ROSEMARY DUNCAN; PRUDENTIAL ASSURANCE COMPANY LIMITED v EPPING FOREST DISTRICT COUNCIL LCA/62/2003

UPPER TRIBUNAL
LANDS CHAMBER
LCA/62/2003Case No LCA/62/2003
Between
ROSEMARY DUNCAN; PRUDENTIAL ASSURANCE COMPANY LIMITEDApplicantEPPING FOREST DISTRICT COUNCILRespondent
Before
refusal not recoverable – reasonable costs of appealing against deemed refusalRoger Lancaster (instructed by Halliwell Landau of Manchester) for ClaimantCharles Mynors (instructed by Colleen O’Boyle, Solicitor to Epping Forest District Council) for Compensating AuthorityVenue 48/49 Chancery Lane, London WC2A 1JRDate 27 February 2004Hearing 15 January 2004Property: 46 Highfield Green, Epping, EssexCatchwords: COMPENSATION – tree preservation order – preliminary issues – held deemed refusal of application to fell was refusal on which claim could be based – cost of reparing damage suffered before refusal not recoverable – reasonable costs of appealing against deemed refusal recoverable if reasonable to appeal
[1]The preliminary issues that I have to decide concern the claimants’ entitlement to compensation in respect of a refusal of consent to cut down two trees protected by a tree preservation order adjacent to a dwelling house, 46 Highfield Green, Epping. The facts relevant to these preliminary issues are not in dispute. The two trees, a weeping ash and a field maple, were specified in the District of Epping Tree Preservation Order No 28/83, made by the compensating authority on 12 April 1984. The house, an end of terrace house built in the 1960s, was bought by the claimant Mrs Duncan in 1989. In 1997 she noticed that damage to her property had occurred to her front porch and rear conservatory and she reported it to her insurers, the Prudential Assurance Company Ltd. She also instructed a specialist firm, O’Callaghan Associates, who advised that the damage was due to subsidence caused by the roots of the two trees. In February 1998 cracks were reported in the bathroom wall. In December 1998, on Mrs Duncan’s instructions, O’Callaghan Associates submitted to the authority an application for consent to fell the trees. The application was not determined within the period prescribed and in March 1999 and appeal against its deemed refusal was made to the Secretary of State for Transport, Local Government and the Regions. An inspector held an inquiry in February 2002, and he recommended that consent should be granted for the felling of the weeping ash but not the field maple. The Secretary of State, however, in a decision dated 20 June 2002 rejected the recommendation for consent, and dismissed the appeal.[2]During the long period that elapsed between the claimant’s notice of appeal to the Secretary of State in March 1999 and its determination in June 2002 the claimant sold the house to Mr R M Brown and Mrs M Parker. The statement of agreed facts says that the sale was in or around April 2000. At that stage no remedial works had been carried out, and the price reflected the damaged condition of the house. The claimant made a claim under her insurance policy for the reduction in market value and was paid £50,000 in settlement.[3]In September/October 2000 the purchasers carried out the necessary works to underpin the flank wall of the house, and stabilising works were carried out to the front porch, the conservatory and the boundary wall. In his report to the Secretary of State the inspector concluded that the damage to the porch might have been caused by the roots of the weeping ash and that the tree might cause damage in the future to parts of the house that had not been underpinned. The Secretary of State took the view that the tree’s roots were not necessarily the prime cause of subsidence in the porch and that, as underpinning had been carried out in 2000 and no level monitoring had been carried out after 1999, there was no evidence of continuing movement in the property, so that the felling of the tree was not justified. In relation to the field maple the inspector concluded that it might have caused damage in the past to the flank wall of the house and to the boundary wall and probably had done so to the conservatory, but that it would not cause damage in the future to those parts of the house that had been underpinned and that the likelihood of future damage to the remainder of the house had been substantially reduced by the underpinning. The Secretary of State expressed his conclusions on the effect of the field maple in substantially the same terms. 3[4]The TPO was made in pursuance of powers contained in section 60 of the Town and Country Planning Act 1971. It accords with the model order in the Schedule to the Town and Country Planning (Tree Preservation Order) Regulations 1969. It contains (in Article 2) a prohibition against the cutting down etc of the specified trees without consent, and it provide (at Article 3) for the making of application for consent. Under Article 4(1) where an application for consent is made, the authority may grant such consent either unconditionally or subject to conditions or may refuse consent. Article 8 applies the Third Schedule to the Order which contains certain sections of Part III of the 1971 Act adapted and modified for the purposes of the Order. Under section 36(1), as so set out, where an application for consent is refused or is granted subject to conditions, the applicant may appeal to the Secretary of State, who, under section 36(3), may allow or dismiss the appeal and may deal with the application as though it had been made to him in the first instance. Under section 37 if within two months from the date of receipt of the application the authority have not given notice of their decision or notice of it having been referred to the Secretary of State the provisions of section 36 apply in relation to the application as if consent had been refused.[5]Article 9 of the Order provides:
“9. Subject to the provisions of this Order, any person who has suffered loss or damage in consequence of any refusal (including revocation or modification) of consent under this Order or of any grant of any such consent subject to conditions, shall, if he makes a claim on the authority within the time and in the matter prescribed by this Order, be entitled to recover from the Authority compensation in respect of such loss or damage ….”
