EDWARD BRIAN HALL v SANDWELL METROPOLITAN BOROUGH COUNCIL ACQ/153/2003

UPPER TRIBUNAL

LANDS CHAMBER

ACQ/153/2003

Case No ACQ/153/2003

Between

EDWARD BRIAN HALLApplicant

SANDWELL METROPOLITAN BOROUGH COUNCILRespondent

Before

The President

(in person) for Claimant

David Park (instructed by Legal Services, Sandwell Metropolitan Borough Council) for Acquiring Authority

Venue Birmingham Civil Justice Centre, Priory Courts

Date 14 January 2008

Hearing 9 January 2008

Property: Land at the rear of, 32 Park Lane East, Tipton, West Midlands

Catchwords: COMPENSATION – compulsory purchase – preliminary issues – whether enforcement notice made use of land unlawful – whether use to be excluded for the purposes of compensation – whether claim in respect of chattels removed from land by acquiring authority sustainable – held use of land unlawful and to be excluded for the purposes of compensation – held claim in respect of chattels potentially sustainable in part – Land Compensation Act 1961 s 5 r (4), Local Government (Miscellaneous Provisions) Act 1982 s 41

[1]The claim in this reference relates to land, 94m2 in extent, comprising the land, garage and premises at the rear of 32 Park Lane East, Tipton, West Midlands. The land was included as grey land in the Sandwell (Peel Street, Tipton) (Clearance Areas) Compulsory Purchase Order 1996. It was owned by the claimant. Following confirmation of the CPO a general vesting declaration was made by the acquiring authority on 20 November 1997, and the land vested in the council on 20 December 1997.

[2]The land is the plot on the corner of Peel Street and Perry Street and it adjoins, and lies to the rear of, 32 Park East, which is on the corner of Perry Street and Park Lane East. Thirty-two Park Lane East is an end of terrace property built at the beginning of the 20th century and consisting of a retail area and store on the ground floor, with residential accommodation on the ground and first floors. At the valuation date (the date of vesting) the whole property was used as a shop for the retail sale of motorcycle accessories with residential use above, and storage and machinery repairs were undertaken on the land acquired.

[3]On 10 July 1992 two enforcement notices were served in respect of the subject land on Mr Hall under section 172 of the Town and Country Planning Act 1990. The first of these related to the erection of two buildings, and it required works of demolition to be carried out. The second related to the use of the land and required (in terms which I will set out and consider in more detail later) the cessation of the use of the land for the repair of vehicles and the repair and storage of vehicle parts and the removal of machine tools, vehicles and parts from the land Mr Hall appealed against the enforcement notices. Following an inquiry the inspector, in a decision letter of 29 April 1993, upheld the notices, making minor amendments to them.

[4]Although they had vested the land in themselves on 20 December 1997 the council did not take possession until July 2002. On 18 July 2002 they served notice on Mr Hall under section 41 of the Local Government (Miscellaneous Provisions) Act 1982 stating that any items on the land belonging to him must be collected by no later than 19 August 2002 and that, in the event that they were not collected, the council would dispose of them. Mr Hall had some time earlier been made bankrupt, and on 27 August 2002 BDO Stoy Hayward, chartered accountants, wrote to the council on behalf of the trustee in bankruptcy saying that the items on the land were Mr Hall’s responsibility. On 9 December 2002 the council wrote to Mr Hall stating that they would now dispose of all the items.

[5]Reference to the Tribunal was made on 16 December 2003, and in November 2005 the trustee in bankruptcy assigned his interest in the claim to Mr Hall and has since then had no involvement in the reference. Compensation has been agreed between the District Valuer on behalf of the council and Mr Hall’s valuer as to the value of the land taken, severance and injurious affection and accommodation works. All fees relating to these, except legal fees, have been agreed and paid. As far as business loss is concerned accounts for the claimant’s business for the years to 30 June 1995, 1996 and 1997 were prepared and analysed by Mr Hall’s accountants, and as a result of this the two valuers have agreed the compensation 3 payable on two alternative bases: £6,000 for temporary loss of profits, and £20,000 for total extinguishment.

