Compulsory purchase and compensation

Citation

Sams, G. (1999), "Compulsory purchase and compensation", Journal of Property Investment & Finance, Vol. 17 No. 3. https://doi.org/10.1108/jpif.1999.11217cab.001

Compulsory purchase and compensation

Law briefing

Compulsory purchase and compensation

Gary Sams

Introduction

The format of the legal briefing is slightly different from usual this year. The Department of Environment, Transport, and Regions is currently undertaking a comprehensive review of compensation provisions and it seems appropriate to highlight areas of the compensation code which have been shown by a number of cases reported in recent years to be in desperate need of reform. Many useful suggestions have been included in the final report of the Interdepartmental Working Group on Blight, which was published in 1997. I also hope that the DETR will note the problems caused by the time limit on referring compensation claims to the lands tribunal, which has unfolded like a soap opera in a succession of recent cases. I start this year's briefing, however, with a plea for changes in the law as it affects compensation for severance, and for a complete repeal of the planning assumptions, the purpose of which has always been a mystery to me.

With regard to the regular update on case law, I note with interest that the Court of Appeal has considered a case on severance compensation which I criticised in these columns last year and has partly reversed the original decision. There is the most recent episode of the time limit soap, and finally there is a case which is concerned not with the compensation payable, but with the much more important consideration of whether the surveyor should be paid his fee!

Proposed amendments to the compensation code. Severance and the land taken

The problem

I was not the first person to highlight this problem, but it has been a hobbyhorse of mine since my article of the above name was published in the first ever issue of this journal, then called simply the Journal of Valuation 1 JV 9 (1982). It was referred to in the discussion papers on compensation produced by the RICS in the 1980s, but was not taken up in their final submission to the Government or in the resulting 1991 Planning and Compensation Act. I suspect that this was because a lot of people could not believe that such an obvious anomaly really existed.

The problem is simple. If a plot of land is taken under a CPO, the part taken and the part retained can both be worth less as separate parcels of land than they were worth as part of the whole. Take, for example, a single house plot, half of which is acquired for road widening. When combined the two areas of land were each 50 per cent of a valuable development site. However, neither is large enough on its own to be developed, and they are both virtually worthless when looked at in isolation. This is not a problem in respect of the land retained because, under section 7 of the 1965 Compulsory Purchase Act, compensation is payable for any depreciation in the value of the retained land caused by the severance. There is, however, no similar right in respect of the land taken, even though this has been depreciated to the same extent. For a more detailed consideration, see my 1982 article which looks at the problem in more detail, and in particular at ways in which the courts have tried to reduce the impact of this anomaly, none of which has been wholly successful. However, the clearest analysis of section 7 which I have seen was made by Roskill LJ in the Court of Appeal decision in Hoveringham Gravels v. Chiltern DC, 1977 243 EG 911, when he said:

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  It seems to us that the section in its true construction is envisaged as an additional head of compensation for the owner of the land taken by reason of other retained land of his being less valuable to him through that retained land being severed from or otherwise injuriously affected by the compulsory acquisition of the land taken.

Example

In last year's update (1998 JPVI 219) I referred to the lands tribunal decision in the case of Reaper Ltd v. Merseyside Waste Disposal Authority (1997). This was a classical example of the problems which are created by the law relating to severance as it now stands. The claimant owned a large area of land which had considerable value for the development of a retail park, and which had a perfectly adequate access. The authority made a compulsory purchase order on the majority of land, but not the part which gave access to the public highway. As land taken is to be valued as if offered for sale by a hypothetical willing seller, the authority argued that this seller would need to acquire access from an adjoining landowner if he wished to realise the development value, and that the holder of the key access land would be likely to seek a ransom value payment of up to 50 per cent of the development value realised on the land taken. The lands tribunal agreed, though it decided that because there were two possible means of obtaining access (one of which was, of course, owned by the claimant), a lesser deduction of 25 per cent was appropriate. The claimant therefore received only 75 per cent of the full open market value of the land taken, in order to allow for the cost of buying an access which he already owned!