Article 11(1) makes provision for the making of a claim for compensation, and Article 11(2) provides:
“(2) The time within which any such claim shall be made as aforesaid shall be a period of twelve months from the date of the decision of the authority or of the Secretary of State, as the case may be, or where an appeal has been made to the Secretary of State against the decision of the authority from the date of the decision of the Secretary of State on the appeal.”
[6]On the application of the council, I ordered that the following issues be determined as preliminary issues:
“(a) Whether or not the First Claimant is entitled to be compensated in respect of the loss she suffered on her sale of the Property, given that she has already been compensated for that loss by the Second Claimant. (b) Whether or not the Second Claimant is entitled to be compensated in respect of any loss that relates to or arises out of (i) harm caused to the Property by the trees prior to the date of the deemed refusal of consent under the Order. (ii) The possibility of such harm being caused to the Property after the date on which the loss was suffered; and 4 (iii) The costs of mounting the appeal to the Secretary of State against the deemed refusal of consent.”
[7]Issue (a) no longer remains for determination as the council accept that the second claimant is entitled to seek compensation on behalf of the first claimant under the step-in rights in the insurance policy taken out by the first claimant. In the event the preliminary issues for determination resolved themselves into the following: (1) What was the refusal (and what was the date of the refusal) in respect of which a claim for compensation may lie under Article 9? Was it the deemed refusal (February 1999) or the Secretary of State’s decision, which was given on 20 June 2002? (2) Are the claimants entitled to compensation to reflect the cost of remedying damage caused to the property by the trees prior to the date of refusal? (3) Are the claimants entitled to compensation to reflect costs of the appeal to the Secretary of State?[8]Issue (1) arises because the council contended that the refusal for the purposes of Article 9 was the Secretary of State’s decision given on 20 June 2002 and that that refusal could not have caused loss to the claimants since Mrs Duncan had sold the house before that date. The contention of Mr Charles Mynors for the council was this. Under section 2(4) of the Planning (Consequential Provisions) Act 1990, any reference in any enactment, instrument or document to the provisions of the repealed 1971 Act, must be construed, so far as may be required for continuing its effect, as including a reference to the corresponding provision in the consolidating Town and Country Planning Act 1990. Thus the reference in the Third Schedule to the Order to section 37 of the 1971 Act must be construed as a reference to the corresponding provision, section 78(2), in Part III of the 1990 consolidating Act. Section 11 of the Interpretation Act 1978 provides that, where an Act confers power to make subordinate legislation, expressions used in that legislation have, unless the contrary intention appears, the meaning they bear in the Act. Section 336(5)(c) of the 1990 consolidating Act provides that “in relation to a decision given on an appeal in the circumstances mentioned in section 78(2), references [in this Act to such a decision] shall be construed as references to the decision so given,” and section 336(1) provides that “planning decision” means a decision made on an application under Part III of the Act. So, said Mr Mynors, the refusal of consent consisted in the decision of the Secretary of State.[9]Mr Roger Lancaster for the claimants submitted that section 336 had no application to the Order. In Bell v Canterbury City Council (1988) 56 P & CR 211 Russell LJ (at 216) had rejected the council’s contention that the words in Article 9 “loss or damage in consequence of any refusal of consent” should be construed in the light of various provisions in the 1971 Act dealing with the measure of compensation consequent upon other refusals of consent by local planning authorities exercising planning functions. The lord justice said that the interpretation of Article 9 should be read without reference to other provisions in the Act and the words of Article 9 should be give their ordinary meaning. 5[10]Mr Lancaster said that under the Third Schedule to the Order the effect of the council’s failure to give notice of a decision on the application for consent was that the council were deemed to have refused the application in February 1999. Under Article 9 the council was the compensating authority where a person suffers loss or damage as the result of any refusal of consent. Article 11 of the Order specifically contemplated the Secretary of State’s involvement in the process and provided for the submission of a claim for compensation effectively to be delayed until the outcome of the appeal was known. The council could at any time have indicated that they would entertain a further application, which they could have granted. An inevitable consequence of the council’s interpretation would be that no authority would determine an application since by leaving the matter effectively to the Secretary of State they would avoid any possibility of having to pay compensation.[11]Mr Mynors’s contention about the effect of section 336, assuming that it applied to the construction of the Order seemed to me to be misplaced in view of the provisions of the paragraph in subsection (5) after the one (paragraph (c)) on which he placed reliance.

