Towards a Compulsory Purchase Code: 2 Procedure (Report) [2004] EWLC 291(5) (16 December 2004)

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URL: http://www.bailii.org/ew/other/EWLC/2004/291(5).html
Cite as: [2004] EWLC 291(5)

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PART 5

TRANSFER OF TITLE

The final stage in the implementation of a compulsory purchase order involves the transfer of title to the subject land to the acquiring authority. In this Part we review this process, considering the means of enforcement available to acquiring authorities by means of the "deed poll" procedure, the machinery for completion of the acquisition, and the liability for costs of completion. We also discuss the resolution of difficulties which may arise where the owners of the subject land are suffering from disability or incapacity, where they cannot be traced, or where the acquiring authority discover, subsequent to commencing implementation of the compulsory purchase order, that they have failed to purchase or to compensate all those entitled.

(1) DEED POLL PROCEDURE

Completion of a compulsory acquisition is governed by the ordinary law relating to sale of land. Once compensation has been agreed or determined, there comes into existence a relationship equivalent to vendor and purchaser under a contract for sale. This is sometimes referred to as a "statutory contract", enforceable if necessary through the courts by order of specific performance.

There is, however, an additional remedy set out in section 9 of the Compulsory Purchase Act 1965 available to an acquiring authority where the landowner fails to convey or to make good title. This is execution of a "deed poll" vesting title in the authority and entitling them to immediate possession of the subject land.

Existing law

The deed poll procedure may be invoked by the acquiring authority where the owner of any of the land being compulsorily purchased, or of any interest in that land, does one of the following:

(1) Once compensation has been agreed or awarded, refuses to accept the compensation payment duly tendered;

(2) Neglects or fails to make out title to the land or interest to the satisfaction of the acquiring authority; or

(3) Refuses to convey or release the land as directed by the acquiring authority.^[2]

The acquiring authority is thereupon entitled to pay into court the compensation payable in respect of the land or interest in question. The sum paid is placed to the credit of "the parties interested in the land".

The High Court may order distribution of moneys paid into court "according to the respective estates, titles or interests of the claimants", and make such other orders as it thinks fit. An order may be made on the application of any person claiming any of the money paid into court, or any interest in the whole or part of the affected land.

Section 28 of the Compulsory Purchase Act 1965 makes provision for the mechanics of execution of deed polls.

Payments into court are governed by sections 25 and 26 of the 1965 Act. We deal with these provisions in more detail below, in Part 5(7). In our Consultative Report on Procedure we indicated our provisional view that the provisions should be replaced in simpler form in the context of deed polls.

In summary, section 25 applies section 4 of the Administration of Justice Act 1965

(1) Where the payment was "in respect of any lease, or any estate in land less than the whole fee simple, or of any reversion dependent on any such lease or estate", any person with an interest in the money may apply to the court for an order as to the laying out, investment, accumulation or payment so as to preserve "the same benefit as they might lawfully have had from the lease, estate or reversion or as near thereto as may be."^[11] As we indicated in the Consultative Report on Procedure, this means that the court can fairly apportion between interested parties, for limited estates, sums paid into court and the income generated.^[12]

(1) Any person who has only a possessory title (and no documentary proof of ownership) is entitled to apply for payment out of court of moneys if no other claim is made for them.^[13] There is a presumption that such person is entitled to payment as owner unless and until "the contrary is shown to the satisfaction of the court".

Section 26 of the Compulsory Purchase Act 1965 deals with the liability of an acquiring authority for costs (for example, of the land purchase and of investment of compensation) where money has been paid into court. The court may make an appropriate order against the authority. The section is couched in complex terms.

Deficiencies

In our Consultative Report on Procedure we highlighted three areas which, in furthering a new statutory code, we believed merited attention. 5.12

First, we indicated that section 9 of the Compulsory Purchase Act 1965, closely derived as it is from the Lands Clauses Consolidation Act 1845,

Secondly, we doubted that the provisions in the 1965 Act relating to leases (or similar interests) and to those persons in possession as owners at the time of the purchase,

Thirdly, we doubted that section 28(3) of the 1965 Act (which provides that the execution of a deed poll is subject to section 7(4) of the Law of Property Act 1925) any longer served a useful purpose.

Provisional proposals

In our Consultative Report on Procedure we set out our provisional proposals for a new (and simplified) deed poll procedure.

In summary, we proposed that, once the compensation has been agreed or (in practice, more likely) determined, the acquiring authority may make payment into court, accompanied by a description of the subject land and of the persons entitled, so far as the latter are known to the authority. Having made that payment, which the court would hold to the credit of the owner, the authority would then be entitled to execute a deed poll (describing the land, the circumstances and persons credited with the compensation payment) vesting title in itself.

The effect of our proposals would be to repeal parts of sections 9

Consultation

Those who responded to our proposals in connection with the deed poll procedure agreed with our view that it would be desirable to re-state the procedure in modern form, and that the detailed provisions relating to payment into court are no longer necessary, so long as the court is given a general power to make such orders as it thinks fit.

Apart from one respondent who argued that perhaps a label more modern than "deed poll" would be appropriate, the only dissent to our provisional proposals came from the Law Reform Committee of the Bar Council. It suggested that leaving the ability to execute with the acquiring authority alone risked giving it too much power, and that some more effective form of check and balance is desirable. That might be effected by replacing the present system with one under which the court executes the conveyance or transfer. 5.20

We asked consultees whether they had any comment on the effect and continuing relevance of section 28(3), and in particular its reference to section 7(4) of the Law of Property Act 1925.

Finally, we asked consultees to indicate the extent to which the deed poll procedure is used in practice and to share with us any practical problems of which they were aware.

The principal concern related to limitation periods and the inability to utilise the deed poll procedure once the relevant limitation period has expired. Reference must be made to the Lands Tribunal within six years of the date of entry into possession.

This important omission should, in our view, be rectified. There are two possible solutions. Statute could enable an acquiring authority unilaterally to submit a valuation to the Lands Tribunal and make payment into court in that sum. Alternatively, an obligation may be imposed on the acquiring authority to refer any contested issue of compensation to the Lands Tribunal within the limitation period, or such extended period as the Tribunal may allow. We prefer the latter alternative. 5.24

Aside from this issue, consultees (such as the City of London Law Society) indicated to us that, although in their experience use of the deed poll procedure is currently not widespread, its future use may increase for two reasons. First, because the expeditious acquisition of paper title is necessary in order to facilitate the increasing number of concession-based schemes backed by compulsory purchase, where the concession company or other entity is granted a lease of the relevant asset, and that lease is then charged to funders. Secondly, public bodies are becoming anxious to use the procedure as a means of stopping the clock running on liability to pay statutory interest. The alternative to this, of course, would be greater use of the vesting declaration route in order to circumvent delay caused by reference to the Lands Tribunal.

Recommendations for reform

In the light of our consultation we are minded to confirm our provisional proposals. Our recommendations essentially replicate them, subject only to dealing with the limitation issue outlined above.

The expression "deed poll" is straightforward and is understood by most people as representing a unilateral mechanism (for example, the procedure for change of surname). Not only do we believe that change is unnecessary, we are also conscious that any such change would require amendment of references in other legislation, notably the Compulsory Purchase (Vesting Declarations) Act 1981. 5.27

We are not persuaded that further controls on the procedure are necessary. At the moment a deed poll can only be executed where compensation is agreed or has been determined by the Lands Tribunal. In our view, acquiring authorities can be expected to execute deed polls unilaterally. The extent of the order (and of the land to be taken) will already have been determined by the Secretary of State in the confirmation process. If a claimant is aggrieved that an authority has taken more land by deed poll than is justified, their remedy lies either by way of judicial review or through the review process contained in section 9(5) of the Compulsory Purchase Act 1965.

We do believe that our earlier proposal needs to be supplemented by a further provision dealing with the limitation issue. We recommend that an acquiring authority should be obliged to make a reference to the Lands Tribunal within the limitation period where the amount of the compensation payment still has not been settled. That will be within six years from the date of accrual of the cause of action under the present limitation regime,

Recommendation (13) – Deed poll procedure

(1) If, after compensation in respect of any land or interest in land has been agreed or determined, the person entitled:

(a) refuses to accept the compensation; or

(b) fails to make out title to the satisfaction of the acquiring authority; or

(c) refuses to convey or release the land as directed by the acquiring authority,

the authority should be entitled to proceed by the "deed poll procedure" as described in this recommendation.

