KCC’s contractors to remove a sign but your clients are reluctant to permit entry for this purpose even though notice of entry had been served.”

Thus, it was suggested, KCC were not asserting that they had already entered. Mr Frost said that it would have been clear at the on site meeting on 17 October 1995 that works were already being carried out on part of the site. Mr Nardecchia also asked Mr Frost about a letter of 14 November 1995, under his reference, to Mr Jarvard, in which it was said that:

“…up to 26 November 1995 the only work to affect the BP site are the installation of a duct across the eastern access and the removal of the top soil on the verge between the two accesses.”

Mr Frost said that the statement was indeed correct in relation to the petrol filling station itself but not to Plot 92 as whole.

[13]Robert Collingham, a review and development officer with the property group of KCC, the second witness called by Mr Tait, said that he had been employed in the Estates Department of KCC from 17 June 1998 to 1 April 2002. He took over the file relating to the acquisition of BP’s land in July 2000. It showed that there had been correspondence, discussions and meetings throughout 1992, 1993, 1994 and 1995 between BP’s agent and KCC on a range of issues relating to BP’s land and the need for accommodation works. Before confirmation of the CPO and before entry had been taken, heads of agreement had been discussed concerning the accommodation works. Most of the correspondence on the file related to the costings of the accommodation works and interim payments to BP’s contractors in the period October 1995 to August 1996. 7

[14]Mr Collingham said that he had written to BP’s agent on 6 July 2000 to let him know that he had taken over the files. He heard nothing until 2 April 2001 when he was telephoned by Mr Turner, who said that the matter had been passed in house. He next received a telephone call from a Mr Tyler on 20 December 2001 seeking to recommence negotiations. Mr Collingham said that he told Mr Tyler that he thought that the claim was time barred. He said that in 1999 a claim had been submitted but under the wrong legislation, and, despite a request from KCC, no revised claim had been submitted. As far as accommodation works were concerned, KCC had paid BP’s contractors £112,727 excluding VAT for accommodation works to enable the filling station to continue operating.

[15]Mr Nardecchia called Peter John Sharpe Turner BSc FRICS IRRV, a Director of Stiles Harold Williams, surveyors and valuers. Mr Turner said that his firm had been instructed by BP in or about October 1994 to act on BP’s behalf in relation to the CPO. They continued to do so until their instructions were terminated in April 2001. During the course of negotiations BP required heads of agreement to be entered into setting out KCC’s obligations to pay compensation in respect of alterations to and acquisition of part of BP’s land. He himself was dealing with the matter in the last stages of the negotiations on the heads of agreement. He visited the site on 2 February 1996 (ie some days prior to the February agreement), and his file note of the visit recorded the following:- “Roadworks at Links has commenced. There is a lot clearance work on the opposite side of the main road with all the contractors lorries and cranes. Access to the Service Station is now quite restricted although its still open, the whole area of land in front has now been fenced off. The triangle of land contains a hedge about 8 ft high and a small area of landscaped ground beyond just by the corner of the nursery building, this land will be for turning and sight line and there is no land between that and BP’s land. The road construction has already started immediately to the east of the Petrol Station and access into the working area is directly off BP’s eastern slip road. This is causing a lot of mud and inconvenience and blockage of access into this entrance road. The contractors have put a ‘no exit’ sign at this point for petrol station customers so they have to use the single access at the western end. Along the working strip the land has been levelled, the foundations are going in and a new metal post and chain link fence has gone up to mark the new boundary of the BP land. About half way along its length the boundary is pushed back to form a square area about 20 feet by 20 feet which looks as though it is being used on a temporary basis by the contractors for storage purposes. Check this out as it may be contrary to the original plans and should be compensated.”

[16]Mr Turner said that his recollection was that, although fencing went across the land in front of the filling station (ie on Plot 92), no works were being carried out there. He thought that the works that had been carried out to the east of the access road were preparatory works only. One of the matters that he was dealing with was the yielding up of the land, and the suggestion that entry had already been taken was contrary to the terms of the agreement. 8

[17]The first question that arises is whether, as KCC contend, entry on Plot 92 pursuant to the notice of entry, was made on 8 August 1995. The evidence of Mr Frost clearly establishes, I find, that it was. Temporary fencing was erected around a substantial part of Plot 92, trees were felled within that area and topsoil was cleared. Mr Nardecchia’s contention is that this action on the part of KCC contractors did not amount to the taking of possession pursuant to the notice of entry. Possession for this purpose, he says, consists of an actual holding or detention coupled with the animus to possess. He refers to Friendly Bar Limited v Glasgow Corporation

[1975] SLT 18

and Buckinghamshire CC v Moran [1990] Ch

[623]The agreement of February 1996 shows, he says, that, before that agreement, KCC had lacked the necessary animus possedendi, since paragraph 3(a) provided expressly for BP to yield up possession.

