Moto Hospitality Ltd v Secretary of State for Transport

This is the judgment of the court. The case raises important and difficult issues as to the scope of the statutory right to compensation under section 10 of the Compulsory Purchase Act 1965 (the 1965 Act”).

The claimant (“Moto”) operates the Cherwell Valley Motorway Service Area (“the MSA”), which it occupies under a sub-lease from Esso Petroleum Co Ltd. (The petrol filling station as such is occupied under licence only, which, as is accepted, does not give rise to a claim under section 10.) The MSA lies close to junction 10 on the M40, known as “the Ardley interchange”. During 2001 and 2002, alterations were carried out to the junction, involving general improvements and the stopping up and realignment of various sections of highway (the totality of which works we shall refer to as “the scheme”). Moto claims that the new arrangement substantially diminished the value of its site as a service station, principally because the routes to it are longer and less direct. It seeks compensation under section 10 of the Compulsory Purchase Act 1965 for the diminution in value of its leasehold interest.

The President (George Bartlett QC) ordered the trial of a preliminary issue:

"Whether, if the claimant has suffered loss through the diminution in value of its leasehold interest in the premises due to the carrying out of the works, it is entitled to compensation under section 10 of the Compulsory Purchase Act 1965."

In a decision dated 29^th July 2006, he answered that question in the affirmative. The Secretary of State appeals.

The Ardley interchange forms the junction between the M40, running roughly north-south, the A43 to the east and the B430 to the west. The alterations were associated with the dualling of the A43 between Towcester and the M40.

The President described the effect of the alterations by reference to a plan attached to the decision. For our purposes, the following is a sufficient summary:

The claim was based on both temporary and permanent loss. In relation to temporary loss the statement of case said:

"The Works commenced in or around February 2001 and were completed in or around September 2002. The execution of the Works generally during this period caused disruption to the operation of the CVMSA, and in particular the ability of vehicles readily or conveniently to access the CVSMA from the Ardley Interchange."

No particulars were given of the obstructions during the works.

Permanent loss was described as follows:

"The execution of the Works involved obstructions of existing public highways at the Ardley Interchange by blocking of the highways and removal of the carriageways, including (the southbound off- and on-slip roads and the northbound off-slip road)….”

As a result, it was alleged, “the CVMSA was less accessible and/or convenient for, and attractive to, customers using the Ardley Interchange”.

The tribunal was presented with expert evidence on behalf of Moto, assessing the impact of the new arrangements on “turn-in” rates to the MSA from different directions. For example, their evidence showed a reduction of 34% for southbound traffic on the M40; and similar orders of reduction for the other main flows. It was agreed that the distances via the MSA for various categories of traffic had increased by distances ranging from 120 to 615 metres (decision para 12). As the President noted:

“The claimant's concern about traffic from the A43 to the M40 southbound is not, I think, about the distance but with the fact that it no longer passes the MSA, since it goes from the new Padbury roundabout onto the new southbound slip-road. Traffic from the M40 southbound has now to negotiate both the Padbury roundabout and the Cherwell roundabout.” (para 12)

Since this was the hearing of a preliminary issue, no specific findings were made on this evidence. However, one does not need expert guidance to deduce from the plans that, for example, the Padbury roundabout now provides the main link for many important traffic movements, previously served by the Eastern roundabout; and that, since it is considerably further from the MSA, the relative attractiveness of the MSA to those flows (all other things being equal) is likely to be significantly reduced.

We proceed on the basis that there has been a significant adverse effect on the attractiveness, and therefore on the value, of the MSA, without in any way prejudging the factual assessments which may need to be made by the tribunal in due course.

The improvements were carried out by the Secretary of State, as highway authority for trunk roads, under various orders made under the Highways Act 1980. The orders were confirmed following the normal statutory procedures, including consideration of objections and local inquiries. Moto did not raise the issue of damage to its business by way of formal objection to the orders, as it could have done (see e.g. Vasiliou v Secretary of State [1991] 2 All ER 77). That does not affect its right to statutory compensation as such, but, as will be seen, it may have a bearing on the factual context in which its claim is considered.

Authorisation of the scheme required a package of statutory orders, which were described in detail in the decision (para 6). The most relevant are:

As is apparent from that summary, the 1980 Act contains a variety of provisions providing the necessary powers for different aspects of the scheme, including specific powers for compulsory purchase and for stopping up existing highways. The following are of particular relevance to the present appeal.

The incorporation of the 1981 Act brought with it the provisions of the 1965 Act and the Land Compensation Act 1961, governing compensation. Owners of land compulsorily acquired for such public works are entitled to compensation based on the market value of the land taken, “disturbance”, “severance” and “injurious affection”, under principles defined by the 1961 Act and section 7 of the 1965 Act. An owner whose land is not taken, but is injuriously affected by the execution of the works, may have a claim under section 10 of the 1965 Act.

