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|Judgments - Wildtree Hotels Limited and Others v. London Borough of Harrow
HOUSE OF LORDS
Lord Steyn Browne-Wilkinson Lord Nolan Lord Hoffmann Lord Hobhouse of Woodborough
OPINIONS OF THE LORDS OF APPEAL FOR JUDGMENT
IN THE CAUSE
WILDTREE HOTELS LIMITED AND OTHERS
LONDON BOROUGH OF HARROW
ON 22 JUNE 2000
I have had the advantage of reading in draft the speech of my noble and learned friend Lord Hoffmann. For the reasons he gives I would also make the order which he proposes.
I have had the benefit of reading in draft the speech of my noble and learned friend Lord Hoffmann. For the reasons which he gives I would restore the opinion of the Lands Tribunal on question 3 of the preliminary points of law but otherwise would dismiss the appeal.
I have had the advantage of reading in draft the speech of my noble and learned friend Lord Hoffmann. For the reasons he gives I would also make the order which he proposes.
1. The issues
The Harrow Hotel is a family business. It consists of some converted houses in the Pinner Road, a section of the main A404 road from central London to Harrow. A short distance south of the hotel, the road crosses the Metropolitan Line by Roxborough Bridge. Between 1989 and 1994 the London Borough of Harrow ("the Council") carried out improvements to the bridge and its approaches. The work was done under statutory powers which incorporated the Compulsory Purchase Act 1965. Although a compulsory purchase order was confirmed in 1986, none of the land belonging to the hotel was taken.
The owners of the hotel ("the claimants") say that during the period of the works they were subjected to various forms of interference with their use and enjoyment of the hotel. Hoardings were erected which obscured the hotel and prevented or restricted access by themselves and their customers. For long periods the roads and pavements leading to the hotel were totally or partially obstructed or closed. The works caused continual noise, dust and vibration. All this was very detrimental to business. The claimants say that in the absence of statutory protection, they would have had an action for public and private nuisance. Therefore their land was "injuriously affected by the execution of the works" so as to entitle them to compensation under section 10 of the Compulsory Purchase Act 1965:
The question of compensation was referred to the Lands Tribunal. After service of pleadings the parties agreed that the Tribunal should decide certain preliminary points of law. The tribunal member (Judge Rich Q.C.) gave a decision and then, at the request of the claimants, stated a case for the Court of Appeal. The questions formulated for the court (as amended by consent in the Court of Appeal) were as follows:
The Court of Appeal, by a majority (Peter Gibson and Pill L.JJ; Ward L.J. dissenting)  Q.B. 634 said that the tribunal's answer to question 1 was right. No compensation was recoverable for the noise, dust or vibrations. Such matters did not constitute "direct physical interference" with land or an interest in land. The same majority disagreed with the answer to question 3. In their view, no compensation was recoverable for temporary interference which was no longer reflected in depreciation in capital value at the valuation date. On question 2 the tribunal was unanimously affirmed. Compensation was payable only for damage which, in the absence of statutory powers, would have been actionable at common law. Thus all three questions were decided adversely to the claimants, who appeal to your Lordships' House.
2. Basic principles
Section 10(1) of the Act of 1965 is a modernised version of section 68 of the Land Clauses Consolidation Act 1845. Subsection (2), which says that subsection (1) shall be construed as affording a right to compensation "which is the same" as that which section 68 had been construed to provide, is an unusual provision which suggests some anxiety on the part of the legislature to discourage the courts from taking a fresh look at the statutory language. As Lord Wilberforce pointed out in Argyle Motors (Birkenhead) Ltd. v. Birkenhead Corporation  A.C. 99, 129, the effect which had been given to section 68 was not always easy to justify on normal rules of statutory construction. For example, in Hammersmith and City Railway Co. v. Brand (1869) L.R. 4 H.L. 171, 217-218 Lord Cairns observed that section 68:
Nevertheless, despite its procedural appearance, the courts treated section 68 as creating a substantive right to compensation on principles which were worked out in a series of cases without reference to other enactments. These principles were established after much travail and section 10(2) shows that whatever their logic or merits, Parliament did not want them re-examined.