[18]I reject this contention. It is, I think, quite evident, in view of the notice of entry and the scheme that was being carried out, that the actions of KCC’s contractors were only explicable as action on behalf of KCC in taking steps to implement the scheme pursuant to the statutory powers. Entry on 8 August 1995 is consistent with what Mr Turner observed on 2 February 1996. By that time substantial works were being carried out immediately to the east of the Thanet Way access, with inconvenience being caused as a result of the use of the access for the purpose of the works. It is nothing to the point that no works were at that stage being carried out on that part of Plot 92 lying to the west of his access, or that on 8 August 1995 only the land to the east of the access had been fenced. Notice of entry had been served in respect of the whole of Plot 92. It could have related to part only of the plot. Section 11(1) of the Compulsory Purchase Act 1965 provides:

“If the acquiring authority have served notice to treat in respect of any of the land and have served on the owner, lessee and occupier of that land not less than 14 days notice, the acquiring authority may enter on and take possession of that land, or such part of that land as is specified in the notice; and then any compensation agreed or awarded for the land of which possession is taken shall carry interest at the rate prescribed under section 32 of the Land Compensation Act 1961, from the time of such entry until compensation is paid, or is paid into court in accordance with this Act.”

[19]The fact that notice of entry was served in relation to the whole of Plot 92 and not to part only of it means, in my view, that the taking of possession on 8 August 1995 was, for the purpose of this provision, a taking of possession of the whole. Where notice of entry has been served, any entry on the land will necessarily amount to a taking possession of the land to which the notice relates. If this were not the case, in determining interest payments under this section, factual differences of extreme difficulty could arise as to precisely what land had been entered when, and additional and possibly complex valuations would have to be made of the individual areas. Support for this conclusion is to be derived from the Court of Appeal decision in Chilton v Telford Development Corporation (1986) 281 EG 1443. In that case the acquiring authority had served a single notice to treat relating to the 67.87 acres it was acquiring from the claimant but went into physical occupation of parts of the land in stages over 28 months. The court held that the first entry on the land described in the notice of entry constituted entry on the whole. While the decision concerned a different statutory provision, para 4(2) of Schedule 6 to the New Towns Act 1965, which contained no express power to serve notice of entry in relation to part only of the land, it is in my view good authority for 9 the conclusion that I have referred to. Since entry was taken on 8 August 1996 it was accordingly on that date that the cause of action arose for purposes of section 9 of the Limitation Act 1980: see Hillingdon LBC v ARC Limited

[1999] Ch 139

[20]I cannot accept Mr Nardecchia’s contention that the effect of the February 1996 agreement was to characterise the entry of 8 August 1995 as something less than the taking of possession. No agreement had been entered into in respect of that entry. There was no consent to it on the part of BP. As I have said, it was only explicable as an exercise of KCC’s compulsory powers. Nor does the provision contained in paragraph 3(a) of the agreement, requiring BP to yield up possession, amount to a contractual undertaking on KCC’s part (as, it appears, Mr Nardecchia contends) preventing them from contending that possession had already been taken. The explanation for this provision, it seems to me, is that it stems from earlier drafts of the agreement and no need was seen to excise it. A draft containing the provision had been sent to BP by KCC on 12 April 1994, at which time the Secretary of State’s decision on the CPO was still awaited. If it had been the intention of the parties to agree that possession should be deemed not to have been taken, even though it so evidently had been, one might have expected that some express provision to this effect would have been made. Similarly, it seems to me, the provision in paragraph (5) of the agreement for the determination of compensation by the Lands Tribunal is probably to be explained as a carry- over from earlier drafts. It adds nothing to BP’s statutory rights.