Section 10, which replaced section 68 of the Land Clauses Consolidation Act 1845, provides:

“(1)

If any person claims compensation in respect of any land, or any interest in land, which has been taken for or injuriously affected by the execution of the works, and for which the acquiring authority have not made satisfaction under the provisions of this Act, or of the special Act, any dispute arising in relation to the compensation shall be referred to and determined by the Lands Tribunal.

(2)

This section shall be construed as affording in all cases a right to compensation for injurious affection to land which is the same as the right which section 68 of the Lands Clauses Consolidation Act 1845 has been construed as affording in cases where the amount claimed exceeds fifty pounds.”

For the definition of “the works” and “the special Act” reference must be made to section 1:

"(1)

This Part of this Act shall apply in relation to any compulsory purchase to which Part II of the Acquisition of Land Act 1981, or Schedule 1 to that Act, applies...

(2)

In construing this Part of this Act the enactment under which the purchase is authorised and the compulsory purchase order shall be deemed to be the special Act…

(4)

In this Part of this Act 'the works' or 'the undertaking' means the works or undertaking, of whatever nature, authorised to be executed by the special Act…"

The principles governing compensation under section 68 of the 1845 Act (usually known as “the McCarthy rules”) were established in a series of cases in the 19^th century, culminating in Metropolitan Board of Works v McCarthy (1874) LR 7 HL 243, and Caledonian Ry Co v Walkers’ Trustees (1882) 7 App Cas 259. They were reviewed recently by this court in Clift v Welsh Office [1999] 1 WLR 796, and by the House of Lords in Wildtree Hotels Ltd v Harrow LBC [2001] 2 AC 1.

The background to many of the 19^th C cases lay in the rapid development of the railway system, which inevitably had an adverse effect on many businesses associated with the road network. In Ricket v Metropolitan Railway Co (1867) LR 2 HL 175, 198-9, Lord Cranworth observed:

“The very existence of a railway must cause loss to many persons in its neighbourhood. Every inn or posting-house at which post horses were kept suffered, as is well known, grievous loss by the first establishment of a railroad in its neighbourhood; in fact, the business of such a house was often utterly destroyed. But it was never contended that this was an injury… for which compensation should be demanded…”

In Wildtree Lord Hoffmann also referred to the dramatic impact of the construction of the railways, commenting:

“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…” (Wildtree p 8)

The principles which emerged, as restated by Lord Hoffmann in Wildtree (p 7), are in summary:

The debate in the present case has centred mainly on the second principle. This depends on drawing an analogy with common law principles of public nuisance. There is an obvious artificiality in applying such a test to works which would never in practice be carried out except under statutory authority. This was recognised at an early stage. In Walker’s Trustees (at p 279), Lord Selborne LC (who had himself been the unsuccessful advocate in Brand) observed:

“… if the point were open, I should myself think it questionable whether there was not a fallacy in such a test depending upon the hypothesis of the same work being executed without authority, which (having regard to the nature and operation of Acts for the execution of that class of public works) can hardly be supposed to have been within the contemplation of Parliament”.

The present case is, we think, the first in which a court at this level has been asked to apply these principles to improvement works to a major trunk road junction, carried out by the Secretary of State as highway authority. It might be thought that in such a context the public nuisance analogy becomes almost meaningless. Furthermore, little direct assistance is to be found in the 19^th C cases, which for obvious reasons were not faced with comparable factual problems.

A similar case came before the President in Wagstaff v DETR [1999] 2 EGLR 108. We have been much assisted by his thorough and authoritative analysis of the issues, both in that case and in the present.

We turn to the tribunal’s decision in the present case. He identified two issues as raised by the Secretary of State:

Both issues were decided in favour of Moto. On the works issue, there were two reasons for giving the definition of the “special Act” (and hence the definition of “the works”) a wide meaning:

“The first is that section 10 gives an entitlement to compensation for injurious affection arising from the execution of ‘the works’; that section 1(4) provides that ‘the works’ means the works authorised to be executed by the special Act; and that the sections in the Highways Act giving power to acquire land compulsorily do not authorise the execution of works. The power to execute works arises under other provisions of the Act and orders made under them and not under the CPO or the sections that empower it.” (para 19)

The second relied on comparison with the definition of “special Act” in the 1845 Act:

“(Under section 2 of the 1845 Act) ‘the special Act’ did not consist only of the particular provisions that authorised the taking of lands for the undertaking. It was the whole Act, including the provisions in it that authorised the execution of the works. Compensation under section 68 was not limited to injurious affection caused by the carrying out of works on land that the special Act had authorised to be acquired. To construe ‘the special Act’ for the purpose of the 1965 Act as confined to the powers conferring the right to acquire land compulsorily would, or could, restrict the right to compensation to a narrower range of circumstances than under the 1845 Act, and this would be inconsistent with section 10(2). It is therefore necessary, in my judgment, to give to ‘the enactment under which the purchase is authorised’ a meaning that will result in the same entitlement to compensation for injurious affection as would have resulted from an Act that authorised the taking of lands and the execution of works for purposes of a particular project and which incorporated the Lands Clauses Act.” (para 22)

The President thought that the reference in the definition to the “compulsory purchase order” was simply in order to identify the particular undertaking for which the works were authorised:

“Thus the works for the purposes of which the CPO was made consisted of the entirety of the works of highway construction and improvement that were to be carried out at the Ardley interchange. They were not confined to the parts of the works to be carried out on the land acquired under the CPO. It is the entirety of the works, therefore, that in my judgment constitute "the works" for the purposes of section 10, and it is the entirety of the statutory provisions enabling such works to be carried out that constitutes the enactment.” (para 23)

He did not think that the decision of this court in Jolliffe v Exeter Corporation [1967] 1 WLR 993 compelled a narrower construction.