(2) The acquiring authority should be entitled to pay into the High Court the compensation payable in respect of the relevant land, or interest, accompanied by a description of the person or persons entitled (so far as known to the authority). The compensation so paid into court should be placed to the credit of those persons.

(3) On payment into court as above, the acquiring authority should be entitled to execute a deed poll describing the relevant land and the circumstances of the payment, and giving the names of the persons to whose credit the compensation is paid.

(4) On execution of the deed poll, all the interests in respect of which the compensation was so paid should vest absolutely in the acquiring authority, together with the right to immediate possession as respects those interests.

(5) The acquiring authority should be required to make a reference to the Lands Tribunal within the limitation period applicable for such references (or within such extended period as the Lands Tribunal may allow) for compensation to be assessed.

(6) On the application of any person claiming any part of the money paid into court, or any interest in any part of the land in respect of which it was paid into court, the High Court should be entitled to order its distribution according to the respective interests of the claimants, and to make such incidental orders as it thinks fit.

(7) The incidental provisions of section 28 of the Compulsory Purchase Act 1965 (sealing of deed polls, stamp duty, etc) should be incorporated, save for section 28(3) which should be repealed.

(8) The costs incurred in connection with a payment into court under this proposal should be borne by the authority, save as the court otherwise orders.

(2) OBLIGATION TO COMPLETE PURCHASE

Once notice to treat has been served, and compensation agreed or determined, the acquisition is ready to be finalised. Completion is governed by the ordinary law relating to the sale of land, and we consider here whether specific provision should be made in relation to compulsory purchase.

Existing law

Service of a notice to treat does not of itself create a binding contract of sale.

In the nineteenth century it was well established that, where an acquiring authority had taken possession under compulsory powers, the landowner retained a lien on the land until the purchase money (and any compensation for injurious affection) had been paid. The court would enforce that lien by an order for sale, even though the works were constructed and in use.

There seems little justification for such a lien, to secure what is a statutory right to payment of compensation by a public authority. On the other hand, where the acquiring authority is a commercial entity, such as a privatised utility company, the additional protection of a vendor's lien may continue to be important.^[37]

Schedule 5 to the Compulsory Purchase Act 1965 contains a prescribed form of conveyance. It is not, however, mandatory; an acquiring authority is permitted to use any other form which it may think fit.

Deficiencies and consultation

In our Consultation Report on Procedure, we indicated our provisional view that the present procedures were probably adequate. However, as part of our consultation we sought views on whether the law relating to vendor's lien requires statutory clarification of the circumstances and conditions for its operation.

Considerable concern was expressed by consultees about the current operation of the notice to treat procedure. Indeed, some acquiring authorities have chosen to adopt the vesting declaration route as a matter of policy in order to circumvent the problems they have encountered. These problems can be summarised as follows:

(1) Unwilling and uncooperative vendors can cause significant delays in the process;

(2) Problems can arise as to title (for example, identifying the terms of an easement);

(3) Taking possession pursuant to notice of entry does not bring with it title to subject land, so where the authority is in a joint venture with a developer there can be difficulty demonstrating good title for a third party funding the project;

(4) Expiry of the limitation period can give rise to problems relating to quantification of compensation and transfer of title;

(5) Enforcement of the statutory contract is not realistic for many claimants because of the cost and delay attached to Lands Tribunal proceedings.^[42]

One proposed solution was that there should be a mechanism whereby a claimant can compel the acquiring authority to enter (thereby fixing the valuation date

Our reaction to this suggestion turns in part on Government's stance in its Policy Response Document.

This would inject more certainty into the process for claimants. The enhanced mechanism in the Land Compensation Act 1973

Consultees did not indicate very much practical experience of the vendor's lien in the context of compulsory acquisition. The Law Society, for example, felt that the concept was not well known and that it did not appear to serve any useful purpose. The Bar Council's view was that no lien should apply: full compensation payment should be made on completion and the ability to enforce a lien seemed problematic. 5.39

We accept the validity of these objections, and recommend that the vendor's lien be abolished by statute. On further consideration, we are also of the view that with the expansion of registered title, the retention of title deeds as a means of securing payment of compensation would be of utility in a diminishing number of cases. We do not therefore see any purpose in giving late statutory recognition to a device whose days are numbered. 5.40

Almost all those responding on the issue saw little value in retaining the prescribed forms of conveyance laid out in Schedule 5 to the Compulsory Purchase Act 1965. Only one response, from solicitors Bond Pearce, argued that prescribed forms might be useful to prevent delays occurring as a result of the negotiation of forms of transfer, particularly clauses relating to indemnity. 5.41

We believe that it is no longer necessary to prescribe forms of transfer in primary legislation. We therefore recommend repeal of Schedule 5. We do think, however, there may be value in ODPM or the various professional associations involved exploring the production of alternative precedents in order to achieve some consistency of approach, and to reduce unnecessary duplication of work.

Recommendation (14) – Completion of purchase

(1) Where notice to treat has been served and compensation has been agreed or determined, there should be deemed (as now) to be in place a contract of sale of the subject land between the claimant and the acquiring authority.

(2) The contract of sale should be enforceable by action by either party for specific performance.

(3) The concept of a vendor's lien, in the context of compulsory purchase, should be abolished by statute.

(4) Schedule 5 to the Compulsory Purchase Act 1965 (prescribed forms) should be repealed.

(3) COSTS OF COMPLETION

Introduction

The costs of completing the compulsory purchase are subject to very detailed provision in the Compulsory Purchase Act 1965.

Existing law

By section 23 of the Compulsory Purchase Act 1965:

(1) The costs of all conveyances of the land subject to compulsory purchase shall be borne by the acquiring authority.

(2) The costs shall include all charges and expenses, whether incurred on the part of the seller or on the part of the purchaser:

(a) of all conveyances and assurances of any of the land, and of any outstanding terms or interests in the land, and

(b) of deducing, evidencing and verifying the title to the land, terms or interests, and

(c) of making out and furnishing such abstracts and attested copies as the acquiring authority may require, and all other reasonable expenses incident to the investigation, deduction and verification of the title.

(3) If the acquiring authority and the person entitled to any such costs do not agree as to the amount of the costs, the costs shall be taxed by a Master of the Supreme Court on an order of the court obtained by either of the parties.

(4) The acquiring authority shall pay what the Master certifies to be due in respect of the costs to the person entitled and, in default, that amount may be recovered in the same way as any other costs payable under an order of the Supreme Court.

(5) The expense of taxing the costs shall be borne by the acquiring authority unless on the taxation one-sixth of the amount of the costs is disallowed, and in that case the costs of the taxation shall be borne by the party whose costs have been taxed; and the amount thereof shall be ascertained by the Master and deducted by him accordingly in his certificate of taxation.

(6) Conveyances of the land subject to compulsory purchase may be according to the forms in Schedule 5 to this Act, or as near thereto as the circumstances of the case will admit, or by deed in any other form which the acquiring authority may think fit.

All conveyances made according to the forms in the said Schedule, or as near thereto as the circumstances of the case may admit, shall be effectual to vest the land thereby conveyed in the acquiring authority and shall operate to bar and to destroy all estates, rights, titles, remainders, reversions, limitations, trusts and interests whatsoever of and in the land comprised in the conveyance which have been purchased or compensated for by the consideration mentioned in the conveyance.

Deficiencies

In our Consultative Report on Procedure we did not think that it was necessary for the procedure to be spelt out in such detail in legislation.⁵² In principle we thought that the acquiring authority ought to be required to bear all the costs connected with the purchase. We considered that there could be a simple requirement for the authority to pay to those interested all reasonable costs in connection with the completion of the compulsory purchase (so far as not covered by other provisions governing compulsory purchase). It was our view that the task of assessing costs should remain with the High Court.

Provisional proposals

We provisionally proposed that section 23 should be replaced by a provision that the acquiring authority should pay to those interested all reasonable costs (as assessed by the costs judge) incurred in connection with the completion of the compulsory purchase (so far as not covered by any other provisions).

Consultation

We asked consultees whether they agreed with this provisional proposal, and, if they did not, what practical purpose they believed was served by section 23.

All consultees who responded on this issue supported the provisional proposal. Solicitors Bond Pearce considered that this was a much-needed reform. The Highways Agency stated that they were not aware of having ever invoked section 23(5) and that they would be content that the provision should be repealed. Richard Rattle suggested that if agreement were reached on costs, reference to a costs judge would not be necessary. 5.48

We also asked consultees whether the assessment of the costs of completion should be transferred from the courts to the Lands Tribunal.