[6]This agreement on business loss is, however, subject to a reservation on the part of the council. They contend that as a result of the enforcement notice relating to the use of the land the claimant’s use of the land was unlawful and must be left out of account in determining compensation by reason of rule (4) in section 5 of the Land Compensation Act 1961. They say that there were no lawful operations that could give rise to a business loss and that therefore nothing is payable.

[7]In addition to the claim for loss of profits, Mr Hall seeks compensation in respect of the value of the chattels that were on the land when the council took possession and were later disposed of. The council say that no compensation is payable since they dealt with the items in accordance with their powers under section 41 of the 1982 Act.

[8]The following preliminary issues thus arise for determination:(1) Was Mr Hall’s commercial use of the land acquired lawful?

(2) Is the claim for disturbance excluded by virtue of rule (4)?

(3) Does Mr Hall have a lawful claim in respect of the chattels? There is an agreed statement of facts and a further agreed statement between the valuers. What I have said thus far is derived from these statements. No witness statements were filed. The skeleton argument of Mr David Park on behalf of the council was lodged, but no skeleton was lodged by or on behalf of Mr Hall. At the hearing Mr Hall referred to a witness statement by him that had been filed on his behalf in March 2006 relating to the substance of the claim.

[9]Two further matters are to be noted as part of the factual background, although they do not seem to me to impinge directly on the preliminary issues. The first of these is that Mr Hall also leased nearby premises at Peel Street, Tipton, where he carried out vehicle repairs. These premises were also compulsorily acquired. Secondly, some of the items stored at the subject premises were damaged in a flood caused by adjacent roadworks. A High Court claim was made in relation to these, and they were identified in a schedule. On 28 June 2002 Judge Kirkham, sitting in the Technology and Construction Court, ordered that the items on the schedule should be kept separate from any other items removed from the premises.

[10]I consider first the enforcement notice and its effect. It was, as I have said, one of two contemporaneous enforcement notice served on Mr Hall in respect of the subject land. The first of these (referred to as notice A by the inspector) identified as the breach of planning control “the erection of a garage workshop/stores and the increase in the height of the boundary walls and gates to the land abutting the highway” and it required works of demolition and the removal of all building materials. The second notice (notice B), which is the one of particular 4 relevance to these preliminary issues, in its original form specified as the breach of planning control:

“Without the required planning permission, the making of a material change of us of the land from use as a private garden to use for the business of the repair motorcycles and forklift trucks, the repair and manufacture of vehicle parts and storage of goods in connection with a business, an industrial use and commercial storage purpose.”

[11]The requirements of the enforcement notice as served were as follows:

“(i) Stop using the land for the repair of any vehicles, motorcycles and forklift trucks, in connection with a business, and the repair, manufacture and storage of any vehicle parts.”

The time for compliance with these requirements was 120 days after the notice took effect.

[12]In her decision at paragraph 9 the inspector said that she had queried the wording of the paragraph specifying the breach, which was not absolutely clear. She said:

“...It was agreed that the last phrase should be deleted since it was superfluous ... I do not believe that any injustice would be caused by this variation.”

[13]The breach, in the enforcement notice as confirmed, thus became:

“without the required planning permission, the making of a material change of use of the land from use as a private garden to use for the business of the repair of motorcycles and forklift trucks, the repair and manufacture of vehicle parts and storage of goods in connection with a business.”

[14]In relation to the requirements the inspector said this: “24. Although you made no appeal under ground (f), briefly whether the requirements of the notice are reasonable, I have nevertheless considered their reasonableness. The allegation refers to the repair of motorcycles and forklift trucks. There is no mention of other vehicles. In my opinion, therefore, it is not reasonable to include the repair of ‘any vehicles’ in the first part of the requirements and I will delete those words. This deletion does not, however, indicate that the repair of other vehicles on the site is authorised. Similar, the second part of paragraph 5 requires the removal of all commercial vehicles from the site. There is no reason why you should not keep on the land a commercial vehicle used in connection with the retail use of the shop. That part of the requirement is also unreasonable and I will delete it.” 5

[15]The requirements in the notice as confirmed thus became:

“(i) Stop using the land for the repair of motorcycles and forklift trucks, in connection with a business, and the repair, manufacture and storage of any vehicle parts. (ii) Remove from the land all industrial machine tools and equipment, all motorcycle parts and other items brought onto the land in connection with a business.”