On the public nuisance issue, he held that the obstructions were sufficiently “local” to be capable of giving rise to particular damage (para 54) and that on the facts they satisfied the McCarthy test:

“The question is whether the claimant has suffered damage of a kind or in a way that is different from that suffered by others. What seems to me to be of crucial significance in this respect is that the claimant's land is part of a motorway service area, which has been located where it is for the specific purpose of enabling services to be provided to motorists on the motorway, and it is this that gives particular value to the land. Access to and from the motorway is of particular importance to the claimant's land for this reason, and it is this that distinguishes the position of the claimant from that of the generality of landowners in the area and other users of the interchange. If such access is obstructed in a way that causes a diminution in the value of its interest the claimant will have suffered particular damage.” (para 55)

He concluded that the obstructions of the southbound and northbound off-slip roads and of the northbound on-slip road were capable of giving rise to claims for compensation under section 10. However, the obstruction of the short length of the southbound on-slip road could not give rise to a claim because it was not on that part of the slip-road that provided access from the MSA to the motorway (para 56).

An appeal lies to this court on points of law only. The Secretary of State contends that the tribunal erred in law on five grounds. They can be summarised as follows:

We say at once that we do not think that ground (iv) adds anything of substance to the others. If the tribunal was correct on the other points, then it matters not if this is seen as an extension of the rights under section 10 as previously understood. It was the tribunal’s duty to apply the law as it found it, not to start from any preconceptions as to where the boundaries of compensation rights should be drawn. We must do the same.

However, we also bear in mind the strong criticisms that have been made of the current state of the law of compensation, derived from piecemeal development, by statute and case-law, over more than 150 years. The criticisms were reflected in the Law Commission’s recent report, which made recommendations for a new statutory code (Towards a Compulsory Purchase Code: (1) Compensation Law Com No 286). The Commission recommended (part XI) that section 10 should be replaced by a new and extended right for compensation caused by the execution of public works, linked to the existing provisions of the Land Compensation Act 1973 Part I (compensation for depreciation caused by the use of public works). The Government has so far declined to act on those recommendations.

In those circumstances we think there is some obligation on the courts to do what they properly can to help to rationalise the law. The main principles have now been settled at the highest level in a trilogy of cases: Director of Building and Lands v Shun Fung Ironworks [1995] 2 AC 111 PC (general principles and disturbance); Wildtree Hotel (injurious affection where no land is taken); and Waters v Welsh Development Agency [2004] 1 WLR 1304 (disregarding “the scheme”). In the last case Lord Nicholls endorsed the Law Commission’s criticisms of the complexity and obscurity of the law, and commented:

“Meanwhile, until Parliament takes action I suggest your Lordships’ House, so far as it may properly do so, should seek to simplify the law, always having in mind that the aim of compensation is to provide a fair financial equivalent for the land taken.” (p1306-7 per Lord Nicholls).

Mutatis mutandis we would respectfully adopt a similar approach.

We turn therefore to the issues raised by the appeal, which can be most helpfully sub-divided as follows:

It is convenient to start by considering the issues raised under this head by reference to the 1845 Act and the cases under it, before considering the effect of Jolliffe and of the 1965 and 1980 Acts.

Under the 1845 Act, the “special Act” would normally have been a private Act giving a particular undertaking, for example a railway or canal undertaking, all the necessary powers to carry out its statutory purpose. Typically, these would include powers to acquire outstanding land interests, to stop up or divert public highways or private accesses, and to override other private interests. As the tribunal observed, there was no reason to read section 68 as limited to the particular provisions that authorised the taking of lands. The other powers were equally important to provide the necessary authority for the execution of the works.

Consistently with this approach, and in spite of some contrary indications in the statute, the courts rejected arguments that section 68 was confined to cases where land was acquired compulsorily.

This issue was considered by this court in Kirby v Harrogate School Board [1896] 1 Ch 437. Under the Elementary Education Act 1870, the Board had power to build school accommodation, and to acquire land for that purpose. Section 20 provided that the 1845 Act was to apply “with respect to the purchase of land” for the purposes of the 1870 Act. The Board began to erect a school building on a site which they had acquired by agreement. The plaintiff alleged that it infringed a restrictive covenant attached to his land, and sought an injunction. The claim failed. The court held that the work was authorised by the statute, and that the only remedy for the infringement of the private right was a claim for compensation under section 68 of the 1845 Act.