There was considerable diversity of opinion on this issue, a small majority arguing in favour of the jurisdiction to assess costs remaining with the courts. The Highways Agency, for instance, stated that some of these costs would relate to legal charges, which differ from land valuation traditionally carried out by the Lands Tribunal. These, in their view, should continue to be taxed by a Master of the Supreme Court. CLA agreed the courts were a better forum for this. The Bar Council made the same point, noting that in most cases a Chancery Master could assess the costs. If not they could be assessed by a costs judge perfectly well, rather than increase complications by transfer to the Lands Tribunal. 5.50

ODPM stated that they do not see why there is a need for jurisdiction in assessing costs to be transferred to the Lands Tribunal if the High Court already has the expertise. PEBA also emphasised this point. However, ODPM stated that they assumed that the Law Commission would consult with the relevant courts' policy administrators in DCA before proceeding further with this proposal. The remaining respondents disagreed without further comment. 5.51

The Welsh Development Agency were ambivalent. Athough they agreed that there needs to be a body to resolve the issue of reasonable solicitors' or surveyors' costs, they considered it immaterial whether that is the Lands Tribunal or a taxing body. 5.52

A significant minority were of the view that the Lands Tribunal would be a more appropriate body to determine costs. The NFU argued that the Lands Tribunal has the necessary expertise and experience. They stressed, however, that assumption of such a responsibility would need to be adequately resourced. Although Richard Rattle disagreed with the proposal to transfer jurisdiction, he conceded that if the issue were raised as part of a reference of a compensation case to the Lands Tribunal, it would seem reasonable to expect the Lands Tribunal to deal with it.

Recommendations for reform

We consider that the case for repeal of section 23 of the 1965 Act, on the grounds that it is excessively and unnecessarily detailed, is very strong, and we recommend accordingly. 5.54

A more difficult question concerns the taxation of the costs of completion, that is whether the question should be put before the courts (as at present) or before the Lands Tribunal. We are not aware that the present arrangement causes problems in practice, and we are conscious that expertise in the assessment of legal costs resides today with the specialist judiciary of the High Court. On that basis we recommend no change to the present procedure.

Recommendation (15) - Costs of Completion

(1) Section 23 of the Compulsory Purchase Act 1965 should be repealed and replaced by a provision that the acquiring authority should pay to those persons who have incurred them all reasonable costs in connection with the completion of the compulsory purchase (so far as not covered by any other provisions).

(2) The costs incurred should be assessed by the Costs judge. This duty of assessment should remain in the High Court and not be transferred to the jurisdiction of the Lands Tribunal.

(4) PERSONS WITH LIMITED POWERS

Schedule 1 to the Compulsory Purchase Act 1965, titled "Persons without power to sell their interests", contains rules making provision for transfer of title where the authority is dealing with an individual or body suffering from legal disability or incapacity. As we pointed out in our Consultative Report on Procedure, these rules appear virtually obsolete. They derive from provisions in the Lands Clauses Consolidation Act 1845,

Existing law

Schedule 1 to the Compulsory Purchase Act 1965 provides that it shall be lawful "for all persons who are seised or possessed of or entitled to any of the land subject to compulsory purchase, or any estate or interest in any of that land, to sell and convey or release it to the acquiring authority, and to enter into all necessary agreements for the purpose."

The powers are specifically exercisable by the following classes of person:

(1) Corporations;

(2) Tenants in tail or for life;

(3) Trustees for charitable and other purposes;

(4) Persons entitled to receive rents and profits of any of the subject land.^[62]

Where compensation is payable for land to be purchased from a person "under any disability or incapacity" (in a legal sense), who is subject to the Schedule 1 procedure, or for severance or injurious affection to such land (being "permanent damage"),

(1) For discharge of any debt or incumbrance affecting the land;

(2) For purchase of substitute land to be held for like trusts and purposes;

(3) Where buildings were taken or damaged, for removal or replacement or rebuilding;

(4) For payment to any person who becomes "absolutely entitled" to the compensation.^[65]

Once payment has been made into court, the acquiring authority is entitled to require the landowner to convey the land or interest to it. If that fails to happen, or if good title is not made out, the authority is then authorised to execute a deed poll vesting title absolutely in the authority.

Deficiencies

In our Consultative Report on Procedure we indicated two deficiencies:

(1) Schedule 1 to the 1965 Act, in its present form, is unnecessarily complex;

(2) The provisions do not appear to have been used in recent years and they are not likely to be required in the future.

To this may be added a third deficiency: the Schedule's terminology is archaic, deriving from the Lands Clauses Consolidation Act 1845, and contains ancillary provisions with monetary values which have long outlived their usefulness.^[67]

Provisional proposals

We did not make a formal proposal on this issue, other than to indicate that our provisional view was that Schedule 1 to the 1965 Act could be repealed without replacement. 5.62

We did not conceive that there was a present or foreseeable future need for Schedule 1 or an equivalent replacement. If an equivalent were needed, we suggested it might be based on the much simpler Australian model contained in section 116 of the Lands Acquisition Act 1989 (Commonwealth), which has two main limbs:

(1) Where an acquiring authority wishes to acquire an interest in land by agreement or compulsorily, but the owner lacks "capacity or power" to execute a transfer, or to handle compensation, then

(2) The court may approve the owner disposing of the land to the authority (on such terms as are appropriate), so long as the compensation is paid to a court-appointed trustee or applied in such manner as the court directs.^[68]

On balance, however, we were of the view that a replacement provision is not necessary, and that Schedule 1 to the 1965 Act could simply be repealed.

Consultation

Most of those consultees who responded on this issue supported the repeal of Schedule 1. The Highways Agency, for example, told us that they had no recollection of ever having used the powers contained in the schedule. 5.65

Two respondents expressed disagreement. One (the Bar Council) indicated that it is possible that certain charities may be prevented from disposing of endowment land without some form of scheme endorsed by the court or by the Charity Commission. It may be necessary to retain some statutory mechanism for this purpose, possibly on the basis of the Australian model. A second respondent ...Richard Rattle) made a similar point: that, if circumstances involving legal disability were to arise and it was not appropriate to use a vesting declaration, an acquiring authority would require statutory machinery to effect transfer of title.

Recommendations for reform

On re-consideration we now accept that simple repeal of Schedule 1 to the 1965 Act has the potential, albeit remote, to cause problems in the future. We are mindful that the Australian Law Reform Commission, in its report pre-dating the 1989 Commonwealth Act, recommended replacement of a similar provision (also derived from the 1845 Act) with one in simpler and more comprehensive form. Such a provision should be designed to protect persons under legal disability,

We therefore recommend that Schedule 1 to the 1965 Act be repealed but that it be replaced by a simpler, more comprehensive, provision. That provision should confer power on:

(1) the person in whom the legal interest in the subject land is vested, notwithstanding any contrary legal provision, to dispose of the land to the acquiring authority;

(2) the Lands Tribunal, to approve the terms of the disposal (as to form, the amount of compensation payable and the method of payment).

Recommendation (16) – Persons with limited powers

(1) Where the owner of any interest in the subject land has limited power to deal with that land (including disposal), the acquiring authority should be entitled to proceed by the "limited powers procedure" as described in this recommendation.

(2) The authority may apply to the Lands Tribunal for:

(a) appointment of a surveyor (selected from the surveyor members of the Tribunal) to undertake a valuation which will determine the amount of compensation to be paid in respect of the interest. When the application has been made, both the authority and the owner may submit to the Lands Tribunal (and its appointed surveyor) their own assessments of the appropriate amount payable, which submissions will be for the sole purpose of informing the valuation process;

(b) an order empowering the owner to dispose of the interest to the authority on such terms and conditions as the Lands Tribunal considers appropriate (including as to the manner of payment of the compensation).

(3) Schedule 1 to the Compulsory Purchase Act 1965 should be repealed.

(5) UNTRACED OWNERS

The notice to treat procedure depends on the owner of land or interests being compulsorily acquired being not only identifiable but also available to negotiate the compensation payable for the loss sustained. The Compulsory Purchase Act 1965 contains rules addressing the difficulty of "absent and untraced owners" and lays down a machinery whereby in such circumstances land may be vested in the acquiring authority following "valuation" by a surveyor appointed by the Lands Tribunal (rather than determination of compensation as such), payment into court of the sum concerned, and execution of a deed poll. In our Consultative Report on Procedure we considered the operation of this procedure and made provisional proposals for reform.