(d) provides:

“the time of a planning decision, in a case where there is or was an appeal, shall be taken to be or have been the time of the decision as made by the local planning authority (whether or not that decision is or was altered on that appeal) or, in the case of a decision given on an appeal in the circumstances mentioned in section 78(2), the end of the period there mentioned.”
[12]The effect of paragraphs (c) and (d) taken together are thus that where a decision is given on an appeal against an authority’s deemed refusal of an application, the decision for the purposes of the Act is the Secretary of State’s decision but the time of that decision is taken to be the end of the period referred to in section 78(2), ie the period of two months from the date of the council’s receipt of the application. Mr Mynors accepted that this was the effect of these provisions, so that reliance on section 336 would lead to the conclusion that the date of the decision in this case was 18 February 1999 (two months after the date on which the council had received the application, 18 December 1998).[13]However, I do not think that section 336 does govern the construction of the Order as to what constitutes the refusal for the purposes of Article 9 and the time of the decision. The reason for this is that section 336(1) provides that “planning decision” means a decision made on an application under Part III of the Act. The application for consent in this case was not made under Part III of the Act but under Article 3 of the Order. It is because of this that the Third Schedule to the Order modifies section 36(1) (which gives the right of appeal) so as to reflect the fact that the application is not made under the Act but under the Order. It provides:
“Where an application is made to the authority for consent under the Order…”
[14]Since, therefore, section 336 does not apply for the purpose of construing the Order, “refusal” in Article 9 falls to be construed without reference to the Act – in the same way as the words “compensation in respect of such loss or damage” in the same Article (see the Bell case above). It is, in my view, clear that where an authority refuse consent and an appeal against their decision is dismissed by the Secretary of State, the refusal for the purpose of Article 9 is the decision of the authority to refuse consent. The Secretary of State in such circumstances 6 does not refuse consent. He dismisses the appeal against the refusal under the power contained in section 36(3) as contained in the Third Schedule, which provides that he “may allow or dismiss the appeal”. That it is the date of the refusal by the authority that is the material date for the purpose of Article 9 was accepted in Bell (see per Slade LJ (1988) 56 P & CR 211 at 219).[15]In the present case there was no decision by the council refusing consent. Nor was there any refusal of consent by the Secretary of State. In his decision he said simply:
“…the Secretary of State hereby dismisses your appeal.”
The appeal had been made under section 36(1) by virtue of section 37, which provided that section 36 should apply in relation to the application as if the consent applied for had been refused by the authority. To hold that in these circumstances there has been no refusal of the application, so that the claimant cannot be entitled to compensation, would not be an acceptable construction of the provisions. It is inconceivable that no compensation could ever be payable where the authority does not make a decision on the application, and indeed it is no part of the council’s case that that is the effect of the provisions. The provisions of section 37, now section 78(2) of the 1990 Act, are commonly referred to as establishing a “deemed refusal”, and in my judgment the Order is to be applied on the basis that, where the authority fail to determine the application, there is a deemed refusal which constitutes a refusal for the purposes of Article 9. Similarly where Article 11 refers to an appeal that “has been made to the Secretary of State against the decision of the authority” the reference to the decision includes a deemed refusal.[16]On issue (1), therefore, I conclude that the refusal for the purposes of Article 9 was the deemed refusal of the application, and the time of it was the end of the period of two months from the receipt of the application, ie 18 February 1999.[17]Issues (2) and (3) can be dealt with more shortly. On issue (2), compensation is payable only in relation to loss or damage that has been suffered in consequence of any refusal. It follows that (subject to the qualification that I mention below) the cost of remedying damage that the property suffered before the date of the refusal will not be recoverable because the damage will not have been suffered in consequence of the refusal, and the loss – the cost of remedying the damage – similarly will not have been suffered in consequence of the refusal. The qualification to this is that, if as a result of the refusal of consent a more costly remedy is required than would have been necessary if consent had been granted, the extra cost will be recoverable because it will be a consequence of the refusal. Typically works to deal with subsidence damage caused by tree roots will be designed both to repair the damage that has been suffered and to provide protection against future possible damage from this source. More extensive and more costly works may be required if the tree that has caused the damage is to remain following the refusal of consent than if the tree is to be cut down: see for example Buckle v Holderness Borough Council [1996] 2 EGLR 133.