[16]Mr Park drew attention to section 179(1) and (2) of the 1990 Act, which provides:

“179(1) Where at any time after the end of the period for compliance with an enforcement notice, any step required by the notice to be taken has not been taken or any activity required by the notice to cease is being carried on, the person who is then owner of the land is in breach of the notice. (2) Where the owner of the land is in breach of an enforcement notice he shall be guilty of an offence.”

Mr Park also referred to section 181(1) and (2), which provide that an enforcement notice is not discharged if it is complied with, but has continuing effect, and to section 187B, which empowers the local planning authority to seek an injunction to restrain the breach of planning control.

[17]Rule (4) of section 5 of the 1961 Act provides:

“(4) Where the value of the land is increased by reason of the use thereof or of any premises thereon in a manner which could be restrained by any court, or is contrary to law, or is detrimental to the health of the occupants of the premises or to the public health, the amount of that increase shall not be taken into account.”

[18]Mr Park submitted that the subject land would have had an enhanced value to Mr Hall’s business if he had been able to use it for commercial purposes in breach of the enforcement notices. The consequence of the enforcement notices coming into effect and the failure to comply with the requirements was that the use of the premises was unlawful and Mr Hall was liable to be prosecuted and that the council could seek an injunction to restrain the unlawful use of the premises. Mr Park referred to Hughes v Doncaster Metropolitan Borough Council

[1991] 1 AC 382

, in which the House of Lords had hold that a claim for compensation for disturbance fell to be considered in the light of rule (4). Accordingly, he submitted, the effect of rule (4) was to exclude compensation for business losses that arose from the uses of the subject land that were in breach of the enforcement notice’s requirements. Those requirements prohibited commercial storage, repairs and maintenance.

[19]Mr Hall said that the premises at 32 Park Lane East had been in retail use since they were built in about 1901. It was therefore lawful to use the subject land for storage for the purposes of the retail use. He used it for the purposes of the storage of motorcycle parts for sale. In 6 addition he kept these classic cars for his own personal use and the six motorcycles which he used to race. He said that the inspector had recognised that the land could be used for purposes that was evident from paragraph 24 of the decision and also from paragraph 18, where the inspector said:

“18. You said that when you bought the premises there was a car repair business in operation at the rear of the site, where building B now stands. Local people had told you that this business had been in operation for 15 years, but, even if there had been evidence to establish this, it would not take the use back to 1963. In addition, the yard had been used for the storage and sale of paraffin for 38 years. The shop used to sell general hardware as well as other items and it seems to me that the sale of paraffin was probably ancillary to the shop use. In any event, that would have been primarily a retail use (the storage being for the purpose of resale) and not the industrial/storage uses alleged in the notice. There is therefore no evidence to show that the uses alleged in the notice have existed on the site for the necessary period of time. The appeal under ground (d) therefore fails.”

[20]It is inescapable, in my judgment, that the lawfulness of the use of the subject land is to be judged in the light of the requirements of the enforcement notice, and I accept Mr Park’s submission, for the reasons he advances, that a use in contravention of these requirements would have to be left out of account in assessing compensation by reason of rule (4). It is not now open to Mr Hall to contend that, to the extent that the notice prevents the use of the subject land for purposes ancillary to the shop use, it goes too far and is unlawful or should be disregarded. Under section 285(1) of the 1990 Act the validity of an enforcement notice cannot, except by way of appeal under Part VII be questioned in any proceedings whatsoever on any of the grounds on which such an appeal can be brought. Under section 179, failure to comply with the requirements of any enforcement notice constitutes an offence.