Existing law

Schedule 2 to the Compulsory Purchase Act 1965 is a short, self-contained code, applied by section 5(3) of that Act. Where the owner is a person who either "is prevented from treating with [the acquiring authority] on account of absence from the United Kingdom", or "cannot be found after diligent inquiry has been made", and compensation is payable for the subject land for "any permanent injury to any such land",

When compensation has been assessed, the acquiring authority "may" then pay that sum into court for the credit of the interested parties, who must be described "so far as the acquiring authority is in a position to do so".

Power is conferred on the High Court to order distribution of the sum paid into court "according to the respective estates, titles or interests of the claimants", on application being made to it by any person claiming any part of the money or the land or any interest in the land.

The Schedule 2 procedure does not apply where the acquiring authority is invoking the vesting declaration procedure as in such circumstances it is able to proceed regardless of any outstanding interests.

Deficiencies

In our Consultative Report on Procedure we outlined the following deficiencies in the procedure for dealing with "absent or untraced owners":

(1) The qualifying criteria appear unduly narrow. In our view, the procedure should be available whenever the authority is unable to deal directly with the person entitled, not only where they cannot be traced or are out of the jurisdiction but also where they are unable (for example, through illness) or unwilling to deal with them;^[82]

(2) The procedure allows only for challenge of the surveyor's valuation by the claimant. There should be some means whereby an acquiring authority may challenge valuations which it considers to be too high;^[83]

(3) In general, Schedule 2 to the Compulsory Purchase Act 1965 is cast in archaic language, and its form is in need of improvement.^[84]

Provisional proposals

In our Consultative Report on Procedure we therefore took the view that Schedule 2 to the 1965 Act should be restated in modern terms and that it should be widened to include persons who are unwilling or unable to deal with the acquiring authority for whatever reason. 5.75

The Lands Tribunal had raised with us the question whether acquiring authorities should be allowed to challenge the surveyor's valuation. It seemed to us, however, that the problem could be dealt with by appropriate amendments to the Lands Tribunal rules, enabling the authority to present its views on quantum prior to the valuation being fixed. As we did not consider any substantive change to the law was necessary, we did not make any provisional proposal in this regard.

Consultation

Many consultees agreed that there is a need to modernise the Schedule 2 procedure. British Waterways, for example, told us that identification of interests can be a common source of delay in the compulsory acquisition process and that measures to expedite the process and to introduce greater certainty would be welcomed by acquiring authorities. 5.77

Others went further. The City of London Law Society argued, in the context of acquisitions where land value is relatively nominal (such as sub-soil acquisitions), that an independent valuation, without any reference to the Lands Tribunal, should be made binding on the parties. De minimis matters would incur disproportionate cost if they had to be referred to the Lands Tribunal for determination. The RICS, on the other hand, argued for the determination of compensation by the Lands Tribunal. 5.78

The Welsh Development Agency felt that valuation issues should be capable of being re-opened by authorities as well as by claimants, partly because the current position undermines the purpose of an independent valuation, and partly because it might encourage claimants to be unresponsive until a late stage in the process (thus causing cost and delay). 5.79

Concern was expressed in relation to limitation periods. London Underground Ltd indicated that an acquisition (and the project it is designed to facilitate) could be frustrated if the owner of the subject land makes no claim, as the limitation period then expires and the acquiring authority is left with no method whereby it can vest title in itself. It seems to us that this problem can best be dealt with by reform of Schedule 2 to the Compulsory Purchase Act 1965.

All but one of the consultees who responded on the issue of qualifying criteria agreed that the Schedule 2 procedure should be available in a broader range of circumstances. The dissenting view came from the Country Landowners Association who contended that extension of the procedure would create potential for abuse. The CLA argued that acquiring authorities should be obliged to attempt to negotiate compensation with recipients of CPOs who have no real control or bargaining power. There is a risk that acquiring authorities will be tempted to by-pass the negotiation stage where they perceive a particular owner as "difficult" and to use the Schedule 2 procedure. That, asserted CLA, would be "an extremely undesirable state of affairs".

Recommendations for reform

Our recommendation seeks to address two of the three deficiencies identified above. As we explained in our Consultative Report on Procedure, and for the same reasons, we do not believe that acquiring authorities should be entitled to a review of the surveyor's valuation. The acquiring authority initiates reference to the Lands Tribunal, and provision could be made in the Land's Tribunal's rules for the authority to lodge its view on the appropriate valuation at the reference stage. The valuer appointed by the Land's Tribunal would be required to have regard to the authority's submission. The submission would not of course in any way bind the process of valuation. 5.82

Our recommendation first expands the qualifying criteria to be satisfied for use of the Schedule 2 procedure. Although we understand and sympathise with the concerns expressed by CLA, we believe that the controls of administrative law confer satisfactory protection on those who fear abuse by acquiring authorities. While the acquiring authority has a discretion to invoke the procedure in those circumstances where it may be applied, that is a discretion which must be exercised fairly and reasonably, and in the event of a failure to do so, the remedy of judicial review will be available. 5.83

As we indicated in our Consultative Report on Procedure, we believe that an authority should be able to act in order to promote the wider public interest where, for example, a landowner simply refuses to co-operate. That refusal should not be capable of unreasonably delaying a project, nor should it lead to a situation where the absence of a claim within the limitation period frustrates the ability of an authority to vest title at all. Our recommendation should help to alleviate these difficulties. 5.84

Secondly, our recommendation seeks to recast the procedure in modern and simplified terms. We should emphasise that the recommendation does not extend to the vesting declaration procedure because there the acquiring authority can proceed without regard to outstanding interests.

Recommendation (17) – Untraced and non-compliant owners

(1) Where the owner of any interest in the subject land either:

(a) cannot be found by the acquiring authority after making reasonable inquiry; or

(b) has been found, but is unwilling to deal with the authority; or

(c) has been found, but is prevented from dealing with the authority by reason of illness, absence or other circumstance,

the authority should be entitled to adopt the "non-compliance procedure" described in this recommendation.

(2) The authority may apply to the Lands Tribunal for appointment of a surveyor (selected from the surveyor members of the Lands Tribunal) to undertake a valuation which will assess the amount of compensation to be paid in respect of the interest. When making the application, the authority may submit to the Lands Tribunal (and its appointed surveyor) its own estimate of the appropriate amount payable, which submission will be for the sole purpose of informing the valuation process.

(3) Once the assessment has been made, the authority will hold the valuation and produce it on demand to the owner of the interest to which it relates, or to any other person with an interest in the subject land.

(4) All the expenses of, and incidental to, the obtaining of the valuation shall be borne by the authority.

(5) Following assessment of compensation, and subject to (6) below, the authority may then invoke the "deed poll procedure".

(6) Where any person, claiming to be entitled to compensation paid into court under this procedure, wishes to challenge the amount of compensation assessed by the valuation:

(a) before making application to the High Court for payment of the sum paid into court, the claimant may serve notice on the authority requiring the authority to refer the issue within a prescribed time limit to the Lands Tribunal for determination;

(b) pending determination by the Lands Tribunal, the High Court may make such orders for interim payment as it thinks fit;

(c) if the Lands Tribunal subsequently determines that a further sum in compensation should be paid by the authority, the authority shall make that payment in the manner directed within a prescribed time limit.

(6) OMITTED INTERESTS

It may be that following entry upon the subject land by the acquiring authority, it is discovered that certain interests have been overlooked during the acquisition process. In consequence, compensation has been neither determined nor paid, and the interest holder will understandably be aggrieved. Statutory provision is made to allow the authority to regularise the position.

Existing law

Section 22 of the Compulsory Purchase Act 1965 ("Interests omitted from purchase") makes the required provision. If it appears that an acquiring authority, having entered the subject land, did so without purchasing or paying compensation for "any estate, right or interest in or charge affecting" that land "through mistake or inadvertence",

(1) purchase, or pay compensation for, the estate, right or interest in or charge affecting the land; and

(2) pay "full compensation for the mesne profits" to any person who may establish a right to it.

Compensation shall be agreed or awarded and paid in the manner it would have been had the authority purchased before entering the land, "or as near to that manner as circumstances admit".^[89]

There is no provision in section 22 for the stipulated time limit to be extended, whether by agreement or otherwise. Nor does it deal with the need to serve notice to treat and notice of entry. 5.88

The Court of Appeal has held that the acquiring authority has power to correct omissions outside the statute. This can be achieved by serving notice to treat after entry has been taken, so long as the statutory time limit for such service has not expired. In Cohen v Haringey LBC,

Section 22 of the 1965 Act does not apply to (nor need it apply to) land acquired by vesting declaration.