The solution

There is actually nothing unfair in the Reaper decision so far as it concerns the land taken. The problem is with the severance aspect of the compensation, which should operate to ensure that the claimant is compensated for any reduction in the value of his land, caused by the fact that it has been split into two parts. Unfortunately for Mr Reaper, his loss has been suffered in respect of the land taken and so is not compensatable, and not in respect of the land retained, in which case it would have been.

The solution is simple. Section 7 needs to be amended so that severance compensation is payable in respect of both land taken and land retained.

The planning assumptions

The problem

The problem I have always had with the planning assumptions is working out why they exist at all. Sections 14-16 of the 1961 Land Compensation Act set out, in words of one syllable, exactly which assumptions the valuer has to take into account in assessing the compensation payable for land taken on compulsory purchase. If they did not exist, he would be left to his own devices to assess compensation on the basis of current open market value. Clearly, the open market value will include any value attributable to development potential, to the same extent that such development potential would have been taken into account in an open market transaction. At best, therefore, the planning assumptions operate to ensure that the valuer does what he should be doing in any event. At worst, on the other hand, by setting out exactly what planning permissions are to be assumed, the planning assumptions can operate to force the valuer to pay compensation for development potential which does not, in the real world, exist, and which would not have been reflected in any open market sale. Before illustrating this problem with an example, I will briefly summarise the relevant sections:

Section 14 states that any planning permission to be assumed under these provisions is in addition to any existing planning consent. It also states that just because there is no planning permission, or assumed planning permission, for any development, it is not necessary to assume that planning permission would never be granted for that development. Do we really need to be told that the value of land should reflect its planning permission? Or, that any realistic hope value for the prospect of future development should be taken into account?

Section 15 has two main parts:

1. 1.

   planning permission must be assumed for development in accordance with the proposals of the acquiring authority.

2. 2.

   planning permission must be assumed for development of any class specified in part I of Schedule III of the Town and Country Planning Act 1990.

Section 16 sets out the assumptions which are to be made in respect of the designation of the land in the development plans for the area. Generally, planning permission should be assumed for the use for which the land is designated in the plans, provided that planning permission might reasonably have been expected for that use. If, however, the land consists of a site defined in the current development plan as the site of a specific development, then planning permission is to be assumed for that development without question.

I can think of no possible justification for assessing compensation reflecting planning consent for development in accordance with the local authority's proposals; for development falling within part I of Schedule III; or for development in accordance with the development plans for the area; unless there is a reasonable prospect that planning consent for that development could have been obtained in the no scheme world. This is, however, exactly what the planning assumptions do require, in certain circumstances.

Example

In last year's briefing I referred to the lands tribunal decision in the case of Colley v. Canterbury City Council (1991) 1998 JPVI 216, which concerned one of the most blatant examples of statutory nonsense I have ever seen. Very briefly, the claimant owned the site of a house which had been demolished in 1961. Planning permission had at that time been granted for demolition and rebuilding of the house, but only the demolition had actually been carried out, and it was generally assumed that the consent for rebuilding had lapsed. After lengthy argument, the claimant was eventually successful in convincing the local authority that the planning permission had been partly implemented and remained valid. He therefore owned a valuable house plot. The local authority was, however, determined that no house would be built, and immediately after acknowledging the existence of the planning consent, it issued a revocation order. The ensuing compensation claim should have been straightforward. Before the revocation order the claimant had a house plot: after the order he had a virtually worthless parcel of amenity land. Compensation should be payable for the difference in value. The local authority, however, came up with an ingenious argument. Section 164(4) of the 1990 Town and Country Planning Act states that in assessing any depreciation, it shall be assumed that planning permission would be granted for development of any class specified in Schedule 3 of the Act, and one of those classes is the rebuilding of a house which was in existence in 1948, as was the case with the demolished house. In other words the before value was the value of the site with planning consent for building a new house. The after value was the value of the site without any planning permission, but on the totally unrealistic assumption that planning permission would have been granted for the house. The value on both approaches was the same and therefore no compensation was payable!

The tribunal could not deny the logic of the compensating authority's argument. Nor, however, were they prepared to accept that the claimant should be confiscated of an extremely valuable planning permission without compensation, commenting that:

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  The interpretation of section 164(4) sought by the compensating authority produced a result contrary to sense and reason in that it required an assumption that planning permission would have been granted for the very operations which have been revoked.

