Smith and Another v South Gloucestershire Council
| Jurisdiction | England & Wales |
| Judge | Sir Martin Nourse,Lord Justice Mance,Lord Justice Ward |
| Judgment Date | 31 July 2002 |
| Neutral Citation | [2002] EWCA Civ 1131 |
| Court | Court of Appeal (Civil Division) |
| Date | 31 July 2002 |
| Docket Number | Case No: A3/2001/2151 |
[2002] EWCA Civ 1131
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM HIS HONOUR JUDGE WEEKS,
Q.C., (CHANCERY DIVISION, BRISTOL DISTRICT
REGISTRY)
Royal Courts of Justice
Strand,
London, WC2A 2LL
Lord Justice Ward
Lord Justice Mance and
Sir Martin Nourse
Case No: A3/2001/2151
Mr Stephen Jourdan (instructed by Messrs. Burges Salmon of Bristol) for the Appellant
Mr Richard Lynagh, QC and Mr D Shapiro (instructed by Messrs Wansboroughs of Devizes) for the Respondent
This is a dispute as to the date on which compensation payable by a registering authority under Section 10 of the Local Land Charges Act 1975 (compensation for non-registration or defective official search certificate) ought to be assessed.
The claimants, Colin Albert Michael Smith and his wife, Kathleen Smith, are the freehold owners of a property known as Beanwood Farmhouse, Beanwood Farm, Westerleigh, Bristol. They purchased it at auction on 22 nd February 1995 from the then mortgagee in possession, National Westminster Bank plc, at a price of £150,000, and it was conveyed to them on 22 nd March 1995. Before that, on 24 th February 1989, planning permission had been granted for the erection of an agricultural worker's dwelling and garage on land near the property, subject to a number of conditions, one of which was in the following terms:
"the occupation of the existing dwelling on the holding shall be limited to a person solely or mainly employed, or last employed, in the locality in agriculture as defined in section 290(1) Town and Country Planning Act 1971, or in forestry….. or a widow or widower of such a person."
That condition ("the occupancy condition"), being a local land charge within section 1 of the 1975 Act, was required to be registered in the local land charges register maintained by the defendants, South Gloucestershire Council, as the registering authority.
The other material events which occurred before Mr and Mrs Smith's purchase of the property were as follows. On 25 th January 1995 solicitors acting on behalf of National Westminster Bank plc submitted a requisition for search and official certificate of the register of local land charges in respect of the property. In response, on 31 st January 1995 the solicitors were issued with an official certificate of search in respect of the property, in which the occupancy condition was not shown as being registered in the local land charges register. The search was one of the documents made available to prospective bidders at the auction.
Mr Smith's evidence, which appears to have been unchallenged in essential respects, was to the following effect. He said that there were three reasons for his purchasing the property: first, it included buildings from which it was suitable to conduct his business; second, it provided (or would provide following renovation) a good family home; third, it offered a considerable development opportunity, in that it was derelict at the time of the purchase and he hoped that, following renovation, it could be sold on at a profit over and above the basic rise in the property market. He said that he only saw the local search on the day of the auction and that if he had known about the occupancy condition beforehand he did not believe that he would have bought the property. After the purchase he set about renovating the property, his best estimate being that by November 1998 he had expended about £226,450 in doing so. In November 1998, and for the first time, Mr Smith learned from a neighbour of the existence of the occupancy condition. He thereupon ceased work on the renovation, sought advice from a planning consultant and a solicitor and unsuccessfully attempted to get the occupancy condition lifted. Further parts of Mr Smith's evidence will be referred to later.
So far as material, section 10(1) of the 1975 Act provides:
"Failure to register a local land charge in the appropriate local land charges register shall not affect the enforceability of the charge but where a person has purchased any land affected by a local land charge, then….
(b) in a case where a material official search of the appropriate local land charges register was made in respect of the land in question before the relevant time, if the charge was in existence at the time of the search but (whether registered or not) was not shown by the official search certificate as registered in that register,
the purchaser shall …… be entitled to compensation for any loss suffered by him in consequence."
Sub-section (3)(b)(i) of section 10 provides that where, as here, the acquisition of the purchaser's interest was preceded by a contract for its acquisition "the relevant time" is the time when that contract was made. Sub-section (4) provides that any compensation for loss under the section shall be paid by the registering authority in whose area the land affected is situated. Sub-section (7) provides that in the case of an action to recover compensation under the section the cause of action shall be deemed for the purposes of limitation to accrue at the time when the local land charge comes to the notice of the purchaser.
The Council having denied liability and refused to pay them anything, on 8 th March 2000 Mr and Mrs Smith issued proceedings in the Chancery Division claiming compensation under section 10 of the 1975 Act to be assessed. Preliminary issues were directed and were tried by His Honour Judge Weeks, QC, sitting as a judge of the High Court in Bristol. On 1 st December 2000 he made an order declaring, first, that the certificate of search dated 31 st January 1995 was a "material official search" within section 10(3)(d) of the 1975 Act; secondly, that the search did not show the occupancy condition; and, thirdly, that as a consequence of that omission Mr Smith had purchased the property at the auction held on 22 nd February 1995. The order further provided that Mr Smith was entitled to compensation (to be assessed) pursuant to section 10 of the 1975 Act in respect of the loss he had suffered.
Although no appeal was brought against Judge Weeks's decision that Mr Smith was entitled to compensation, the Council did not make or offer him any payment until August 2001, when £100,000 was paid on account of their liability. The assessment of compensation took place on 20 th and 21 st September 2001, again before Judge Weeks. By that time Mrs Smith, as the joint owner of the property, had been joined as a claimant in the action. By his order made on 21 st September, the judge ordered the Council to pay to Mr and Mrs Smith £197,500 in respect of the diminution in value of the property, together with £44,760 by way of interest at 8% up to the date of judgment. He also ordered the Council to pay further sums to Mr and Mrs Smith in respect of matters which are no longer in dispute. He granted Mr and Mrs Smith permission to appeal on the issue of the valuation date.
It was common ground in the court below, first, that the amount of the compensation was to reflect the difference between the value of the property without the occupancy condition and its value subject to that condition; secondly, that the date when Mr and Mrs Smith's cause of action accrued (22nd February 1995) was not the appropriate date for the compensation to be assessed; thirdly, that the value of the property subject to the occupancy condition was £277,500 in November 1998 (when its existence was discovered) and £357,500 in September 2001 (the date of the compensation hearing). The Council argued for the earlier of those dates and Mr and Mrs Smith for the later. No other date was suggested.
The judge held that compensation was to be assessed at November 1998, not September 2001. He found that the value of the property without the occupancy condition was £475,000 in November 1998 and £650,000 in September 2001. Those findings produced differences in value of £197,500 at November 1998 (being the amount awarded by the judge) and £292,500 at September 2001. If account is taken of the interest at 8% on £197,500 up to the date of judgment (£44,760), the total amount of the award was £242,260 as opposed to the £292,500 which would have been awarded at September 2001, a difference of £50,240. It is in respect of that difference that Mr and Mrs Smith appeal.
The entitlement to compensation under Section 10(1) of the 1975 Act is the equivalent of a cause of action in tort. The general rule in tort, as in contract, is that damages are assessed at the date of the breach of duty. In this case that would have meant that the compensation should be assessed at 22 nd February 1995. Having made that point, the judge said:
"It is common ground, however, that to take such date would be unfair to the Smiths because it was not until November 1998, some three years later, that their attention was drawn to this planning restriction and so for three years or more they were unable to do anything about the planning restriction or to realise the property to quantify this loss."
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