Blythswood Friendly Society v City of Glasgow District Council
| Jurisdiction | England & Wales |
| Judge | Lord Wilberforce,Lord Salmon,Lord Fraser of Tullybelton,Lord Keith of Kinkel,Lord Scarman |
| Judgment Date | 06 July 1978 |
| Judgment citation (vLex) | [1978] UKHL J0706-3 |
| Date | 06 July 1978 |
| Court | House of Lords |
| Docket Number | No. 1. |
[1978] UKHL J0706-3
House of Lords
Lord Wilberforce
Lord Salmon
Lord Fraser of Tullybelton
Lord Keith of Kinkel
Lord Scarman
My Lords,
I have had the advantage of reading in draft the speech of my noble and learned friend Lord Keith of Kinkel. I agree that the appeal should be allowed to the extent proposed by him. I also agree to his proposed order as to costs in this House and in the Second Division proceedings.
My Lords,
I have also had the advantage of reading in draft the speech of my noble and learned friend Lord Keith of Kinkel. I agree that the appeal should be allowed to the extent proposed by him. I also agree that neither party should be awarded costs in this House or in the Second Division proceedings.
My Lords,
I have had the advantage of reading in draft the speech prepared by my noble and learned friend Lord Keith of Kinkel and I entirely agree with it. I agree that the appeal should be allowed to the extent proposed by him, and that neither party should be found entitled to costs or expenses either in this House or in the Court of Session.
My Lords,
This appeal is concerned with the proper method of ascertaining the compensation to be paid in respect of the discharge of a ground annual secured over certain heritable property which has been the subject of compulsory purchase.
The property in question is a tenement building at 85 Garnethill Street, Glasgow. It was compulsorily acquired by the appellants' predecessors, Glasgow Corporation, which invoked the expedited procedure provided for in the Sixth Schedule to the Town & Country Planning (Scotland) Act 1945, as re-enacted with amendments in the Eleventh Schedule to the similarly titled Act of 1947, to the effect that the subjects vested in the Corporation on 12th January 1976. The building comprised twelve flatted dwellings, of which five were let on controlled tenancies, two were let on regulated tenancies, and five were owner-occupied. The subjects were charged with a ground annual of £17.63 under a contract of ground annual constituted in 1863, the benefit of which had been purchased by the appellants in 1965. The contract contained provisions relating to the erection and maintainance of buildings and other matters, which were constituted real burdens running with the land. The proprietor of the property has been compensated by payment of the sum of £1,910 and a feu-duty of £4.28 payable in respect of it has been discharged.
The use by Glasgow Corporation of the expedited procedure to which I have referred had the effect, by virtue of para. 3(4)(b) of the Sixth Schedule to the 1945 Act, that the ground annual was discharged on the date of vesting in the Corporation, and that the Corporation became liable to pay compensation for the discharge under the provisions of the Lands Clauses Consolidation (Scotland) Act 1845. Section 108 of that Act provides:
"If any difference shall arise between the promoters of the undertaking and the party entitled to any such charge upon any lands required to be taken for the purposes of the special Act, respecting the consideration to be paid for the discharge of such lands therefrom, or from the portion thereof affecting the lands required for the purposes of the special Act, the same shall be determined as in other cases of disputed compensation."
The Town and Country Planning (Scotland) Act 1954, by section 63, introduced special provisions for determining the consideration to be paid for the discharge of inter alia ground annuals. These provisions are now re-enacted in section 20 of the Land Compensation (Scotland) Act 1963, which is in these terms:
"(1). Subject to the provisions contained in section 32 of this Act relating to increased compensation in cases falling under section 31 of this Act, the aggregate amount of the consideration payable under section 108 of the Lands Clauses Consolidation (Scotland) Act 1845 in respect of the discharge from all relevant prestations of land the dominium utile in which has been acquired (whether compulsorily or by agreement) by an authority possessing compulsory purchase powers, shall be an amount equal to the difference between—
(a) the amount of the compensation payable in respect of the acquisition of the dominium utile in the land, and
(b) the amount of the compensation which would have been so payable if the land had not been subject to any relevant prestation.