My Lords, I shall start by stating certain principles which are settled by decisions of high authority and were not as such in dispute before your Lordships, although there was argument over their application.
(1) Despite the reference in section 68 of the Act of 1845 (and now in section 10 of the Act of 1965) to land being "taken," the section gives a right to compensation to anyone whose land, or interest in land, has been injuriously affected by the execution of the works. It is not necessary that any of his land should have been taken. If land has been taken, the compensation for injurious affection of his remaining land is calculated on different principles under section 7 of the Act of 1965 (formerly section 63 of the Act of 1845).
(2) The term "injuriously affected" connotes "injuria," that is to say, damage which would have been wrongful but for the protection afforded by statutory powers. In In re Penny and South Eastern Railway Co. (1857) 7 E. & B. 660-669 Lord Campbell said:
In practice this means that a claimant has to show that but for the statute he would have had an action for damages for public or private nuisance. As a general proposition this again is not in dispute. But a public nuisance, such as an interference with the use of a public highway, is a wrong to the public as a whole and the ordinary common law remedy was a prosecution on indictment. To support an action for damages, the plaintiff has to prove that he suffered particular damage greater than that suffered by members of the public in general. This rule offers considerable scope for dispute on the facts and some of the decisions on injurious affection reflect different judicial views on what amounts to particular damage.
(3) A corollary of the last principle is that no compensation is payable under section 10 of the Act of 1965 if the company or statutory authority acted outside its powers. It was again Lord Campbell, this time in Imperial Gas Light and Coke Co. v. Broadbent (1859) 7 H.L.Cas. 600, 612, who made this point:
(4) Compensation is payable only for damage to the plaintiff's land or interest in land. He is not entitled to any compensation for loss caused to him in a personal capacity. This rule also provides scope for a great deal of argument about whether, for example, interference with the utility of the land for the purpose of carrying on a business is damage to the land or a personal loss by the proprietor of the business. On this point the authorities also reveal divergent opinions.
(5) Section 68 gave compensation for injurious affection caused by the "execution" of the works. In Hammersmith and City Railway Co. v. Brand, L.R. 4 H.L. 171 the House of Lords (with Lord Cairns dissenting) decided that this meant that there could be compensation only for the effects of the construction of the railway and not for its operation. If an embankment unreasonably obstructed the claimant's light or access, he could claim compensation. But he could not claim for what would otherwise have been a nuisance caused by the noise, vibrations or smell of passing trains.
3. Conflicting policies and conflicting decisions
The construction of the railways, which gave rise to most of the 19th century cases on injurious affection, involved massive changes in the urban and rural landscape of the United Kingdom and the disruption of the lives and businesses of very large numbers of people. It is not surprising that strong views were held about the respective claims of the winners and losers in this revolution and the judicial decisions often reveal the opinions of individual judges on questions of economic and social policy. Some were in favour of full compensation for all whose property had been adversely affected by the railway and others thought that the public interest required that liability should be kept within narrow bounds. Lords Bramwell and Westbury fell into the first category and Lords Cranworth and Chelmsford and Erle C.J. into the second. I cite two characteristic examples, one on each side. Giving the leading judgment in the Exchequer Chamber in Hammersmith and City Railway Co. v. Brand, (1867) L.R.2 Q.B. 223, 230-231 Baron Bramwell said:
In modern economic terms, Baron Bramwell thought that the railways should not create externalities; that is, costs involuntarily borne by other people which were not taken into account in assessing the profitability of the enterprise. The contrary view is exemplified by Erle C.J. in Ricket v. Metropolitan Railway Co. (1865) 5 B. & S. 149, 163-164, 169-170:
Judges who took this view tended to rely upon a floodgates argument: unless the right to compensation was rigidly confined, everyone whose economic interests had been damaged by the construction of the railways would be entitled to compensation. Post houses and coaching inns were favourite examples.