[18]The fact that the tree roots have caused damage in the past is likely to inform the judgment that has to be made on what works are necessary to prevent such damage recurring in the future. It must also be said that compensation may be awarded to reflect the loss of market value arising from the refusal of consent (see Bell), and it is not necessarily the case that the measure of this loss of value will be the extra cost of the remedial and preventive works. It is possible that the knowledge of past damage, coupled with the inability to remove the tree that 7 has caused it and the consequent fear of future damage, may result in a loss of value that is greater than the extra cost of the works. Whether or not it does so, however, is a matter of valuation.[19]On issue (3) there is no doubt, in my judgment, that the reasonable costs of pursuing an appeal against the refusal of consent are recoverable as a loss suffered in consequence of the refusal provided that on the facts it was reasonable to pursue the appeal. In Buckle the Tribunal (Dr T Hoyes FRICS) accepted that it was reasonable on the part of the claimant to have pursued an appeal because, had it been successful, the claim would have been reduced, so that, to that extent, the appeal was an attempt to mitigate the claimant’s loss. Whether the same would apply in the present case depends on the facts, and I am not concerned in determining these preliminary issues to come to any conclusion in this respect. On the face of it, however, the fact that the council had failed to determine the application and the inspector recommended that consent should be granted for the felling of one of the trees would, quite apart from other considerations, suggest that the appeal was reasonable.[20]I therefore determine as follows the preliminary issues:(1) The refusal for the purposes of the application of Article 9 of the Order is the deemed refusal of the council, and the relevant date for that purpose is 18 February 1999.(2) The cost of repairing damage suffered before the date of the refusal is not itself recoverable, but, if the effect of the refusal was to increase the cost of carrying out works to repair past damage and to prevent possible future damage, the extra cost may form the subject of compensation. Similarly the fact that damage had occurred in the past may be relevant to any question of the loss of market value arising from the refusal of consent.(3) The reasonable costs of pursuing the appeal against the refusal of consent are recoverable as a loss suffered in consequence of the refusal provided that on the facts it was reasonable to pursue the appeal.[21]The parties are now invited to make submissions on costs, and a letter dealing with this accompanies this decision, which will not become final until the question of costs has been disposed of. Further directions as to the future conduct of the reference will be given in due course. Dated 19 January 2004 George Bartlett QC, President Addendum on costs 8[22]I have received the parties’ written submissions on costs. The claimants ask for their costs of the preliminary hearing. They say that they were successful at the hearing. The compensating authority say that the consequences of the decision on the preliminary issues are that compensation is payable under three heads as follows:(a) the extra costs (if any) of works necessary to prevent future damage likely to be caused by the tree, over and above the cost of works merely to rectify past damage;(b) any additional diminution in market value due to the need to retain the tree, over and above the costs referred to in (a);(c) the costs of pursuing the appeal to the Secretary of State, provided that it was reasonable to pursue the appeal. They go on to argue that the compensation payable under (a) and (b) is either nil or, at the very most, only a small proportion of the diminution is market value that forms the basis of the claim; and that compensation is payable under (c) only in relation to the professional costs incurred up to the date of the sale of the property, and that these are likely to be only a very small proportion of those claimed. They say that they are entitled to be paid by the claimants a significant proportion if not all of their costs of the preliminary hearing.[23]Of the three issues I determined at para 20,(1) was determined in favour of the claimants,(2) was determined in favour of the council, but with qualifications, and(3) was determined in favour of the claimants, but with a qualification. Neither party has been wholly successful, therefore, and in my judgment the proper award of costs is therefore likely to depend on the amount of compensation that is ultimately awarded and any offers that have been made. I am in no position to determine the correctness of the council’s contentions on quantum. This must await the substantive decision. The appropriate order is that the costs of the preliminary hearing be reserved, and I so order.[24]The claimants ask that two further orders be made. Firstly they seek an order that the compensating authority pay the claimants their reasonable costs of pursuing the appeal against the deemed refusal of consent to fell. These costs, however, form part of the substantive claim for compensation, and what costs were reasonably so incurred fall to be determined as part of the substantive decision. Secondly the claimants ask for a stay of 3 months to enable negotiations to take place. On this, rather than directing a stay, I will order that the substantive hearing be now fixed for the earliest available date after 1 June 2004. Dated 27 February 2004 George Bartlett QC, President 9