The only way the tribunal could avoid the clear inequity which would result from a literal interpretation of section 164, was to ''notionally add'' additional words into the section to the effect that it did not apply to revocation order proceedings as:

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  Unless such a construction is inferred unfairness and hardship will result in cases such as the present case and it would be open to compensating authorities in similar cases to avoid paying compensation by waiting until demolition had taken place before making revocation orders.

While this case demonstrates the problems created by the planning assumptions in respect of planning compensation, it is easy to see how similar problems could arise in relation to compulsory purchase.

Let us assume that the planning permission in the above case had, indeed, lapsed and that the land therefore had no realistic prospect of ever being developed. The claimant would have to accept that he would be unable ever to sell the land at a price which reflected any development value. Well, not entirely: in the unlikely event that the land should be required for a motorway or a new airport runway, then compensation would be assessed taking into account the planning assumptions, and in particular the rebuilding of a house which was in existence in 1948. In other words the only way the owner would ever be able to sell the land at residential development value would be under a compulsory purchase order.

The solution

Quite simply, the planning assumptions could be abolished without any risk of creating unfairness, and valuers would then be free to reflect any actual development value in the compensation payable, free from the possibility that they may be constrained to make unrealistic assumptions.

Certificates of appropriate alternative development under section 17 of the 1990 Act do, however, serve a valuable function when valuers disagree as to the existence and extent of development value, and should be retained.

Recent decisions

The land taken: ignoring the scheme, and severance

In last year's update I commented on the case of English Property plc v. Royal Borough of Kingston upon Thames (1996), in which I felt that the Lands Tribunal had stretched the law a little too far in order to justify an award of compensation which it considered fair to the claimant. The Court of Appeal has recently considered this case and has partly overturned the original decision.

The case concerned a small area of land in the town centre, which by the valuation date was part of the paved forecourt to a mixed-use development. It was being acquired for road widening and there was little doubt that, but for the road proposals, this land would have been incorporated into the development, which had taken place many years earlier.

It was common ground that the land taken was ''at the date of valuation, in its then condition, valueless''. However, it was agreed between all the parties that the land should not be valued as it actually was, but as it would have been if the setback had not been required. In other words it was necessary to assume that the development, which had actually taken place 17 years previously, had not yet happened, and value the subject land at its value for inclusion in the development scheme. The justification for this approach was stated to be section 9 of the 1961 Land Compensation Act, which requires that any depreciation in the value of the relevant interest which is attributable to an indication having been given that the relevant land is, or is likely to be, acquired by an authority possessing compulsory purchase powers, should be left out of account. This seems to be a remarkable interpretation of section 9; a hitherto uncontentious provision which ensures that the blighting effect of a proposed CPO is not used to reduce the compensation payable.

The tribunal decided that based on full development land values, the site had a value of £171,400. However, it had to accept that the site was too small to be developable in its own right, and therefore no developer would pay full development value if this land were to be offered for sale in the open market by a hypothetical willing seller, as required by the rules of compulsory purchase. It decided that an open market sale of the subject site would have fetched £85,700, i.e. 50 per cent of the marriage value which would be released by merging the site with adjoining land. The claimant had therefore lost £85,700, which he could have realised in the real world (he was, actually, also the owner of the adjoining land). This sum had been lost because the land taken had been severed from the other land of the claimant by the CPO, and the tribunal awarded that sum as severance in respect of the land taken, producing the following award in total:

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  Land taken ­ £85,700Severance ­ £85,700Total ­ £171,400

Tribunal taking liberties?

I described this in last year's article as the second liberty which the tribunal had taken with the compensation code (the first being the interpretation put on section 9). Severance compensation under section 7 of the 1965 Compulsory Purchase Act is a head of claim which is applicable only to land retained, and in this case any loss had been incurred in respect of the land taken and is not compensatable.

The Court of Appeal agreed and reduced the award to just the ª85,700 for land taken. However, in spite of stressing the principle that the land taken, and the land retained, should be valued in their actual physical condition as at the date of valuation, it did nothing about the first liberty. It seems to me that, applying this principle, the land taken was a useless piece of forecourt at the valuation date, and should be valued as such.