[21]Mr Nardecchia, in his supplemental further submissions, says that BP’s submission - “is that its statutory right to compensation is retained but in a form which is modified altered and extended by the terms of the agreement for the sale of its land. The claim therefore arises from the agreement as do the rights of the parties.” I cannot see how the contention in the second sentence follows from the first sentence. If the statutory right to compensation is retained but in a form that is modified by the agreement, the right to compensation necessarily, it seems to me, arises under the statute.

[22]Mr Nardecchia might have argued that the agreement supplanted the parties’ statutory rights, but, as expressed in the words I have quoted, his final submissions do not do so. If the effect of the agreement was indeed to supplant the statutory rights, Mr Tait accepts that the claim would not be statute-barred. This is because no cause of action would arise in respect of the recovery of the purchase money until, firstly, the landowner had become entitled to payment of a quantified sum agreed between the parties or ascertained by the Lands Tribunal following determination of a reference to it and, secondly, the authority had declined to make such a payment. Any such reference would be to the Tribunal acting as arbitrator. Section 13(1) of the Arbitration Act 1996 applies the Limitation Act 1980 to arbitral proceedings as it applies to legal proceedings. However, section 3(8) of the Lands Tribunal Act 1949 as amended provides that where the Tribunal is acting as arbitrator, Part I of the 1996 Act only applies in so far as it is applied by the Lands Tribunal Rules; and section 13(1) is not one of the provisions that are applied by rule 26 of the 1996 Rules, nor is it applied by any other rule. There would thus be no time limit on a reference to the Tribunal of a dispute as to compensation pursuant to the agreement. 10

[23]Mr Tait submits, however, that the agreement did not supplant the parties’ statutory rights. This is, he says, evident from the document itself, which recites the fact of service of notice to treat and notice of entry and refers to “compensation” rather than to the purchase price, making provision for the assessment of compensation in terms that did no more than re-state the parties’ actual position in law. It is also evident, Mr Tait says, from the factual matrix in which the agreement was made. The purpose of the agreement was to provide for the accommodation works, and in the absence of the need to make this provision it would have had no purpose. I accept these submissions, and, as I have said, Mr Nardecchia’s contention is not that the agreement supplants, but rather that it retains, the statutory right to compensation. What the agreement does is to make detailed provision for accommodation works and payment for them, but not to alter the claimant’s statutory right to compensation. Of course the amount payable as compensation would have to reflect the agreement that the parties had reached in relation to the accommodation works and the transfer to BP of the small area of land for a revised access road. In this respect, however it was no different from any agreement between claimant and acquiring authority, after entry and before a Lands Tribunal determination, agreeing particular items of claim. It conferred no new right to compensation.

[24]The final issue concerns the small additional areas of land that were the subject of the exchange of letters in November 1996. Mr Nardecchia says that these constituted an agreement for the transfer of them from BP to KCC on the basis that compensation would be payable in accordance with the compensation code. There could have been no lawful entry and taking of possession of these areas until 26 November 1996. I do not see how the considerations affecting these additional areas of land can have any bearing on the question whether the claim in this case is statute-barred. The claim relates to the land included in the CPO – Plot 92 as it was identified on the CPO plan and described in the schedule. The claim does not relate to the additional areas that were the subject of the exchange of letters in November 1996. Whether they could have constituted an enforceable agreement (and, as Mr Tait points out, they do not satisfy the requirements of section 2 of the Law of Property (Miscellaneous Provision) Act 1989) and whether lawful entry could have been effected prior to 26 November 1996 are thus questions that need not be addressed.

[25]On this preliminary issue, therefore, I determine that the claim is statute-barred. This determination accordingly disposes of the reference. The parties are invited to make submissions as to costs, and a letter accompanying this decision deals with this. The decision will not take effect until the question of costs is determined. Dated 28 June 2002 George Bartlett QC, President ADDENDUM ON COSTS

[26]The acquiring authority ask for their costs. The claimant submits that it “should not be ordered to pay all of the Acquiring Authority's costs having regard to the circumstances of 11 this reference.” What the particular circumstances are that would make it appropriate to deprive the authority, as the successful party, of part of its costs in this case is not identified, and I can see no justification for a partial award only. The claimant must pay the acquiring authority's costs of the reference, such costs if not agreed to be the subject of a detailed assessment by the Registrar on the standard basis. Dated 23 July 2002 George Bartlett QC, President 12