One issue was whether compensation could be claimed under section 68 for work on land acquired by agreement, rather than compulsorily. Reference was made to the fact that section 68 was part of group of sections in the 1845 Act headed “Purchase of lands otherwise than by agreement”. The court rejected a narrow interpretation. Although some of the reasoning turned on the specific wording of the 1870 Act, the decision was of more general effect. Thus, Lindley LJ, while acknowledging that the language of the statute was “not quite happy”, said:

“… when regard is had to the object of the section, it would be misreading the Lands Clauses Act if we were to hold that a person injuriously affected by the construction of the works could not have the benefit of s. 68 if the company had managed to acquire the land by agreement rather than by the exercise of their compulsory powers. I have not the slightest doubt myself that s. 68 properly applies to all cases of purchase by railway companies under their powers, and to all cases of purchase by school boards under the powers conferred upon them by this Act of 1870.” (p 448-9)

Similarly Kay LJ saw no reason to confine the words of section 68 (“even when applied to a railway company”) to works on land which has been compulsorily acquired (p 451). The third member of the court (A L Smith LJ) agreed with both judgments on this point (p 455).

In reading the early cases, however, some care is needed to distinguish between the interpretation of section 68 itself, and that of the incorporating provisions of the special Act. The application of section 68 may depend on apparently narrow differences of wording. For example:

The view that section 68 itself was not dependent on compulsory purchase was treated as settled in Horn v Sunderland Corp [1941] 2 KB 26. In that case, Scott LJ (who, as counsel, had been the author of an important report on compensation law, which preceded the changes made by the Acquisition of Land Act 1919) gave a classic exposition of the principles of compensation law. It is most often cited in the context of compensation for disturbance, but he also dealt with section 68:

“There is a third kind [of compensation] given by the [1845] Act, namely by s. 68, but that has nothing to do with compulsory acquisition. It is a remedy for injuries caused by the works authorised by the Act to the lands of an owner who has had none of the lands taken in that locality. The remedy is given because Parliament, by authorising the works, has prevented damage caused by them from being actionable, and the compensation is given as a substitute for damages at law…” (p 42, emphasis added)

Thus it is clear that, subject to any specific provision in the special Act, a claim for compensation under section 68 did not depend on the inclusion of compulsory purchase powers in the provisions authorising the works. By the same token, where some of the required land was subject to compulsory purchase, it is hard to see why it would have mattered for the purposes of section 68 whether the works took place on that land or elsewhere. As far as we are aware, there is no support for such a distinction in any of the section 68 cases before Jolliffe (to which we turn below).

Similarly, the 19^th C cases seem to us to give no support for an argument that stopping-up under statutory powers granted by the “special Act” was excluded from the scope of section 68. This aspect was exhaustively and persuasively examined by the President in Wagstaff (p 113), and we see no reason to duplicate that discussion. As he observed, in the long history of this provision, until Jolliffe, there appears to have been no case where stopping-up (whether under express or implied statutory powers in the special Act) has been treated as outside the scope of section 68.

We would only add that the argument was raised and implicitly rejected in an important early case: Chamberlain v West End of London Railway Co (1862) 2 B&S 617 (Ex Ch). It had been found that following the railway works cutting off a highway access, and notwithstanding the provision of a deviation road, the value of the claimant’s properties as shops had been “greatly diminished” by the reduction in the number of people passing them (p 610). In the course of argument for the railway company, reference was made to the provisions of the 1845 Act relating to the stopping up and diverting of roads, and the requirement, subject to a penalty, to provide “a permanent substituted road, equally convenient as the former, or as near thereto as circumstances will allow” (sections 56-7). It was argued that these requirements implicitly excluded any right to compensation under section 68.

Although the court made no specific reference to this argument, it must be taken as having rejected it. Erle CJ (with whom the rest of the court agreed) accepted, on the basis of the umpire’s finding, that the claimants’ houses had been depreciated in value “because the highway was stopped up, and the easy access which before existed was taken away”. He may well have thought it implicit in the umpire’s findings that the statutory test for the replacement had not in fact been met by the deviation road. (By contrast with the 1980 Act, the 1845 Act did not make satisfaction on that issue a pre-condition of the validity of an order.) In any event, he concluded that the case came within the scope of section 68 (p 635-6). This decision was later approved by the House of Lords in McCarthy (again without any reference to the issue of statutory stopping-up powers).

Jolliffe was the owner of a garage on a busy road. In connection with the construction of a new inner ring road, the council compulsorily acquired some adjoining land under the Highways Act 1959, and also procured the making of a stopping-up order by the Minister of Transport under the Town and Country Planning Act 1947. No land was taken from him, but the garage was left at the end of a cul-de-sac and the business was seriously affected. It was held that section 10 gave no right to compensation.

Mr Holgate relies on Jolliffe as showing that a claim under section 10 only arises in respect of works on the land subject to compulsory purchase. We accept that this was part of Lord Denning’s reasoning, but we agree with the President’s analysis (para 32) of the other judgments, which shows that, in spite of some incidental comments suggesting a narrow view of “the special Act”, this point was not essential to the majority conclusion.