Throughout the original and appeal hearings noone seems to have questioned the assumption that the land should be valued not as it actually was, but as it might have been had the development at the rear not yet taken place, and had there been no road scheme. Section 6 of the 1961 Act certainly requires the latter assumption. Section 9, however, does not require the former. It states that in valuing the land taken, the blighting effect of the threat of acquisition should be left out of account. It is a rule which should be applied when valuing the land taken, once that land has been defined. It cannot be used when deciding what the land taken actually comprises, in order to pretend that it is something different.

Delay: statutory limitation period

Another topic which has developed in these pages over recent years is the question of whether the six-year limitation period applies to the referral of compensation claims. If it does, then if a claimant, or his advisers, fail to refer a disputed claim to the tribunal within the time limit, then the claimant loses any right he has to enforce his right to compensation. At worst he will get nothing. At best the acquiring authority will pay the sum to which they consider he is entitled. The importance of this principle can be appreciated when you look back at the most significant tribunal decisions of recent years, and realise how many of them where considered more than six years from the commencement of the negotiations. Of course, exactly when the six-year clock starts to tick is one of the prime areas of uncertainty.

In Co-operative Wholesale Society v. Chester-le-Street District Council LT (1996) 73 P & 38; CR 111 the lands tribunal decided that the Limitation Act 1980 did apply when the General Vesting Date procedure was used, though noted with relief that it did not apply where the traditional route of Notice of Entry and Notice to Treat were used. The Court of Appeal subsequently upheld that decision.

They were shown to be wrong about the traditional procedure by the High Court in Hillingdon London Borough Council v. ARC Ltd (1997) 9729 EGLR 125-132, which specifically considered the Notice to Treat and Notice of Entry procedure. The Court found the law unclear and Stanley Burton QC included in his decision a plea that:

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  the law on this question be clarified as soon as possible. If my decision is not appealed the position should be clarified by legislation. It is obviously highly undesirable that there should be uncertainty as to the law on an important question affecting rights and obligations between public authorities and the private citizen.

The questions which it found so difficult centred not only on whether the limitation applied at all, but also on when it commenced, and when it ended. There was some concern that a claimant who had referred his case to the lands tribunal within the six-year period, could lose his right to compensation while he was waiting for a hearing! The court rather hesitantly decided that the least objectionable interpretation of the law is that a claimant has six years from the date of possession to make his reference to the tribunal, and from that date the right to compensation is preserved. The Court of Appeal upheld that decision in April 1998 and, for future guidance, confirmed that the clock would stop ticking once a reference to the lands tribunal has been made.

The lands tribunal in the case of Stuart Lillis v. North West Water Ltd (1998) has again considered the question of a limitation period. This dispute was not concerned with whether the six-year period had elapsed, as both parties accepted that it had. The question was whether, because of its actions, the acquiring authority should be prevented from relying on the limitation period. It may be recalled that this question was also raised in CWS v. Chester-le-Street case, the tribunal concluding that by continuing negotiations after the expiry of the six-year period, the authority had effectively waived any right to rely upon it. In the Lillis case, the claimant argued that the attempt by the water authority to rely on the limitation period to defeat the claim was unjust and should be defeated by any of the three equitable doctrines of estoppel by convention, promissory estoppel, and waiver. A review of the decision does require consideration of these legal principles for which, as a surveyor, I apologise. The implications of the decision, do however, have substantial practical consequences for anyone practising in this field.

Estoppel by convention

Estoppel by convention was stated by Lord Denning in Amalgamated Investment and Property Co. v. Texas Commerce International Bank (1982) QB 84, to be the principle that where the parties to a transaction proceed

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  on the basis of an underlying assumption -- either of law or of fact, -- whether due to misrepresentation or mistake makes no difference -- on which they have conducted the dealings between them -- neither of them will be allowed to go back on that assumption when it would be unfair or unjust to allow them to do so.

There must be both a shared assumption underlying the transaction, and unfairness or injustice in allowing one of the parties to go back on that assumption.

