West Suffolk County Council v Rought
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,LORD JUSTICE HODSON,LORD JUSTICE PARKER |
| Judgment Date | 27 April 1955 |
| Judgment citation (vLex) | [1955] EWCA Civ J0427-1 |
| Docket Number | re LANDS TRIBUNAL ACT, 1949 Section 3(4) |
| Court | Court of Appeal |
| Date | 27 April 1955 |
[1955] EWCA Civ J0427-1
In The Supreme Court of Judicature
Court of Appeal
The Master Of The Rolls (Sir Raymond Evershed),
Lord Justice Hodson and
Lord Justice Parker.
Mr GEOFFREY LAWRENCE, Q.C. and Mr HAROLD BROWN. Q.C. (instructed by Messrs Sharpe, Pritchard & Co., Agents for Mr Alan F. Skinner, Bury St. Edmunds) appeared on behalf of the Appellants.
Mr DEREK WALKER-SMITH. Q.C. and Mr M.L.H. CHAVASSE (instructed by Messrs E.P. Rugg & Co.) appeared on behalf of the Respondents.
The question in this appeal is whether the Appellants, the West Suffolk County Council, having acquired compulsorily certain land and property of the Respondent Company, W. Rought Limited (to whom I will hereafter refer as "the Company"), and having become liable to pay to the Company, inter alia, and in addition to the value of the land taken, compensation for the Company's disturbance, based on deprivation of business profits which the Company thereby incurred, the Arbitrator in assessing compensation should have taken some account of the additional taxes, particularly income tax, which the Company would or might have become liable to pay had the business profits been earned; or whether, as the Arbitrator held, he was bound as a matter of law to disregard altogether any such liability or possible liability.
The facts are few and not in dispute. The County Council was engaged, in and after the month of October 1952, upon a scheme for widening and rebuilding a bridge over the Little Ouse River at Brandon in Suffolk. The Company owned and was in possession of certain buildings in proximity to the old bridge. As a necessary part of the bridge widening scheme, the County Council, in the exercise of their statutory powers, duly acquired a substantial part of the Company's premises. The Company at all material times has carried on business as hatters' furriers and they used the' premises in question (a) for the storage of skins and (b) for the process known as that of "blowing" fur, As a result of the acquisition by the Council, the Company had to find other premises, which they did in, but not before, Midsummer 1955. During the period of nine months from October 1952 to Midsummer 1953 the Company was without the premises acquired by the County Council and without any other premises to take their place. As a result, the Company said that they had lost three beneficial contracts. I am not concerned with thedetails of those contracts or with the validity of the Arbitrator's finding that the Company had suffered loss, amounting in all to £11,600, in regard to those contracts. It is sufficient for the purposes of my Judgment to take one of the contracts as an example, a contract which (as the Arbitrator found) the Company would have been able to make and would have made with a firm known as wilsons of Manchester for the supply of 25,000 lbs. of Blown Coney No. 1 Fur, and which, after allowing for the cost and expenses incurred in connection with it (other than tax liability), would have yielded to the Company a profit of £5,000.
The argument of the County Council was to this effect: (1) if the £5,000 had been earned, then in fact the Company would have been liable to an additional amount of income tax by reason of the fact that their business profits would have been enhanced by that amount; (2) Whether or no the Company would have been liable to income tax in respect of that exact sum, the Arbitrator should in any case properly have made some estimate of the tax liability (if any) which the Company would have incurred as a consequence of that contract, and, having found as a fact what the amount would have been, he should have reduced the compensation payable by the County Council accordingly; (3) Otherwise the Company get, in the end of all, more than they would have got in the way of business earnings if there had been no compulsory acquisition of the Company's property. I add that, according to the argument of the County Council, as things are the Company will be under no liability whatever for tax in respect of the sum payable for compensation.
It is obvious that the point, as I have stated it, has, at least as a matter of first impression, some substance and reason in it. It is equally obvious that in the case where A., by reason of some breach of contract or tortious act on his part, has to pay B. by way of damages compensation for the profits or earnings which B. has in consequence lost, there issome reason and substance in the view that if A, is bound to pay the gross sum, without regard to the liability for tax, which B. would have incurred had he enjoyed the profits or earnings, B. Is better off financially than he would have been if A. had not broken the contract or not committed the tortious act. But in the case of Billingham v. Hughes, this Court held that, in the case at any rate of a tortious act on the part of A, - it was a case of personal injuries through negligence - no such diminution of liability is permissible. Billingham v. Hughes is binding in this Court, and I shall return to it and to some consideration of its ratio decidendi. But the argument of Mr Lawrence and Mr Brown for the Council was that the principle of that case was not in any event applicable to compensation payable for disturbance by an acquiring authority. The learned Counsel pointed out, first, that the acquiring authority is acting lawfully throughout and therefore ought not to be subject to any disability which might affect a wrongdoer; and, secondly, they observed that compensation for disturbance, though so described and though calculated in this case by reference to deprivation of business profits which would otherwise have been earned, is in truth no more and no less than part of the price paid for the acquisition of the land by the acquiring authority. On these grounds Mr Lawrence and Mr Brown have contended that the present case is distinguishable from Billingham v. Hughes and that we ought not to regard ourselves as governed by the latter.
For the second proposition stated by the Counsel for the Appellants there is ample authority. Under the old law, before the Acquisition of Land (Ascertainment of Compensation) Act, 1919, it was so stated and settled by the House of Lords in the case of Commissioners of Inland Revenue v. Glasgow and South-Western Railway Company, 1912 Appeal Cases, page 315,and since the 1919 Act the position has been held to be the same by this Court in the case of Horn v. Sunderland Corporation. 1941 2 King's Bench, at page 26. Mr Lawrence particularly relied on certain language in the latter case. I observe, however, first, that in the Glasgow and South-Western Railway Company case the question before the House was as to the amount of the stamp duty payable upon a transfer of the property acquired. The question in the latter case of Horn v. Sunderland Corporation I take from the second paragraph of the headnote, which says: "Held, by the Court of Appeal (Lord Justice Goddard dissenting) that when land being used for agricultural purposes is ripe for building and compensation for its compulsory acquisition is fixed on the basis of its value as building land, compensation for disturbance shall only be awarded to the extent (if any) that the value of the land for agricultural purposes together with the compensation for disturbance exceeds the compensation payable on the basis of the land being building land".
I now refer to certain passages in the Judgments in that case upon which Mr Lawrence particularly fastened. Thus, at page 32, Sir Wilfrid Greene, the Master of the Rolls, said this: "Apart from injurious affection, the question which a jury under the Lands Clauses Acts and an arbitrator under the Act of 1919 has to answer is: What is the price which ought to be paid to the owner for the land which is being compulsorily acquired, price and compensation being the same thing under different names: see Inland Revenue Commissioners v. Glasgow and South Western Railway Company. It became the practice under the Lands Clauses Acts to ask the jury to deal separately with the elements into which the price was capable of being split, although there was in strictness no necessity to do this, since the price to bepaid was a global sum". Then, towards the end of the Judgment, this passage was referred to, at page 36: "It was also said by Mr Squibb that, if the respondent is wrong in his contention, results will follow which the legislature cannot have intended. As an illustration of his point, I may take the case of land which, at the time of acquisition, has a potential value as building land which gives it a value (say £11,000) rather higher than would have been the case if it had been purely agricultural (say £10,000). If by disturbance the owner suffers a loss of £2,000 and nothing is to be awarded in respect of that disturbance, the owner will be damnified. The reasoning which appeals to me does not, however, lead to...
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