(2) Any reference in this section to a 'relevant prestation' is a reference to any feu-duty, or ground annual or other annual or recurring payment or incumbrance (or any portion thereof), to which the said section 108 applies (not being stipend or standard charge in lieu of stipend).
(3) Where the dominium utile has been acquired by agreement it shall be assumed for the purpose of estimating the amounts referred to in subsections (1) (a) and (1) (b) of this section that it was acquired compulsorily in pursuance of a notice to treat served on the date of the laking of the agreement.
(4) If the land is subject to only one relevant prestation the amount of the consideration in respect of the discharge of the land from that prestation shall be equal to the aggregate amount of the consideration.
(5) If the land is subject to two or more relevant prestations the market value of each such prestation immediately before the service of the notice to treat or, as the case may be, the making of the agreement, shall be estimated and the aggregate amount of the consideration shall be attributed to the discharge of the land from the relevant prestations in order of priority, so however that so much thereof as is attributed to the discharge of the land from any prestation shall (without prejudice to the next following subsection) not exceed the value estimated as aforesaid, of that prestation.
(6) If, after giving effect to the provisions of the last preceding subsection in any case to which they apply, there remains an unattributed balance of the aggregate amount of the consideration, the amounts attributed in accordance with those provisions shall be increased proportionately so as to extinguish the balance.
(7) Subject to the next following subsection references in this section to the compensation payable in respect of the acquisition of the dominiumutile in any land shall be construed as references to such compensation exclusive of any compensation for disturbance or for severance or injurious affection.
(8) In relation to the acquisition of the dominium utile in any land to which Rule (5) of section 12 of this Act applies, references in this section to the compensation payable in respect of the acquisition shall be construed as references to the compensation (exclusive of any compensation for disturbance or for severance or injurious affection) which would have been so payable if the said Rule (5) had not applied."
Determination of the consideration payable for discharge of the ground annual in the present case was referred by the parties to the Lands Tribunal for Scotland, which fixed the consideration at the sum of £158. At the request of the parties the Tribunal stated a Special Case for the opinion of the court upon certain questions of law therein stated to which I shall refer in detail later. The case was heard by the Second Division (Lord Justice-Clerk Wheatley, and Lords Kissen and Thomson), who by interlocutor dated 4th November 1977 answered certain of the questions and remitted to the Tribunal to act in accordance with the views and decisions expressed in the opinion of the court. Against that interlocutor the appellants, Glasgow District Council, now appeal, with leave, to this House.
It was contended by the respondents before the Tribunal that in determining the consideration payable under section 20(1) of the 1963 Act there should be taken into account the benefit of the real conditions in the contract of ground annual, to which I have referred above. The Tribunal held that the benefit of these conditions fell to be disregarded, and that in any event they were of no significant value. The contention was not renewed before the Second Division.
The Special Case sets out the approach to the matter of valuation of the ground annual adopted by the expert witness on either side, Mr. McNeill for the appellants and Mr. Coyne for the respondents. Mr. McNeill presented valuations of the dominium utile of the subjects which he claimed to have been made on the respective bases prescribed by paragraphs (a) and (b) of section 20(1). His valuation for the purposes of paragraph (a) represented in the case of each of the categories of houses included in the property a number of years' purchase of net income, derived from the rents (actual or estimated) of the houses. In arriving at the net income the prestations, namely the feu-duty and the ground annual, were treated as part of the expenditure set against the rents, the remainder of the expenditure being his estimate of other costs borne by the landlord. The number of years' purchase taken for the purposes of the calculation was 18 in the case of the houses let on controlled tenancies, 12 in the case of those let on regulated tenancies, and 14.5 in the case of the owner occupied houses. These figures of years' purchase were arrived at by analysis of actual sale prices of comparable properties, all of which were subject to prestations in the shape of feu-duties or ground annuals or both. In his valuation for purposes of paragraph (b) of section 20(1) Mr. McNeill simply added back the amount of the prestations. So the difference between the valuations under paragraphs (a) and (b) came to be...
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