My Lords, I mention these ancient controversies not only because they still have some resonance today but also because they are an aid to the understanding of the old cases to which your Lordships were referred in the course of the argument. The 19th century authorities on this subject do not display a steady development of the law but the shifting ascendancies of one view or the other. For example, Mr. Mole Q.C. for the council particularly relied upon passages in the judgments of Lord Chelmsford and Lord Cranworth in Ricket v. Metropolitan Railway Co. (1867) L.R.2 H.L. 175. This case, in which the House of Lords by a majority of two to one (Lord Westbury dissenting) deprived the landlord of the "Pickled Egg" in Clerkenwell of the £100 compensation which a jury had awarded him for loss of trade caused by street closures and diversions during the construction of the Metropolitan Railway, was thought at the time to lay down narrow and artificial limits on the compensation which could be claimed for anything other than actual physical damage to the premises. Two years later the advocates of a restrictive approach had an even greater success when the House of Lords in Hammersmith and City Railway Co. v. Brand, L.R. 4 H.L. 171 decided by a majority of two to one (Lords Chelmsford and Colonsay; Lord Cairns dissenting) that no compensation whatever was payable to persons whose interests in land were damaged by the actual operation of the railway. This case made it apparent that the arbitrary rules stated by, for example, Lord Cranworth in Ricket, were not necessary to keep the floodgates shut. The construction of the railways would have caused no loss to post houses or coaching inns if the trains had not run. So after Brand the cases on injurious affection caused by the construction of the works returned to more logical principles. Ricket v. Metropolitan Railway Co., L.R.2 H.L. 175 was explained and distinguished in later cases in your Lordships' House until it became very difficult to say for what proposition, if any, it remained authority.
My Lords, with this introduction I turn to the three issues which were before the Court of Appeal and are now before your Lordships.
4. The first issue: noise, dust and vibration
The first question as formulated in the case stated was whether the Lands Tribunal erred in law in deciding that compensation was not payable where "an interference to some legal right, public or private, is not a direct physical interference to land." In the Court of Appeal, Pill L.J.  Q.B. 634, 648 rightly commented that this formulation was not the most illuminating way of defining the issue between the parties. To some extent it begged the question. The real issue was whether the claim for damage caused by noise, dust, vibration and the like could be the subject of compensation. The term "direct interference," as used in the question, was intended to mean the same as "material injury to the property" in the distinction which Lord Westbury L.C. drew in St. Helen's Smelting Co. v. Tipping (1865) 11 H.L.Cas. 642, 650:
Lord Westbury's purpose in marking the difference was to distinguish between those cases in which a landowner might have to accept interference with his amenities in the interests of reasonable give and take between neighbours in the district in which he lived and those cases in which the damage was unacceptable anywhere. Mr. Mole said that no compensation was payable under section 10 of the Act of 1965 for damage which was not "material injury to the property" in this sense. He said that Lord Cranworth (who was a party to the decision in the St. Helen's Smelting Co. case) had in mind the same distinction when he said two years later in Ricket v. Metropolitan Railway Co., L.R.2 H.L. 175, 198:
This, said Mr. Mole, excluded the effect of noise, dust or vibrations which did not cause damage to the structure of the hotel but affected the comfort of the people who used it. He said that this might be an arbitrary rule but Lord Wilberforce had said in Argyle Motors (Birkenhead) Ltd. v. Birkenhead Corporation  A.C. 99, 129-130 that the old law was not altogether logical. Nevertheless, it had to be taken as it was: "the most powerful considerations of policy would need to be present before so strong a current of authority could be turned back."
Lord Cranworth's dictum was said in the context of a case involving obstruction of the public highways giving access to the premises. I doubt whether he had the St. Helen's Smelting Co. v. Tipping dichotomy in mind. In any case, the dictum can no longer be regarded as authoritative. It was overtaken by the decision of the House of Lords in Metropolitan Board of Works v. McCarthy (1874) L.R. 7 H.L. 243, in which compensation was awarded to the owner of a warehouse near Blackfriars because the construction of the Victoria Embankment cut off his access across the public highway to a dock on the river. In the later case of Caledonian Railway Co. v. Walker's Trustees (1882) 7 App. Cas. 259, 296, in which compensation was awarded for the closing of an access to a main street in Glasgow at some distance from the premises, Lord Blackburn said that if Lord Cranworth's dictum was still law, the case would have to be decided differently. But in his opinion it was not.