In any event, this point was not fully argued. There was no reference to the history discussed above. Indeed it was apparently conceded by counsel for the claimant (contrary to Kirby) that, had the acquisition been by agreement, no compensation would have been payable. As Lord Denning fairly observed, “it would be very strange if a compulsory purchase order made all the difference” (p 998). He might well have taken a different view, had he been reminded that in Kirby the same thought had led the court to the opposite conclusion: that the equivalent section 68 should be read as extending to works on land acquired by agreement.

On the stopping-up issue, Mr Holgate is on firmer ground, since all three members of the court clearly based their decision on this point. Lord Denning said:

“[The Stopping Up Order] authorised the stopping up of various streets in Exeter, including this part of Coombe Street. But it is important to observe that the Act of 1947 contains no provision for compensation. In this respect the Act is like the old Highways Act, 1835. The legislature provided for local inquiries and confirmation by quarter sessions, but no provisions for compensation. Under that Act the stopping up might ruin a man’s trade, but he could recover no compensation. So here, the stopping up of Coombe Street may damage Mr Joliffe’s trade in that street, but he can recover no compensation on that account…” (p 997F-G)

Similarly, Davies LJ noted that the stopping up of the street was done by the Minister under the Town and Country Planning Act, which made no provision for compensation (p 999F-H). Russell LJ thought that “the execution of the works authorised, that is to say, the construction of the highway” had no injurious effect on the plaintiff's property:

“The damage was already done. Coombe Street, before a pick or spade had been laid on the works, had been turned into a cul-de-sac so far as the plaintiff was concerned.” (p 1000B)

Thus, Jolliffe must be taken as authority for the proposition that, where the execution of the works is facilitated by a stopping-up order made by a different compensating authority, under a different statutory scheme not incorporating the 1965 Act, the stopping up does not give rise to a claim under section 10. In this case, by contrast, the stopping-up order was made under the same Act by the same authority, and as part of a composite package of measures, all of which were required for the execution of the works. We see no reason, based on the 19^th C cases or otherwise, to extend the Jolliffe principle to a case like this.

Finally, we consider whether the law as settled under section 68 has been altered, either generally under section 10 of the 1965 Act, or, specifically, as applicable to the scheme.

The short answer to the first point has to be “no”, principally because section 10(2) makes that clear. Section 10 is to be construed as affording “in all cases” the same right to compensation as under section 68. As Lord Hoffmann observed of the sub-section:

“(it) 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.”

Arguably, the wording of section 1 of the 1965 Act (reflecting the title of the Act itself) implies a more specific link with compulsory purchase than the heading to the group of sections in the 1845 Act (referred to in Kirby). In particular, the definition of “special Act” in section 1(2) (“the enactment under which the purchase is authorised and the compulsory purchase order”) appears to assume the existence of a compulsory purchase order of some form. However, we agree with Scott J, who in Re Elm Avenue [1984] 1 WLR 1398 accepted Kirby as authority for the application of section 10 to works on land acquired by agreement (although we note that there was no counter argument on the point.) Regardless of differences in the language, we regard Kirby (taken with section 10(2)) as justifying a broad construction and a purposive approach, even if it involves some violence to the statutory wording.

We note also, as did the tribunal (para 33), that -

“… in none of the other leading modern cases on the application of section 68 and section 10 [including Clift and Wildtree Hotels, and Westminster City Council v Ocean Leisure Ltd [2004] RVR 219] was it thought necessary to consider whether the works giving rise to the damage had been carried out on land that had been compulsorily acquired.”

In the last case (Ocean Leisure) it was conceded by the council that section 10 applied to injury from works on the highway, regardless of any link with a particular acquisition, compulsory or voluntary. This was under a statutory order which in terms applied the 1965 Act to “the acquisition of land” under the order. For the purposes of the present case, it is unnecessary to decide whether the concession was correct, although we have no reason to doubt it. It is sufficient to hold that the inclusion of compulsory powers in the package of orders for the scheme, for at least part of the land required, was enough to trigger the application of section 10 to the works as a whole.

For completeness, we record Mr Holgate’s tentative reliance on the decision of this court in Edwards v Minister of Transport [1964] 2 QB 134. That case concerned section 63 of the 1845 Act (now section 7 of the 1965 Act), which gave an owner of land compulsorily acquired an additional right to compensation for severance or injurious affection of land previously held with the land taken. Adopting a narrow approach to construction of section 63, it was held that the claim for injurious affection was confined to the effects of works and uses on the land taken. We have some doubt whether it would have been decided the same way today (having regard, for example, to the restatement of the general principle of “full and fair compensation” in Shun Fung at p 125). In any event, as the judgments made clear (see e.g. per Russell LJ at p 158), section 68 was not in issue. The effect of the decision as regards section 63 was reversed by the Land Compensation Act 1973 s 44. In our view, the case is of no assistance in the present case.