Deficiencies

In our Consultative Report on Procedure we outlined the difficulties of section 22 of the Compulsory Purchase Act 1965:

(1) The time limit of six months takes no account of the time which may be required to settle the amount of compensation payable (which could well exceed the statutory period).

(2) The section does not apply where an acquiring authority is aware of the existence of the right or interest, but fails (for whatever reason) to serve the necessary notices.^[94]

(3) In view of the decision of the Court of Appeal in Cohen v Haringey LBC, it may be questioned whether any statutory provision is necessary.

(4) It does seem, however, that there is one important advantage in bringing a claim under the statute rather than at common law. Under section 22, compensation is calculated as at the date of entry on the land (excluding the value of any works carried out post-entry), ^[95] but under the procedure in Cohen there is no provision for back-dating the valuation.^[96]

Furthermore, section 22 does not indicate who is to initiate proceedings for settling the compensation.^[97]

Consultation

We did not make any specific provisional proposals on this issue, but we invited views on the possible replacement of section 22 and the Cohen procedure. This would be by a new provision giving a general power to rectify accidental omissions retrospectively within a defined time limit,

Consultees agreed that it was necessary for there to be a procedure dealing with accidental omissions. The Welsh Development Agency, for example, indicated that in practice the chances of an acquiring authority missing a minor interest are too great not to have in place a correcting procedure. 5.93

The Highways Agency expressed concern about the current time limits. First, they believe that the section 22(3) time limit is too short, and should be lengthened. Secondly, they feel that it is unsatisfactory that, once the overall three years time limit has expired, an authority cannot then serve notice to treat or take any other step to regularise the position.

The City of London Law Society reinforced our view that section 22 does not set out clearly enough the requirements being made of acquiring authorities. For example, it is not clear what an authority must do to "purchase" an omitted interest within the stipulated time. This could mean to complete the acquisition of the interest or, simply, to serve notice to treat in respect of it. 5.95

The Law Society suggested to us that the remit of section 22 is too narrow: that some provision should exist which allows for the rectification of mistakes, not just after entry on the land, but also before entry, and indeed at any time after the CPO has been made. They also felt that the rectification procedure should go wider than minor rights and interests, and that it should be capable of covering the omission of owners and occupiers. We believe that section 22 already covers "estate" owners.

Recommendations for reform

In our view section 22 was designed to be no more than a "slip rule" for rights and interests which have simply been overlooked by accident. The provision was not meant to operate as a vehicle whereby an authority can go back to the drawing board and identify significant interests which (with hindsight) it would like to have included in the order but failed to do so, either because the project now makes that desirable or because it failed to make proper enquiry at the time of making. 5.97

We believe that, although there is need for such a slip rule, the procedure should not be so open-ended that it causes uncertainty for interest-owners. Its availability needs, therefore, to be clearly delineated in terms both of the rights and interests it covers, and the time for its operation. Put simply, if an acquiring authority fails to operate the rule within the prescribed time, its occupation would become unlawful and it must either vacate the land or effect sale by mutual consent. We consider that an appropriate time limit would be 18 months.

We also feel there is lack of clarity as to the meaning of the term "to purchase" in section 22(1) of the 1965 Act.

We recommend, therefore, that section 22 (and Cohen) be replaced by a provision in modern form, as set out below.

Recommendation (18) – Omitted interests

(1) An acquiring authority should be entitled retrospectively to rectify accidental omissions relating to interests and rights by serving notice to treat and notice of entry within a prescribed time limit (or within such longer period as is allowed by the Lands Tribunal).

(2) An acquiring authority should be entitled to refer disputes over compensation to the Lands Tribunal for determination within that time limit.

(3) Compensation should be assessed by reference to the date of the original entry on to the subject land.

(4) Section 22 of the Compulsory Purchase Act 1965 should be amended accordingly (and the expression "to purchase" in subsection (1) should be clarified).

(7) PAYMENTS INTO AND OUT OF COURT

Existing law

Payments into court

In certain circumstances, set out in the Compulsory Purchase Act 1965, an acquiring authority is entitled to enter the subject land, under notice to treat or vesting declaration procedures, before any compensation is assessed or paid.

The circumstances where payment-in arises under the Compulsory Purchase Act 1965 are:

(1) Where the landowner refuses to convey or make good title;^[106]

(2) Where the mortgagee of subject land refuses to convey, or make good title;^[107]

(3) Where the acquired land is subject to a rentcharge and the person entitled fails to release or to make good title;^[108]

(4) Where the acquisition is from a landowner who is under a legal disability;^[109]

(5) Where the statutory alternative means for obtaining entry is used; ^[110]or

(6) Where payment is made in respect of common land but there is not a committee of commoners.^[111]

Section 25(2) of the Compulsory Purchase Act 1965 provides that where the payment into court was "in respect of any lease, or any estate in land less than the whole fee simple, or of any reversion dependent on any such lease or estate", any interested person may apply to the court for an order as to investment or accumulation or payment out of court so as to preserve the equivalent of the benefit they would have had in the interest in land.

Section 25(3) of the same Act provides that any person who has only a possessory title (and no documentary proof of ownership) is entitled to apply for payment of moneys out of court (and accrued interest) if no other valid claim is made for those moneys.

Section 26 of the 1965 Act reproduces the complex provision from the Lands Clauses Consolidation Act 1845 for the payment of costs related to the administration of compensation paid into court. Examples include the costs of the purchase of the land and the investment of compensation, and the costs of obtaining orders for the payment of dividends and for payment out of court.

Payments out of court

Where compensation money has been paid into court any interested party may apply to the court for payment out. Three provisions are of particular relevance:

(1) Section 9 of the Compulsory Purchase Act 1965 deals with the position where an owner of, or a person with an interest in, land fails to make title or convey the land. Any person who believes they are entitled may make a claim for payment out of money previously paid into court. The court may order distribution of the money or dividends "according to the respective estates, titles or interests of the claimants" and may also make "such other order as [it] thinks fit".

(2) Schedule 2 to the Compulsory Purchase Act 1965 provides for payment into court of compensation determined for land owned by absent or untraced owners following service of notice to treat.^[115] Distribution may be ordered by the court, on the application of any person claiming, "according to the respective estates, titles or interests of the claimants", and likewise it may make any other order as it thinks fit.^[116]

(3) Schedule 3 to the 1965 Act sets out an alternative procedure for obtaining entry, which makes specific provision for payment into and out of court. We have already indicated our view that Schedule 3 is obsolete and we have recommended its repeal, and we say no more of it here.

In addition, section 29 of the Local Government (Miscellaneous Provisions) Act 1976 relates to local authorities where money has not been paid out of court for more than 12 years following payment-in. Where an authority applies for repayment of unclaimed compensation the court may make such an order. The court, however, may make a subsequent order to the effect that the whole or part of the money transferred to the authority be paid by that authority to "another person" if the court considers that action to be just.

Deficiencies

Provisions such as sections 25 and 26 of the Compulsory Purchase Act 1965 were designed in a different climate where payment into court was the usual pre-requisite to taking possession, and far more frequent an occurrence than it is today.

In our Consultative Report on Procedure we indicated the following deficiencies were inherent in the present legislation relating to payments-in:

(1) Sections 25 and 26 of the 1965 Act are based on, and reproduce the substance of, the provisions on payment into court originally in the Lands Clauses Consolidation Act 1845.^[119] These two sections are cast in a convoluted and archaic manner, and the procedure is in need of simplification.

(2) Section 26 of the 1965 Act, dealing with the reimbursement of incidental charges and expenses, is complex. In our Consultative Report on Procedure we quoted the editor of the Encyclopedia of Compulsory Purchase and Compensation as saying that two factors today render the section "a dead letter"^[120]:

(a) The need to make payment into court is now rare because the disabilities which rendered payment necessary^[121] "have been largely removed" and an authority can use the notice of entry procedure without paying money into court;

(b) Even in the cases excepted by section 26(1) (payments into court made in consequence of wilful refusal or wilful neglect to make title), the court has a discretion as to costs under section 50 of the Judicature Act 1925.

Under modern procedures, the need for payment into court is likely to arise only where owners are untraceable or are obstructive, and the appropriate route will be by deed poll (for which we have recommended a simplified "deed poll procedure").