[21]The question, therefore, is what is the scope of the requirements of the enforcement notice as varied by the inspector on appeal. Mr Park accepted that the requirements were properly to be construed in the light of the inspector’s decision as a whole, as Mr Hall sought to do. Approaching the matter in this way, I cannot, however, accept Mr Hall’s contention that the storage of motorcycles and motorcycles parts in connection with the retail use of the shop premises is not made unlawful by the enforcement notice. The requirements include the cessation of use of the land for, inter alia, the storage of any vehicle parts and the removal from the land of all motorcycle and motorcycle parts brought onto the land in connection with a business. This in terms requires the removal of such items even if the business in connection with which they had been brought onto the land was a retail business in the shop, and I do not think that it is possible to construe the requirements in any other way. It is true that the inspector was aware of the potential lawful use of the subject land for purposes ancillary to a retail use of the shop. This is clear from paragraph 18 and 24, which I have quoted. But there is nothing in her decision to suggest that she thought the requirements did not or ought not to extend to motorcycles and motorcycle parts stored on the land in connection with retail sales in the shop. On the other land she did think it right to exclude from the ambit of requirements a commercial vehicle used in connection with the retail use of the shop (see paragraph 24 of her decision). 7

[22]The reason that the inspector did not seek to exclude from the requirements motorcycle and motorcycle parts stored on the land in connection with the retail use of the shop is, it seems to me, this. It formed no part of Mr Hall’s case at the inquiry, as understood by the inspector and as recorded by her in her decision, that the motorcycle and motorcycle parts on the subject land were being stored there for that purpose. In her description of the site she said:

“6. At the time of my visit building A contained a variety of machinery including a drill, a planer, a sander, an off-cut saw and welding equipment together with a Suntester machine. There were well stocked storage units and a small lift. There was a total of four motorcycles in the building. Building B is open sided to the yard and contained a further variety of machinery including a very large milling machine, a drill, two bandsaws and a lathe. There was also a vintage car under a tarpaulin and two more motorcycles.”

[23]In relation to notice B, the inspector said this: “13. For this to succeed it is necessary to prove that the uses alleged in the notice had started before the end of 1963 and continued since the beginning of 1964. However, at the inquiry the main thrust of your argument was that the uses alleged in the notice had not taken place on the site. This is really an appeal under ground (b), that is to say that the alleged breach of planning control has not taken place, and I will deal with this point first.

[14]You said that building A is used only for the storage repair and maintenance of our own motorcycles, any repairs or servicing in connection with the shop, which sells motorcycles and accessories, is carried out in a building you rent on the opposite side of Peel Street. Your main business was the repair of forklift trucks, but 80% of the work was done on the customers’ premises and the remainder in the Peel Street premises. The fork lift which the Council’s officer had seen on the site in 1990 had been on the site to move the RSJ from the truck outside to its position to support the roof of building B; it was not there for repair. Building B was used for the storage of machinery; there was no electricity supply to the building, and it was your intention to move those items to the building in Peel Street and move the smaller items stored at Peel Street to building B. This would give you space to work on your vintage car ....

[16]I accept that motorcycles are your hobby, and that those stored in building A are your own personal machines. This building is well provided with machinery, including a tuning machine and welding equipment. Even taking your statement that you like to have the correct tool for the job, the building is extremely well equipped for a hobby. You said that any commercial motorcycle repairs were done in the Peel Street premises, but on my visit it was very difficult to get inside the building let alone work in it. I understand that the fork lift trucks stored there could be moved into the adjoining yard, but that too was somewhat crowded with cars presumably connected with the car repair businesses. The fascia to your shop advertises performance tuning, service and repairs. Given the state of the Peel Street building and the convenience of building A I consider it unlikely that building A has never been used for commercial motorcycle repairs. Similarly, some of the machinery in building A is used for the 8 repair and manufacture of vehicle parts, and these could easily be for business purposes.”

[24]Thus it does not appear that it was any part of Mr Hall’s case that motorcycles or motorcycle parts were stored on the land, or might in future need to be stored, for the purposes of retail sales in the shop, and the inspector was accordingly not concerned to couch the notice in terms that would permit such a use. I do not think the requirements of the notice are to be construed as not applying to these. The result is that use of the land for this purpose would be unlawful and must be left out of account in assessing compensation for disturbance. This conclusion applies equally to the claim for business losses and to the claim for the value of the items that were disposed of by the council to the extent that the items were there in connection with the business.