The assumption was that a statutory limitation period did not apply. The authority argued that neither party even thought about a limitation period, so how could they have made a conscious assumption that it did not apply? The tribunal, however, felt that it was ''an assumption held by both parties (even if only held subconsciously) and became a common assumption in their negotiations''. The first of the requirements for estoppel by convention, that of a shared assumption, was therefore satisfied.

The second requirement is that there must be unfairness or injustice. The tribunal member considered that:

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  it would, in my view be unjust and unconscionable to allow North West Water to defeat the claim on the grounds of limitation. There is a stronger case for the intervention of equity than in Chester-le-Street where there was a statutory limitation period which was known, or ought to have been known by the parties.

and that in this case, where the limitation period expired before the Hillingdon decision:

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  it was reasonable for the claimant's advisers to assume that a reference of a claim under the 1991 Act could not be time barred. The law was assumed to be that limitation did not arise until the amount of compensation had been agreed or determined. The claimant's advisers were not at fault in not referring the claim to this tribunal within six years: as it was thought to be unnecessary to do so.

The tribunal therefore concluded that both of the requirements for estoppel by convention were satisfied. It did, however, hesitate in coming to this conclusion for two reasons. First, the dilatory way in which the claimant pursued his claim and second the speculative nature of his compensation claim which was based on depreciation in the value of land reflecting value for future coal mining, when there was no mineral licence, no planning consent for mining, and a firm indication that any planning application would have been refused. The tribunal did not consider that these reservations were sufficiently strong to prevent it from reaching its conclusion that, under the doctrine of promissory estoppel, the water authority should be prevented from relying on the limitation period.

Having reached this conclusion, it was not necessary for the tribunal to consider the alternative doctrines of promissory estoppel and waiver, though it chose to do so briefly.

Promissory estoppel

Promissory estoppel is the principle that where one party has, by his words or actions, made an unequivocal promise or assurance, then once the other party has acted on this assurance, he should not be allowed to go back on his promise.

In the view of the tribunal the water authority could not have made a promise not to rely on limitation, because it did not know until after the end of the six-year period that limitation applied. The case on the grounds of promissory estoppel therefore failed.

Waiver

With regard to waiver, the answer was similar. The authority could not waive its intention to rely on the limitation period until, as a direct result of the Hillingdon decision, it knew that it had such a right. The evidence pointed to the opposite conclusion: ''as soon as it became aware of the limitation point they resolved to use it to defeat the claim''. The case on the grounds of waiver therefore also failed.

Current position

So where does this leave the law relating to the limitation, as it is likely to affect existing and future claims? In a mess, is the answer. The only consistency is that the six-year limitation period applies to both General Vesting Declarations (GVDs) and the traditional route of Notice to Treat and Notice of Entry, and that the period ends with the date the claim is referred to the lands tribunal. Where the traditional route is used, the limitation period commences with the date of physical possession. However, in the CWS v. Chester-le-Street case, which concerned a GVD, neither of the obvious choices: the date of the GVD, or the date of possession, was used. Instead, the date of demolition was taken as the commencement date. This would therefore appear to be the commencement date under the GVD rules, though its application in a case like Lillis, which concerned bare land, would be interesting, to say the least. I suspect that in this respect at least CWS v. Chester-le-Street may not be followed in future cases.

Assuming that it is possible to establish that the limitation period has indeed elapsed, it is necessary to consider the circumstances in which the lands tribunal is likely to prevent the acquiring authority from relying on that period to defeat a claim. Where the period ends after the date of the Hillingdon decision, its attitude is likely to be the same regardless of the procedural route used. Both parties should be aware that there is a limitation period, and if the authority does anything to suggest that it is prepared to continue negotiations after that period has expired, it is likely to be deemed to have lost its right to rely on limitation on the grounds either of waiver, or of promissory estoppel.