Against this background we agree with the President’s reasons for holding that a wide construction of “the special Act” is appropriate in the present case. He recalled his consideration of this issue in Wagstaff, where he had held that the special Act was not limited to the provisions and orders authorising compulsory purchase, but included -

“… all the provisions both in the Highways Act itself and in the orders made under it that empowered the carrying out of the project. Thus it included not only the CPO but also the other orders, including the side roads order that provided for the stopping-up of highways.” (para 16)

In this case, accordingly, he held that the works included “the entirety of the works of highway construction and improvement that were to be carried out at the Ardley interchange” (para 23). We agree.

For the reasons already discussed, there is no reason to exclude the stopping-up provisions. It is true that under this Act the orders could not be made unless provision was made for “reasonably convenient” alternatives (s 14(6)). However, this did not necessarily exclude the possibility of particular damage in individual cases. It is of interest to note (as did the tribunal in Wagstaff p 110F) that, in relation to stopping up of private accesses (ss 125-6), where again the Act requires a “reasonably convenient” alternative, there is also specific provision for compensation. There is nothing in the Act to suggest that the corresponding requirement in section 14(6), in relation to stopping up of public highways, is intended to limit the scope of the 1965 Act, as incorporated (at one remove) by section 247.

There is a slightly stronger argument in respect of the link with compulsory purchase. Section 247 applies the 1981 Act (and through it the 1965 Act) specifically in relation to the compulsory acquisition of land. However, on the view we have taken, the inclusion of compulsory powers for part of the land, is enough to apply section 10 to the effects of the whole of the scheme.

On this point, we note also the President’s comments on the surprising results to which Mr Holgate’s argument would lead. The statement of case relied on three specific obstructions, caused by the stopping up, respectively, of the old south-bound on- and off-slip roads (on the MSA side of the motorway) and of the north-bound off-slip road (on the opposite side of the motorway). The purpose and location of these obstructions was unrelated in any way to the requirements for compulsory purchase. The areas in the CPO represented something of a patchwork, depending on the extent of additional land required beyond that already included within the highway under previous orders. The President described the effect of Mr Holgate’s argument:

“No compensation could be payable in relation to the southbound off-slip road because, although it had constructed across it the new off-slip road which, immediately adjacent to the old slip road was on CPO land, the land where the new road went across the old slip road was not within the CPO. The same would go for the northbound off-slip road. The northbound on-slip road, however, had constructed across it a new length of footpath and this was constructed on CPO land. Compensation could consequently arise in relation to this.” (para 34)

We are happy to conclude that the law does not produce such an apparently arbitrary and illogical result.

We turn to the other main issue, relating to the definition of “particular damage” under the second principle in Wildtree. As Lord Hoffmann commented when explaining this principle:

“… 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.”

Mr Holgate seeks to extract two principles from the authorities: first, that the rights interfered with must be “appurtenant” to the claimant’s land; secondly, the obstruction must be “proximate”.

This particular wording is derived from Lord Hoffmann’s speech in Wildtree (at p 11A-B) where he spoke of interference with “rights appurtenant to the property, such as public or private rights of way”. Mr Holgate sought to equate it with similar terms used in the 19^th C cases. For example, the formulation (by Mr Thesiger QC) approved by the House of Lords in McCarthy ((1874) LR 7 HL 243, 253) referred to “any right, public or private” which the owners or occupiers of property are entitled to use “in connection with such property…”; and Lord Chelmsford (in the same case, p 259) spoke of the need, in relation to a public right, for “something peculiar to the right in its connection with the house to distinguish it from that which is enjoyed by the rest of the world”.

The word “appurtenant” itself is not found in the 19^th C formulations. It is a word normally associated with private rights attached to land, not with the law of public nuisance. Lord Hoffmann himself, when restating the McCarthy principles, made no reference to “appurtenant” rights, but spoke simply of the traditional requirements for the claimant to show “particular damage”, and for the claim to be for damage to land, rather than for loss suffered in a personal capacity. His later use of the term (“rights appurtenant to the property, such as public or private rights of way”) came during his discussion of the arguments of counsel, and followed his citation of the Thesiger formulation. In that context, it reads, not as exposition, but as convenient shorthand.

The only reference to “appurtenant rights” in the 19^th C cases seems to be in the argument of counsel for the railway company in Walker’s Trustees (p 267-8). He spoke of the need for the right to have –

“… a degree of proximity to the affected property which made it, in a reasonable sense, an appurtenant of the property”.

His argument failed, and his use of the term “appurtenant” was not followed by the majority. Lord Selborne mentioned the argument that the access was not “a right so connected with or incident to their real estate” as to give rise to compensation (p 280); but he regarded it as sufficient that the right of access “was direct and proximate and not indirect or remote” (p 285). The argument found a possible echo in the speech of Lord Blackburn, who referred to an action for obstruction of a public way as one for infringement of “a right attached to the land” (p 298); but he was alone in using that language.

Although “proximity” may be identified as a significant feature in some of the cases, it does not appear to qualify as the governing test either at common law, or under section 68.