[25]Items stored on the land that belonged to Mr Hall personally would not, however, have been there unlawfully because they would not have been there “in connection with a business”. (I note that the words “in connection with a business” appear in different places in the specification of the breach of planning control and in the requirements, but there can in my view be no doubt that their purpose was to exclude from the effects of the enforcement notice activities carried on by Mr Hall in his private capacity.) Rule (4) therefore does not operate so as to preclude a claim in relation to personal items. It is here that the preliminary issue in respect of section 41 of the 1982 Act comes into play. The council removed all remaining items from the land in the exercise of their powers under this provision, and they say that Mr Hall is not entitled to compensation for their loss. Section 41, so far as relevant, provides:

“41. (1) this section has effect where − (a) property comes into the possession of a local authority after being found on buildings or premises owned or managed by them; or (b) property which has been deposited with a local authority is not collected from them in accordance with the terms under which it was deposited .... (3) If − (a) the local authority gives the owner or, as the case may be, the depositor of the property notice in writing − (i) that they require him to collect the property by a date specified in the notice; and (ii) that if he does not do so the property will vest in the local authority on that date; and (b) he fails to comply with the notice, the property shall vest in the local authority on the specified date. (4) The date to be specified in a notice under subsection (3) above shall be not less than one month from the date of the notice. .... (11) Where property is claimed by its owner or depositor before it vests in a local authority under this section, he may collect it on payment to the local 9 authority of any sum which they require him to pay in respect of costs incurred by them − (a) in making inquiries for the purposes of this section or serving any notice under subsection (3) above; and (b) looking after the property adequately. ...”

[26]Mr Park submitted that any loss in respect of the items appropriated by the council under section 41 was wholly attributable to Mr Hall’s failure to collect them from the council during the period allowed to him for that purpose. It was the duty of a claimant to mitigate his loss, and Mr Hall had failed to do so.

[27]Mr Hall said that the purpose of section 41 was to deal with goods that had been abandoned. The items on the land had not been abandoned and the council had not been entitled to deal with them under this provision. He had been unable to take any action to collect the items because he was bankrupt at the time and this prevented him from renting anywhere as a store. He had had nowhere to move his business to as no alternative premises had been identified by the council. The council had failed at that stage to make any advance payment of compensation. If he had received a payment he could have afforded to remove the goods.

[28]It was in my judgment undoubtedly lawful for the council to deal under section 41 with the items left on the land that they had acquired. They were property found on premises that they owned. The fact that they acted lawfully in vesting the items in themselves would not, however, necessarily preclude any claim for compensation under rule (6) in respect of their value. If Mr Hall is correct in his contention that he was unable to remove them because of factors consequential upon the compulsory acquisition, then he may be able to claim the value of those items that belonged to him personally rather than to the business. He attributed his bankruptcy to the failure of the council to make an advance payment, and his inability to rent alternative premises was, he said, due to his bankruptcy.

[29]The issue thus resolves itself into what is essentially a question of fact, and I have considered whether there is sufficient evidence before me to determine this question at this stage. Although I note in Mr Hall’s witness statement at paragraph 62 that his bankruptcy ended in June 2001, so that this could not have been the factor that Mr Hall said it was in July 2002 when the section 41 notice was served, I do not think that I can conclude on the facts that Mr Hall is necessarily unable to succeed on this sole remaining element of the claim. This is a matter on which each party ought to be allowed to adduce evidence.

[30]I therefore determine the preliminary issues as follows:(i) Mr Hall’s commercial use of the subject land was unlawful.

(ii) The claim for compensation in respect of loss of business profits and the value of chattels belonging to the business that were on the land when possession was taken is excluded by virtue of rule (4). 10

(iii) Mr Hall may possibly have a valid claim for the value of his own personal chattels that were on the land when possession was taken.

[31]It will be for Mr Hall to prove his case in relation to the chattels. This is now the sole outstanding element of claim, and an order giving directions for its determination will be sent shortly.

[32]A letter relating to costs accompanies this decision. Subject to any submissions that may be made, it appears to me that the appropriate order would be that the costs of this preliminary hearing should be reserved. This decision will become final when the question of costs has been determined. Dated 14 January 2008 George Bartlett QC, President 11