The procedure for payment out of court to claimants set out in section 9 of the 1965 Act could usefully be updated. We already make recommendations as to the future of both section 9 (failure to make title) and Schedule 2 to the 1965 Act (absent and untraced owners).

Likewise, the Local Government (Miscellaneous Provisions) Act 1976 provisions relating to refunding of unclaimed compensation to local authorities are too narrow in their focus, and should be expanded to cover all forms of acquiring authority.

Provisional proposals

In our Consultative Report on Procedure we provisionally proposed:

(1) That sections 25 and 26 of the 1965 Act should be replaced by a simple provision:

(a) Giving the court power (subject to the rules of court), in relation to compulsory purchase compensation paid into court, to make orders for such moneys to be distributed in accordance with the interests of the relevant claimants, and to make incidental orders;

(b) To the effect that costs incurred in connection with payments into court shall be borne by an authority, unless the court orders otherwise;^[124]

(2) That the Law Reform (Miscellaneous Provisions) Act 1976 be amended so as to extend its remit to all forms of acquiring authority.^[125]

The change to section 25 of the 1965 Act would be linked to our proposal for a new and simplified "deed poll procedure". That procedure, operating hand-in-hand with the general provisions in Part IV of the Administration of Justice Act 1982 for managing funds in court,

Consultation

We asked consultees two questions:

(1) Whether they were aware of any practical problems arising from the provisions of the Compulsory Purchase Act 1965 for payments into and out of court and, if so, how should they be addressed.

(2) Whether they agreed that sections 25 and 26 should be replaced by a simpler provision as proposed.

In the main, those consultees who responded to us on this issue were of the view that the provisions are unnecessarily complex, and that they should be simplified as we suggested. As the procedures are rarely used in practice, with one exception respondents did not offer us examples of cases which had given rise to difficulty. The general feeling was that the provisions in sections 25 and 26 should be replaced and simplified. The Law Society suggested that some departmental guidelines on their operation, by means of circular, would be useful. 5.116

Westminster City Council drew our attention to what can happen when an authority adopts the vesting declaration (rather than notice to treat) route. Where subject land has become vested in an acquiring authority, section 10(1) of the Compulsory Purchase (Vesting Declarations) Act 1981 makes the authority liable to pay the appropriate compensation as would have been payable had it taken possession by notice of entry under the 1965 Act. The authority is deemed, under section 8(1) of the 1981 Act, to have executed a deed poll under Part I of the 1965 Act. Because notice to treat is only deemed to be served under the 1981 Act, section 8(3) disapplies section 11(1) of the 1965 Act (notice of entry), and section 10(2) disapplies section 22 of, and Schedule 2 to, the 1965 Act (relating to absent and untraced owners). 5.117

Westminster City Council told us that where the vesting declaration procedure is used, and several claimants dispute the extent of their respective ownerships of the subject land (an issue which can only then be resolved by the Lands Tribunal), there is no mechanism by which the authority can make payment into court of the full compensation pending resolution of the dispute. It appears to us that sections 25 and 26 of the 1965 Act relate only to payments made under the 1965 Act, and do not apply to vesting declarations, unless it can be said that the deeming provision in section 8(1) of the 1981 Act brings them into play. We believe the issue should be clarified and that a mechanism should be devised which will allow for payments into court where the vesting declaration procedure is used. 5.118

Norman Osborn suggested to us that, as an alternative to replacing sections 25 and 26 with a simplified procedure, there could instead be put in place a certification procedure whereby the acquiring authority acknowledged its indebtedness to the landowner or owners in a binding certificate. This would protect claimants and would release authorities from the burdensome (and costly) administration attached to making payment into court, and later seeking repayment under section 29 of the 1976 Act. Some simple dispute resolution mechanism might be a useful adjunct. We are, however, not convinced that this alternative would provide claimants with sufficient security in the event of the acquiring authority ceasing to exist, nor that it would prove attractive for acquiring authorities which may wish to be relieved of any future involvement. We are also concerned that this proposal does not make adequate provision for the payment of interest. In the circumstances, we consider that retention of a scheme based upon payment into court, albeit modified in order to effect some simplification, is preferable. 5.119

Both the Highways Agency and the Welsh Development Agency indicated that the repayment procedure in section 29 should be available to all forms of acquiring authorities, and not just to local authorities.

Recommendations for reform

We believe that the procedure for payment into court contained in sections 25 and 26 of the Compulsory Purchase Act 1965 should be replaced with a simplified procedure. We also believe it would be useful to extend the remit of what is presently section 29 of the Local Government (Miscellaneous Provisions) Act 1976 in order to cover all forms of acquiring authority. Both these reforms should cover acquisitions under the notice to treat and the vesting declaration route. 5.121

The changes which we recommend elsewhere in this report

Recommendation (19) – Payments into and out of court

(1) Sections 25 and 26 of the Compulsory Purchase Act 1965 (concerning payments into court) should be replaced by a simplified procedure (applying to acquisition both by notice to treat and by vesting declaration):

(a) giving the court power, subject to rules of court, to make orders in relation to money paid into court under the statutory provisions relating to compulsory purchase, for the distribution of such money in accordance with the interests of the claimants (and to make such incidental orders as it thinks fit);

(b) allowing for payment into court by an acquiring authority of the full compensation sum where individual claimants dispute the share of that sum due to them;

(c) providing that costs incurred in connection with payments-in shall be paid by the authority, unless the court determines otherwise.

(2) Section 29 of the Local Government (Miscellaneous Provisions) Act 1976 (relating to unclaimed compensation) should be extended so that it applies to all forms of acquiring authority.

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Note 1    See Capital Investments Ltd v Wednesfield UDC [1965] Ch 774.    [Back]

Note 2    Compulsory Purchase Act 1965, s 9(1).    [Back]

Note 3    Whom the authority must describe: see Compulsory Purchase Act 1965, s 9(2).    [Back]

Note 4    Compulsory Purchase Act 1965, s 9(3).    [Back]

Note 5    Compulsory Purchase Act 1965, s 9(4).     [Back]

Note 6    Compulsory Purchase Act 1965, s 9(5). For example, a mortgagee may apply for payment out of the amount secured by the mortgage: see Re Marriage (1861) 9 WR 843.    [Back]

Note 7    They are to be under seal and give rise to any stamp duty “which would have been payable upon a conveyance to the acquiring authority of the land described therein”: Compulsory Purchase Act 1965, s 28(1),(2).    [Back]

Note 8    Under which section “any such power of disposing of a legal estate exercisable by a person who is not the estate owner is, when practicable, to be exercised in the name and on behalf of the estate owner”.    [Back]

Note 9    Law Com CP No 169, para 5.37 and paras 7.32-7.40.    [Back]

Note 10    Although the words of Administration of Justice Act 1965, s 4 are retained in section 25 of the Compulsory Purchase Act 1965, section 4 itself has been repealed by s 75 of and Sched 9 to the Administration of Justice Act 1982 on the basis that there are no saving provisions (see Interpretation Act 1978, s 16). The Administration of Justice Act 1982, s 38 and Part VI, and the Court Funds Rules 1987, also govern payment of funds into court. In addition the Civil Procedure Rules (“CPR”) Part 37 contains general rules for payments in and out of court under a court order.    [Back]

Note 11    Compulsory Purchase Act 1965, s 25(2).    [Back]

Note 12    See Law Com CP No 169, para 7.34(1).     [Back]

Note 13    Compulsory Purchase Act 1965, s 25(3), which speaks of “the persons respectively in possession of the land, as being the owners, or in receipt of the rents of the land, as being entitled to the rents at the time when the land was purchased”. This sub-section follows closely Lands Clauses Consolidation Act 1845, s 79.    [Back]

Note 14    Sections 76 and 77.    [Back]

Note 15    Law Com CP No 169, paras 5.35, 5.36.    [Back]

Note 16    In our consultative report we also drew attention to the linkage between the deed poll procedure in Part I of the Compulsory Purchase Act 1965 and the vesting declaration procedure as established by the Compulsory Purchase (Vesting Declarations) Act 1981, s 8(1) (discussed above in Part 3(7)).    [Back]

Note 17    Compulsory Purchase Act 1965, s 25(2),(3).    [Back]

Note 18    Law Com CP No 169, para 5.35.    [Back]

Note 19    Law Com CP No 169, para 5.36.    [Back]

Note 20    Law Com CP No 169, para 5.37 and Proposal 7.    [Back]

Note 21    All interests in respect of which compensation had been paid would vest absolutely in the acquiring authority, together with the right to take immediate possession in respect of them.    [Back]