We have been referred to some of the common law cases, dating from the 17^th C (many are summarised in Pratt & McKenzie: Law of Highways, 21^st Ed (1967) p 132ff). It is not easy to find a clear or consistent dividing line in the cases between particular damage, which founds a cause of action, and damage shared with the public in general, which does not. In any event, it is not surprising that these cases, even disregarding their internal inconsistencies, are of little help in the context of section 68. They were generally concerned with temporary obstructions, not with permanent works which in practice could only be carried out under statutory powers.

For a general statement of principle, reference is often made to Benjamin v Storr (1874) LR 9 CP 400, 407, in which Brett J reviewed the older cases. He extracted a requirement that the damage must be “particular, direct, and substantial”, which he contrasted with -

“… a mere consequential injury; as, where one way is obstructed, but another (though possibly a less convenient one) is left open; in such a case the private and particular injury has been held not to be sufficiently direct to give a cause of action…”

Similarly, Lord Hanworth MR in Harper v. GN Haden & Sons Ltd [1933] Ch 298, after reviewing the cases, concluded that the claimant must establish:

“(a)

a particular injury to himself beyond that which is suffered by the rest of the public; (b) that the injury is directly and immediately the consequence of the wrongful act; (c) that the injury is of a substantial character, not fleeting or evanescent…” (p 304)

When one turns to the cases on section 68 itself, one finds a similar divergence of approaches, at least before McCarthy. Most useful for present purposes is the decision of the House of Lords in Walkers’ Trustees itself. Although the principles had been settled in McCarthy, the later case is an authoritative application of those principles to facts which perhaps goes as far as any in the direction of Moto’s argument. The speeches also contain a somewhat fuller discussion of the earlier Scottish case, Caledonian Ry Co v Ogilvy (1856) 2 Macq 229, in which the House had disallowed a claim by the owner of a house, whose access over a public road had been adversely affected by a new railway and level crossing.

In Walker’s Trustees the claimant’s spinning mill in Glasgow was served by two streets, Canal Street and Victoria Street, which connected to Eglinton Street, a major road some 90 yards away at its closest. The new railway was constructed along the line of Eglinton Street, with the effect that their direct access to it from Canal Street and Victoria Street was cut off. It was replaced by a connection across the railway further south, involving a substantially longer journey and steeper gradients. The arbitrator had found that the property was “injuriously affected” and assessed the damage at £1500 (£1200 for the detour, and £300 for the increased gradient)

Lord Selborne summarised the “only facts… material to the question of principle”:

“… before the construction of the (works) the property … had… a direct, straight and practically level access (at a distance of about ninety yards), for all sorts of traffic, to Eglinton Street, one of the main thoroughfares of the city; and that by (the works), that direct access to Eglinton Street has been altogether cut off and taken away, a more distant and circuitous access, crossing the railway by a bridge, with a rather steep gradient, being substituted for it.” (p 273)

In upholding the claim, he rejected the argument that the obstruction was “not immediately ex adverso of the property”; it was sufficient that it was “direct and proximate”.

Lord O’Hagan (p 287-8) treated the arbitrator’s decision as amounting to a finding that there had been “a substantial injury” such as apart from the statute would have given the claimants a clear cause of action. He adopted Lord Penzance’s statement (in McCarthy) that compensation is payable where it is shown that:

“… a special value attached to the premises in question, by reason of their proximity to, or relative position with, the highways obstructed, and that this special value has been permanently abridged or destroyed by the obstruction” (p 288).

As already noted, Lord Blackburn decided the case on the somewhat narrower ground that the right must be treated as “attached” to the land. The last member, Lord Watson (p 303), interpreted the rule as giving rise to a claim where -

“… the value of the property, irrespective of any particular uses which may be made of it, (is) so dependent upon the existence of that access as to be substantially diminished by its obstruction…”

The four members of the House gave various reasons for not following Ogilvy. However, a common view was that it had in substance been overtaken by the fifth principle, as established in Brand. As Lord Selborne said:

“The communication was not cut off, and access was not prevented, except when trains were passing; the temporary obstruction of the public road by shutting gates across it at those times, as well as the noise complained of, were incidents, not of the construction, but of the use of the line” (p 277)

In summary, “proximity” appears as a relevant factor in the 19^th C cases, but not as a distinct test. Thus, for example, Lord Penzance spoke of “proximity to, or relative position with” the highway. In so far as one can find a common theme in the speeches, it echoes the common law requirement that the loss must be “particular, direct, and substantial”. Thus the claim in Walker’s Trustees succeeded because what had been a “direct, straight and level” access was “altogether cut off”, leaving as the only alternative a “distant and circuitous access”. Proximity may of course be a factor in deciding whether the damage is sufficiently “direct”.

Mr Holgate, rightly in our view, does not argue that the claim should fail because it is based on loss of business. In that respect the case is similar to Chamberlain, where a principal complaint was the diversion of potential customers by the stopping up of the most direct access.

In Wildtree Lord Hoffmann referred (under the fifth principle) to divergent views in the 19^th C authorities as to whether –

“… 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.”

(see e.g. per Lord Chelmsford in McCarthy p 255).

