Munton v Greater London Council
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,LORD JUSTICE SCARMAN,LORD JUSTICE GOFF |
| Judgment Date | 05 February 1976 |
| Judgment citation (vLex) | [1976] EWCA Civ J0205-1 |
| Court | Court of Appeal (Civil Division) |
| Date | 05 February 1976 |
[1976] EWCA Civ J0205-1
In The Supreme Court of Judicature
Court of Appeal
The Master of the Rolls
Lord Justice Scarman and
Lord Justice Goff
MR. L. SWIFT, Q.C. (instructed by J.J. Warren, Esq., LL.D., Solicitor, Town Hall, East Ham) appeared on behalf of the Appellants.
MR. J. SULLIVAN (instructed by Messrs. Prestons & Kerlys, Solicitors, London) appeared on behalf of the Claimant.
THE MORTGAGEES were neither present nor represented.
REVISED JUDGMENT
In 1969 there were 1,000 houses in the London Borough of Newham which were slums. The Borough made a compulsory purchase order which was confirmed by the Minister. It entitled the Borough to acquire the houses, paying the owners the value. One of the houses, No. 9 Winton Road, London, E.16., was owned by a lorry driver Thomas Munton. He lived there with his wife and three children. On the 12th September, 1969 the Borough served notice to treat. But the Borough did no more at that time because they had not made arrangements to re-house the occupants. Meanwhile the District Valuer set to work valuing the houses. In the spring of 1971 he assessed the value of Mr. Munton's house at £3,400. In addition there would be expected to be added about £100 compensation for disturbance. Even then however the Borough were not ready to occupy. They did not enter into occupation until December 1972. By that time the value had increased so much that the District Valuer put the value of the house then at £5,100 including disturbance. So in 18 months the value had nearly doubled. But in the next few months the property market collapsed. We have no valuation for this house but I should not be surprised if in the middle of 1973 the value of the house was only £3,000.
The question has arisen as to what is the proper compensation to be paid to Mr. Munton. The Borough say that it is only the £400 assessed by the District Valuer in 1971: whereas Mr. Munton claims that it is the £5,100 which was the value when the Borough went into occupation. The President of the Lands Tribunal has held that it is £5,100. The Borough appealed and they lost.
Before I deal with the facts of the case, I will consider two points of law which were discussed before us. The firstis whether, in order to be binding, there must be a memorandum in writing sufficient to satisfy Section 40 of the Law of Property Act, 1925. Now on this point, a compulsory purchase differs from an ordinary contract of sale and purchase. Two propositions are settled. First, when a notice to treat is given, it binds the local authority to purchase, and the owner to sell at a price to be ascertained. See Mercer v. Liverpool Railway (1903) 1 King's Bench at page 664, approved 1904 Appeal Cases at page 463. Second, when there is an unconditional agreement fixing the price - whether in writing or by word of mouth - it is the equivalent of a binding contract between the parties. See Harding v. The Metropolitan Railway Co. (1871-2) Law Reports, Volume 7, Chancery Appeals. Lord Hatherley, the Lord Chancellor, at page 158 said: "When the price is ascertained, you have then all the elements of a complete agreement, and, in truth, it becomes a bargain made under legislative enactment between the railway company and those over whom they were authorized to exercise their power". In Dart on Vendors and Purchasers, Eighth Edition, pages 255-6, it is said: "Where, however, the price is ascertained … the contract is complete, and may be specifically enforced by or against the company". Similar statements will be found in Cary-Elwes (1906) 2 Chancery 148 and Halsbury's Laws of England, Fourth Edition, Volume 8, paragraph 136. Once therefore a notice to treat has been served and there is an agreement on the price, a binding obligation is enacted which is equivalent to a contract between the parties. But I do not think this obligation is a contract such as to require the observance of Section 40 of the Law of Property Act, 1925. It is not a binding contract but a statutory contract which is not within the 1925 Act. That appears from Pollard v. The County Council of Middlesex (1906) 95 Law Times Reports 871 when Mr. Justice, Parker said: "It is quite true that statutory agreement arising out of notices to treat are not within the Statute of Frauds, and that oral evidence of them may therefore be admitted". This is followed in practice. Very rarely do the parties enter into an actual contract in writing. The local authority serves a notice to treat. There is agreement on the price. Then the matter is completed by the conveyance and payment of the money.
The second point of law is whether, in order to be binding, there has to be one entire sum agreed that comprises not only the value of the property itself but also the compensation for disturbance. It was in 1845 that the inquiry was only as to the "value of the land", as it was held that in this sum there was to be included the compensation for disturbance. So that only one sum was to be awarded. That seems to be the effect of Commissioners of Inland Revenue v. Glasgow & South-Western Railway Co. (12) Appeal Cases 315, and Horn v. Sunderland Corp. (1941) 2 King's Bench 26 But although only one sum is awarded, it is very proper, in assessing it, to divide it into two parts (1) the land itself and (2) disturbance. Starting with the Acquisition of Land Act, 1919 and repeated in the Land Compensation Act, 1961 Parliament itself has made a division between the two. In Section 5(6) it says: "The provisions of rule (2)"- that is, about the value of the land - "shall not affect the assessment of compensation for disturbance or any other matter not directly based on the value of land". Since those Acts, the practice always has been for the compensation for disturbance to be assessed separately from the value of the land. That is as it should be. The value of the land can be assessed whilst the owneris still in occupation. The compensation for disturbance cannot be properly assessed until he goes out. It is only then that he can tell how much it has cost him to move, such as to get extra premises or to move his furniture. The practice is warranted by two cases in this court: Harvey v. Crawley Development Corporation (1957) 1 Queen's Bench 485 and Judge Lee v. Minister of Transport (1966) 1 Queen's Bench 111.
In my opinion that is a quite proper view for the local authority to agree in the first place with the owner on the value of the house itself: and to leave till later the compensation for disturbance. That can be assessed later when the local authority go into occupation and the house owner moves.
There is one other point I must mention. It is the effect of Birmingham Corporation v. West Midland Baptist (Trust) Association (1970) Appeal Cases 874. Previously for over 100 years the value was taken at the date of the notice to treat. But when inflation came upon us, the House of Lords altered that old rule. They held that in the absence of agreement, the valuation is to be taken at the date when the acquiring authority enters into possession of the property- But if there has been a binding agreement beforehand as to the value, that would no doubt prevail. The Borough say that there was firm agreement on the price of £400; whereas, for Mr. Munton, it is said that there was no firm agreement, because it was "subject to contract". It depends on the correspondence. The Borough served notice to treat in 1969. In February 1971 the surveyors for Mr. Munton put in a claim for £3,500 subject to contract and with vacant possession on completion, plus surveyors' fees, legal costs and disbursements. It was referred to the District Valuer. On the 19th May, 1971 hewrote to Mr. Munton's surveyors; "I have considered the matter and I am prepared to recommend for the approval of the Acquiring Authority and Government Departments concerned, payment of...
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