Note 22    But not section 9(5) of the 1965 Act which would be retained and amended: see para 5.27 and Recommendation 13(6) below, dealing with payments out of court and “incidental orders”.    [Back]

Note 23    Sections 25, 26 of the 1965 Act should be replaced in part: see Part 5(7) and Recommendation 19(1) (payments into and out of court) below.    [Back]

Note 24    But not section 28(1),(2) of the 1965 Act which would be amended: see Recommendation 13(7) below.    [Back]

Note 25    Law Com CP No 169, Consultation issues (K)(1),(2).    [Back]

Note 26    Law Com CP No 169, Consultation issue (K)(3).    [Back]

Note 27    Law Com CP No 169, Consultation issue (K)(4).    [Back]

Note 28    The limitation period is governed by Limitation Act 1980, s 9 (as established by Hillingdon LBC v ARC Ltd [1999] Ch 139, CA). Limitation runs from date of entry: see Bridgestart Properties v London Underground [2004] EWCA Civ 793, CA. It was held in Bridgestart Properties that, although the parties were unaware of the time limit at the date of actual entry in 1994, by 1998 (when Hillingdon was decided by the Court of Appeal) the claimant should, as a “normal and sensible precaution”(per Keene LJ), have made a “protective reference” to the Lands Tribunal to prevent its cause of action later becoming statute-barred. See generally, on limitation for claims, Part 4(2) above.     [Back]

Note 29    Compulsory Purchase Act 1965, s 9.    [Back]

Note 30    This can have serious consequences where an authority, as freeholder, has to enter into leases with operating companies, or to exchange land (under Acquisition of Land Act 1981, s 19), or to grant private rights of way over diverted access tracks.    [Back]

Note 31    On payment into court see also our Recommendation 19 below.    [Back]

Note 32    It appears from the words in section 9(5) “and may make such order as the court thinks fit” that the court has a fairly broad discretion to direct an inquiry of its own and to make appropriate orders.    [Back]

Note 33    Limitation Act 1980, s 9(1). See further Part 4(2), paras 4.37 et seq above.    [Back]

Note 34    See Capital Investments Ltd v Wednesfield UDC [1965] Ch 774, 794, per Wilberforce J: “There is, by the mere service of a notice to treat, no consensus between the parties, because at this point the price has not been fixed. A notice to treat does nothing more than establish conditions in which a contract might come into existence, either a voluntary contract or a statutory contract. [The legal authorities] make it plain that a contract does not come into existence by the mere service of a notice to treat before the compensation has been determined.”    [Back]

Note 35    Walker v Ware, Hadham and Buntingford Rly (1865) 1 LR Eq 195, 199, per Sir J Romilly MR: “[T]he Act of Parliament does not deprive the plaintiff of his lien. It was not intended, that because power was given to railway companies to take possession of land upon paying into the bank the amount of the valuation of a surveyor and giving the bond required by the [1845] Act, the landowner should lose his ordinary right of lien when the amount payable by the company has been subsequently ascertained, and is found to exceed the deposited sum.”     [Back]

Note 36    Title will not have passed, notwithstanding the taking of possession, until there is formal transfer or execution of a deed poll. From the time of determination of compensation until transfer the landowner will retain a lien on any of the title deeds which he holds. If the landowner is no longer in possession, it appears that his unpaid vendor’s lien is not registrable: see London & Cheshire Insurance Co v Laplagrene Property Co [1971] 1 Ch 499 (considering the Land Registration Act 1925, s70(1)(g) - now Land Registration Act 2002, Sched 1 para 2 and Sched 3 paras 2, 2 and 2A).    [Back]

Note 37    Law Com CP No 169, para 5.32.    [Back]

Note 38    Compulsory Purchase Act 1965, s 23(6). It seems the prescribed form is rarely used in modern practice: Butterworths Compulsory Purchase and Compensation Service, vol 1, para D1007.    [Back]

Note 39    Law Com CP No 169, para 5.33, Consultation issue (J)(2).    [Back]

Note 40    Law Com CP No 169, para 5.33, Consultation issue (J)(3).    [Back]

Note 41    Law Com CP No 169, para 5.33, Consultation issue (J)(1).    [Back]

Note 42    Barry Denyer-Green put to us the following examples: (1) Notice to treat is served in respect of a claimant’s house and part of his garden, leading to service of a 1965 Act, s 8 counter-notice. Claimant finds an equivalent alternative property and puts in an offer. The authority makes a compensation offer which is far too low. The claimant must then refer the matter to the Lands Tribunal (entailing delay), and faces a double loss: expropriation of his present home and inability to secure his new home. (2) Blight notice is served by claimant (small business owner holding premises on lease); no objection is made and notice to treat is deemed to have been served. Claimant moves to alternative business premises. Authority refuses to make entry until premises required for the scheme. Claimant refers matter to the Tribunal, meanwhile remaining liable for rent on the subject premises, as well as the replacement premises, for which he may not receive compensation.    [Back]

Note 43    Planning and Compulsory Purchase Act 2004, s 103 inserting a new s 5A into the Land Compensation Act 1961 (relevant valuation date).    [Back]

Note 44    By analogy with Land Compensation Act 1973, s 52.    [Back]

Note 45    ODPM, July 2002.    [Back]

Note 46    DTLR, December 2001.    [Back]

Note 47    DTLR Policy Statement, App, paras 2.25-2.30. The time limit would reduce from the norm of three years down to 12 months (with certain exceptions). This followed a recommendation by CPPRAG.     [Back]

Note 48    Order operative until notice to treat; and notice to treat until possession.    [Back]

Note 49    Policy Response Document (ODPM, July 2002), para 12(iii).    [Back]

Note 50    The changes were not included in the Planning and Compulsory Purchase Act 2004.    [Back]

Note 51    Land Compensation Act 1973, s52 as supplemented by the Planning and Compensation Act 1991, s 63(2) and the Planning and Compulsory Purchase Act 2004, s 104.    [Back]

Note 52       [Back]

Note 53   2 Law Com CP No 169, para 7.42. Law Com CP No 169, para 7.43.    [Back]

Note 54    Law Com CP No 169, Proposal 16.    [Back]

Note 55    Law Com CP No 169, Consultation issue (Y)(a).    [Back]

Note 56    Law Com CP No 169, Consultation issue (Y)(b).    [Back]

Note 57    Principally sections 7-9 and sections 71-75. Those sections were themselves amended by the Compulsory Purchase Act 1965, Sched 8, because many of the legal disabilities applying in 1845 had since been removed, rendering the provisions of limited application.     [Back]

Note 58    Encyclopedia of Compulsory Purchase and Compensation (Sweet & Maxwell), para B-0443.    [Back]

Note 59    Halsbury’s Statutes (4th edn, 2000 reissue) vol 9, p 244.    [Back]

Note 60    CP No 169, para 5.46.    [Back]

Note 61    Compulsory Purchase Act 1965, Sched 1, para 2(1).    [Back]

Note 62    Compulsory Purchase Act 1965, Sched 1, para 2(3).    [Back]

Note 63    Compulsory Purchase Act 1965, Sched 1, para 2(2). See also provisions relating to trustees for a beneficiary under a disability, rights of common and powers to release: Sched 1, paras 2(4), 3.    [Back]

Note 64    For injury to retained land, see Towards a Compulsory Purchase Code: (1) Compensation (2003) Law Com No 286, Part III, paras 3.13-3.35 and proposed Rule 4.    [Back]

Note 65    If the two surveyors cannot agree on the valuation, a third surveyor nominated by two Justices of the Peace may make the valuation: Compulsory Purchase Act 1965, Sched 1, para 4. We recommend (in Recommendation 16) that the surveyor-appointment mechanism should be replaced (thereby removing references in the legislation to JPs). This means that section 1(5) of the 1965 Act can also be repealed.    [Back]

Note 66    Compulsory Purchase Act 1965, Sched 1, para 6.    [Back]

Note 67    Compulsory Purchase Act 1965, Sched 1, para 10. The deed poll must recite a description of the land; the acquisition by the authority; the vendors’ names; the amount of compensation paid into court; and the default.    [Back]

Note 68    Compulsory Purchase Act 1965, Sched 1, paras 7-9.     [Back]

Note 69    The full text is set out in Law Com CP No 169, para 5.45.    [Back]

Note 70    For example, by putting in place a mechanism to ensure that the amount of compensation payable is reasonable.    [Back]

Note 71    Lands Acquisition and Compensation (ALRC Report No 14, 1980), para 340.    [Back]