In so far as that question was still open following McCarthy, Lord Hoffmann left no doubt as to how it should be answered. When dealing with the claim for temporary loss suffered by the hotel in Wildtree, he referred with approval to Lord Westbury’s dissenting speech in Ricket v Metropolitan Railway Co (1867) LR 2 HL 175, 204 (on the effect on land value of diversion of trade from the “Pickled Egg” public house). Although it was clear that a claim could not be made for loss of profit as such, he said:

“…there is nothing in authority or logic to say that the letting value of the premises cannot be affected by an interference which makes it less convenient to conduct the kind of business for which they would otherwise have been suitable. A plaintiff who can prove such a reduction in value, for whatever period, is entitled to compensation.” (p 17)

Finally, we seek to apply these principles to the facts of the present case. The President considered that the obstructions were sufficiently “local”, and the relationship between the MSA and the motorway sufficiently special, to provide at least the starting point for a claim to “particular damage”. Thus far we agree. It is the next stage of the reasoning which is more controversial.

He considered that, once that relationship had been established, it was enough to show that the existing accesses were obstructed “in a way that causes a diminution in the value of its interest”. On this basis he considered that the obstructions of the southbound and northbound off-slip roads, and of the northbound on-slip road, were capable of giving rise to a claim for compensation. By contrast –

“The obstruction of the short length of the southbound on-slip road, on the other hand, could not give rise to a claim because the obstruction was not on that part of the slip-road that provided access from the MSA to the motorway. It had the effect of intercepting on the new Padbury roundabout traffic from the A43 to the M40 southbound that would have passed the MSA at the Cherwell roundabout, but it did not affect access from the motorway to the MSA or from the MSA to the motorway.” (para 56)

Mr Holgate criticises these conclusions. He summarises the effect of the works:

Although these criticisms were made by Mr Holgate by reference to his “proximity” test, they are in our view equally or more relevant to the question whether the damage was sufficiently “direct”, under the principles discussed above. This is not simply a matter of disagreement on the facts. The tribunal seems to have proceeded on the basis that, once the special relationship had been established, the only question was proof of the amount of the loss. But that seems to us, with respect, to leave out an essential step in the reasoning. As is apparent from cases such as McCarthy and Walker’s Trustees, the special relationship is only part of the test. In the latter case, the claim succeeded, not simply because of the dependence of the particular business on the road link, but because of the direct impact of the works on that access, which was “altogether cut off”. In this case the immediate accesses to the MSA remain substantially unaffected. The loss results, not from any direct obstructions to those accesses, but from the rearrangement of the junction as a whole, including in particular the interposition of the new Padbury roundabout.

In Wagstaff the tribunal accepted that the loss arising from the new road system was “too remote”, because it arose from the junction improvements as a whole, rather than from “the execution of the very small part or parts of the works that would have given rise to an actionable wrong in the absence of the special Act” (p 115M); but it then went on to hold that one of the individual obstructions was sufficiently “direct and proximate” to found a claim. We agree with the first part of that approach. As applied to this case, it means that the loss due to the junction improvements as a whole is not a proper subject of claim. That having been established, we do not think it is appropriate or realistic to examine the effect of individual obstructions which in this case are no more than incidental parts of the overall scheme. Their impact is in practice dependent on, and inseparable from, their relationship with the other parts of the scheme.

This conclusion is arguably reinforced by another consideration, although, since it did not form part of Mr Holgate’s argument, we express no concluded view. (Nor was the point apparently raised in Clift v Welsh Office (above).). There is an important difference between this and the 19^th C cases. They were concerned with interference with the highway by works authorised for a non-highway purpose (generally a railway). When considering the degree of interference, the existing highway system was taken as a fixed factor in the comparison. In this case, by contrast, the works themselves are part of a project for the general improvement of the highway, carried out under the general discretion of the highway authority. The Highways Acts do not give adjoining owners, even those whose businesses are directly linked to the needs of traffic, any guarantee or expectation that the highway system in their immediate area, or the flow of traffic on it, will remain unchanged. Traffic conditions in a particular area may be affected by all kinds of traffic orders or works, near or distant, properly carried out under the management powers of the highway authority. Such changes may be advantageous or disadvantageous to a particular traffic-based operation. They do not in themselves give rise to a claim to compensation, but must be accepted as part of ordinary business risk.

In this context, to justify a claim under section 10, it might be said, there would need to be at the least a direct interference with the access to an individual site which goes beyond what is ordinarily incidental to the traffic objectives of the scheme as a whole. Owners are protected by the obligation to provide “reasonably convenient” alternatives, and their right to object if the orders do not meet that requirement. It would seem difficult to envisage circumstances in practice where, that requirement having been satisfied, the damage could be said to be sufficiently “particular, direct and substantial” to found a claim for compensation.

For these reasons, in respectful disagreement with the tribunal, we conclude that a claim for compensation under section 10 has not been established, at least in respect of the permanent stopping-up orders. That leaves open the question whether a claim may be made for the effect of temporary closures during the works, on which the tribunal made no findings. Accordingly, subject to any submissions of the parties, we would allow the appeal, and remit the matter to the tribunal to consider and determine that issue.

I agree.

I also agree.