Mr. Mole also relied upon a formulation of the rule by Mr. Thesiger Q.C. (afterwards Thesiger L.J.) as counsel in Metropolitan Board of Works v. McCarthy (1874) L.R. 7 H.L. 243, which was adopted by their Lordships. As quoted by Lord Cairns L.C. at p. 253, Mr. Thesiger said:
Mr. Mole said that the words "physical interference" show that the House, in adopting this formula, intended to exclude matters like noise, dust and vibrations. But I do not think that they had the present point in mind at all. They were concerned only with the principle on which compensation could be claimed for interference with "any right, public or private, which the owners or occupiers of the property are by law entitled to make use of," that is, rights appurtenant to the property, such as public or private rights of way. The House was not concerned with damage to the property itself, whether physical or otherwise. This is plain from the report of Mr. Thesiger's argument, at p. 249, in which he explained what he meant by "physical interference."
The Brand case was of course very much concerned with damage to the property itself by vibrations, noise and smells. So the last sentence makes it clear that he was not concerned with injury of that kind. Mr. Thesiger wanted to emphasise that although the works had been completed, he was complaining of their physical presence across the former public highway and not their operation.
As for the comment of Lord Wilberforce in Argyle Motors (Birkenhead) Ltd. v. Birkenhead Corporation  A.C. 99, 129-130, which I have quoted, I do not think it has any application to the present case. He was addressing the rule that injurious affection is an injury to land and not to the profits of a trade carried on upon the land. This, he said, was established by authority and (despite the powerful contrary arguments of Lord Westbury in Ricket v. Metropolitan Railway Co., L.R.2 H.L. 175) could not no be questioned. In these proceedings, the principle is not in dispute. I shall return to its application in connection with the third question.
In the Court of Appeal, Peter Gibson and Pill L.JJ. accepted Mr. Mole's submission that the concept of injurious affection to land had been so narrowly construed in the 19th century cases as to exclude injury caused by matters which cause "sensible personal discomfort" to the occupants. This conclusion was very much reinforced by the opinion of the same judges on question 3, namely that temporary injury is also excluded from compensation. Injury caused by noise and so forth in the course of construction will almost by definition be temporary and injury caused in the same way by the operation of the road, railway or other work will be excluded by the rule in Hammersmith and City Railway Co. v. Brand, L.R.4 H.L. 171. So the conclusions of the majority were entirely consistent with each other. Conversely, Ward L.J. disagreed on both points.
For reasons which I shall explain when I come to question 3, I agree with Ward L.J. that temporary damage is not excluded from compensation. So that cannot be a reason for excluding damage caused by noise, vibrations and so forth. And for the reasons which I have given, I do not think that it is excluded by the construction given to section 68 in the Victorian cases. I agree with Ward L.J. that damage to the amenity of land caused by nuisances involving personal discomfort, having the effect of reducing the value of the land to let or to sell, is damage to the land just as much as physical injury. So much was accepted by this House in Hammersmith and City Railway Co. v. Brand, L.R.4 H.L. 171, when the claim was for a reduction in the value of the land by the noise and pollution of the trains. The House accepted that the claimant had suffered damage to his land but held that the statute made no provision for compensation. If, therefore, compensation cannot be recovered for damage caused by noise, dust and vibrations, it is not because it does not constitute damage for the purposes of section 68.
It is nevertheless a remarkable fact that there is no case in which such damage has been held to be the subject of compensation. The only reference in the cases to the possibility of recovery is a brief dictum of Lord Campbell in In re Penny and South Eastern Railway Co., 7 E. & B. 660, where he said obiter that compensation could be awarded for damage caused by vibrations during the execution of the works but (anticipating Hammersmith and City Railway Co. v. Brand, L.R.4 H.L. 171) not by the operation of the railway afterwards.
Why is there so little authority? It is not, as I have said, because such damage is in principle excluded from compensation. Nor is it because the construction phase of the railways seldom caused such nuisances to neighbouring properties. My Lords, in my opinion the reason is to be found in the interaction of three of the basic principles of compensation to which I have drawn your Lordships' attention. In the first place, claims are restricted to damage caused by the construction of the works. Secondly, the damage must have been caused by the lawful exercise of statutory powers. And thirdly, the damage must have such that in the absence of statutory protection it would have been actionable at common law.