Note 72    Law Com CP No 169, para 5.38-5.41, Proposal 8.    [Back]

Note 73    Occasionally a parcel may attract greater value because, notwithstanding its size, it unlocks development potential. See Law Com CP No 169, para 5.39 and nn 93, 94.    [Back]

Note 74    This presumably means injury to retained land: see Towards a Compulsory Purchase Code: (1) Compensation (2003) Law Com No 286, paras 3.13-3.35 (and proposed Rule 4) for discussion of this head of compensation.    [Back]

Note 75    The selection is made by the President of the Tribunal, on application by the authority, in accordance with the Lands Tribunal Act 1949, s 3: see Compulsory Purchase Act 1965, Sched 2, para 1. The provision in the 1965 Act derives from the Lands Clauses Consolidation Act 1845, ss 58-62 wherein (in its original form) two justices would have to nominate an “able practical surveyor”.     [Back]

Note 76    Compulsory Purchase Act 1965, Sched 2, para 1(3).    [Back]

Note 77    Compulsory Purchase Act 1965, Sched 2, para 1(4).    [Back]

Note 78    Compulsory Purchase Act 1965, Sched 2, para 2(1).    [Back]

Note 79    Compulsory Purchase Act 1965, Sched 2, para 2(2).    [Back]

Note 80    Compulsory Purchase Act 1965, Sched 2, para 2(3).    [Back]

Note 81    Compulsory Purchase Act 1965, Sched 2, para 3. If, before distribution, the money has been dealt with under Administration of Justice Act 1965, s 6, the court may also order distribution of the appropriate dividends. Section 6 has been repealed by Administration of Justice Act 1982, s 75, Sched 9. The distribution of money is now governed by Part VI of the Administration of Justice Act 1982 and the Court Funds Rules 1987.     [Back]

Note 82    The Lands Tribunal has therefore power to award a further sum which must be paid over, or paid into court, within 14 days of the Lands Tribunal’s award: Compulsory Purchase Act 1965, Sched 2, para 4(1), (2). Where the sum is increased, the costs of the claimant’s application fall to be paid by the acquiring authority; otherwise, costs are in the discretion of the Lands Tribunal: Compulsory Purchase Act 1965, Sched 2, para 4(3).    [Back]

Note 83    Law Com CP No 169, para 5.41.    [Back]

Note 84    Law Com CP No 169, para 5.40.    [Back]

Note 85    Law Com CP No 169, para 5.41.    [Back]

Note 86    Amendment of the Compulsory Purchase Act 1965, s 9 would not be appropriate because that provision is designed to bite where a compensation claim has been lodged, and compensation has been “agreed or awarded”.    [Back]

Note 87    See Recommendation 17(1) below.    [Back]

Note 88    For example, in genuine ignorance of a subsisting mortgage.    [Back]

Note 89    That is six months after (a) the authority have notice of the estate, right, interest or charge, or (b) if it is disputed, the date when the claimant’s right is finally established by law: Compulsory Purchase Act 1965, s 22(3). The three-year time limit contained in the Compulsory Purchase Act 1965 is disapplied in this context: see s 22(2).    [Back]

Note 90    Compulsory Purchase Act 1965, s 22(1).    [Back]

Note 91    (1980) 42 P&CR 6 (CA).    [Back]

Note 92    In Advance Ground Rents Ltd v Middlesbrough BC [1986] 2 EGLR 221 (LT), notice to treat was served on a mortgagee over seven years after the CPO became operative, and three-and-a-half years after the authority became aware of the mortgagee’s existence (the delay resulting from death and an assignment). The Lands Tribunal held that the notice to treat was invalid and that the authority had lost its opportunity to rectify its omission. The reference land was no longer authorised to be acquired compulsorily.    [Back]

Note 93    Land acquired by vesting declaration is deemed to be subject to constructive notice to treat served on “every person on whom, under section 5 of the Compulsory Purchase Act 1965, the acquiring authority could have served such a notice”, and the authority is deemed to have “had knowledge of all the parties referred to in section 5”: Compulsory Purchase (Vesting Declarations) Act 1981, s7(1), (2).     [Back]

Note 94    Law Com CP No 169, paras 7.22-7.25.    [Back]

Note 95    For example, where an authority knows of a mortgage on the subject land, but wrongly assumes the equity of redemption (the value of the land on which the mortgage is secured) is greater than the amount outstanding: see Martin v London, Chatham etc Railway (1866) LR 1 Ch 501; and Stretton v GWR (1870) LR 5 Ch 751 (where possession was taken without giving notice to treat to a known interest).    [Back]

Note 96    Compulsory Purchase Act 1965, s 22(4).    [Back]

Note 97    We pointed out that it seems, under Cohen, that the valuation date will be treated as the date of notional entry following service of the valid notice to treat and notice of entry. If works have been carried out by the authority after the date of actual entry, those works may have to be taken into account in assessing compensation. This would create an inconsistency. See Law Com CP No 169, para 7.25.    [Back]

Note 98    As the editor of the Encyclopedia of Compulsory Purchase and Compensation notes (at para B-0499), it is probably in the interests of the authority that, once the right to compensation has been established, even if a claim has not been made, it then makes the reference to the Lands Tribunal. See Caledonian Railway v Davidson [1903] AC 22 (HL).    [Back]

Note 99    We suggested 18 months from the date of entry and taking possession.     [Back]

Note 100    Law Com CP No 169, para 7.26.    [Back]

Note 101    Law Com CP No 169, para 7.26, Consultation issue (U)(2).    [Back]

Note 102    The Agency also raised a compensation issue: namely, if the notional rather than the actual date of entry is to be treated as the valuation date, whether interest on the compensation is payable from the later of these dates (which could be unfair to the claimant). Richard Rattle suggested to us that interest should run from the original (actual) date of entry.    [Back]

Note 103    This would be in line with the reduced time limit envisaged by ODPM for serving notice to treat or making a vesting declaration (see para 4.11 above, and Policy Response Document (ODPM, July 2002), para 12(iii)).    [Back]

Note 104    “If after the acquiring authority have entered on any of the land... it appears that they have through mistake or inadvertence failed or omitted duly to purchase or to pay compensation for any estate [etc] affecting that land...”    [Back]

Note 105    Compulsory Purchase Act 1965, s 11(1); Compulsory Purchase (Vesting Declarations) Act 1981, s 10(1).    [Back]

Note 106    Our understanding from the Court Funds Office is that between 50 and 100 requests are made annually for payments-in in respect of compulsory purchase orders.    [Back]

Note 107    Compulsory Purchase Act 1965, ss 9(1), 25(1).    [Back]

Note 108    Compulsory Purchase Act 1965, ss 14(4), 15(3), 16(5).    [Back]

Note 109    Ibid, s 18(3).    [Back]

Note 110    Ibid, Sched 1, para 6(2).    [Back]

Note 111    Ibid, Sched 3, para 2.    [Back]

Note 112    Ibid, Sched 4, para 7. Our terms of reference do not include a review of the provisions relating to common land.    [Back]

Note 113    Ibid, s 25(2).    [Back]

Note 114    Ibid, s 25(3).    [Back]

Note 115    Ibid, s 26(2),(3).    [Back]

Note 116    Ibid, s 5(3), Sched 2, para 2.    [Back]

Note 117    Ibid, Sched 2, para 3.    [Back]

Note 118    Local Government (Miscellaneous Provisions) Act 1976, s 29(1), (2).    [Back]

Note 119    See Law Com CP No 169, para 7.32.    [Back]

Note 120    Lands Clauses Consolidation Act 1845, ss 78-80.    [Back]

Note 121    Encyclopedia of Compulsory Purchase and Compensation vol 1, para B-0505.    [Back]

Note 122    Compulsory Purchase Act 1965, Sched 1, para 6.    [Back]

Note 123    See Part 5(1) and Recommendation 13 above.    [Back]

Note 124    See Part 5(1) and Recommendation 13, and Part 5(5) and Recommendation 17 above.     [Back]

Note 125    Law Com CP No 169, para 7.40 and Proposal 15.    [Back]

Note 126    Law Com CP No 169, para 7.40.    [Back]

Note 127    The Administration of Justice Act 1982 repealed and replaced the equivalent provisions in the Administration of Justice Act 1965, s4 (which is mentioned in section 25(1) of the Compulsory Purchase Act 1965): see 1982 Act, s 75 & Sched 9.    [Back]

Note 128    See n 126 above.    [Back]

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