Where the period ends before the date of the Hillingdon decision, the situation is more complex. Where the GVD procedure has been used, then the position will be as above and the claimant and his advisers will be expected to have been aware of a limitation period. This will probably be the case even if the period ended before the CWS v. Chester-le-Street decision, which first brought the subject to the attention of most practising surveyors, myself included. I must admit. Where the traditional procedure has been used, the parties will be presumed to have been unaware of the existence of the limitation period, and therefore unable to waive it, or to promise not to rely on it. Claimants will, therefore, need to rely on the principle of estoppel by convention, and demonstrate that both parties have negotiated on the assumption that the limitation period did not apply. In practice there is likely to be little distinction between actions which constitute estoppel by convention, and those which constitute promissory estoppel. They will also need to show that it would be unfair or unjust to allow the authority to go back on the assumption that limitation does not apply. In this respect the claimant may well need to show that by his own actions he has been squeaky clean.

Fees: Rydes' scale and contingency fees

The question of fees is one which is never far from the hearts of most professionals, and it was with this in mind that my ears pricked up at the mention of the case of Durnford and others v. South Gloucestershire District Council (1998). The main decision in this case was made 12 months earlier, and related to seven compensation claims under Part I of the 1973 Land Compensation Act. These were test cases in respect of over 90 claims for compensation submitted on behalf of claimants by the William Ricketts Partnership (WRP), who specialise in this type of compensation claim. The claimants were broadly successful at the initial hearing, and it must have been with some confidence that WRP claimed their costs of the reference to the lands tribunal. It will have come as some surprise to find that the acquiring authority not only disputed these costs, but refused to pay even the usual Rydes' scale fee for dealing with the compensation claims. Another reference to the lands tribunal was, therefore, necessary solely to resolve the question of the disputed fees.

Council U-turn

The uncompromising approach of the compensating authority was particularly surprising, as their representatives had previously reached an agreement with WRP as to their fees for dealing with the claims. While they had initially argued for a discount on Rydes' scale to reflect the large number of similar claims, they subsequently reached provisional agreement to pay a full fee in each case, in return for which WRP agreed not to claim their travelling expenses. This was confirmed in the offer letters which they sent to WRP following each set of negotiations. Only when the claimants had received their compensation, but no fees had been paid, did WRP discover that the Council was now refusing to pay the Rydes' scale fees, amounting in total to almost £30,000.

WRP are no stranger to these columns and in Vol. 14 No. 1, I referred to the case of Hallows v. The Welsh Office (1995) 21 EG 126 in which the firm was roundly criticised by the tribunal on two grounds. First, as specialists in dealing with part one claims, it is the normal practice of the firm to bring in a local residential valuer to give evidence of values, while a representative of WRP gives evidence in respect of Part I claims. The use of two expert witnesses is felt by the tribunal to waste time, and increase costs. Second, as their clients are normally private householders of limited means, WRP undertakes not only to charge no fee should no compensation be found to be payable, but also to bear the costs of any unsuccessful reference to the tribunal. This is considered to give them a direct financial interest in the outcome in the hearing; hardly conducive to giving the impartial evidence expected of an expert witness.

No costs to be claimed

In the light of this past criticism, it is not surprising that the Council disputed its liability to pay the costs of the lands tribunal hearing, even though it is normal practice for the unsuccessful party to be made liable for the other party's costs. In its view the approach of WRP is against public policy and its costs are therefore champertous and unenforceable. It quoted directly from the lands tribunal member's decision in the Hallows case when he thought very hard about whether the expert witness should even be allowed to give evidence, and said:

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  If an expert witness has a financial interest in the outcome of a dispute, other than his fees (which should be the same whatever the result), this must be seen to affect his objectivity? I agree and see it as a factor to be borne in mind in considering the evidence of an expert witness, who will only receive his fee if his client's case is successful. However, I would not go so far as to say that it would be against public policy for an expert witness in this position to give evidence.

In the Durnford case, the tribunal accepted that these were contingency fee arrangements, but did not agree that they were against public policy or champertous. It did not, however, award costs in favour of WRP, finding instead that no costs had in fact been incurred. It accepted the principle put forward by the Council, and taken from the case Court of Appeal decision in Gundry v. Sainsbury (1910) 1 KB 645. It had been agreed between WRP and their clients that under no circumstances would the client have to pay a fee. It is the costs of the client, not their advisers, which can be recovered following a lands tribunal hearing. In this case the clients had incurred no costs, and therefore there were no costs to be recovered. WRP had incurred costs, but they were not a party to the dispute, so could not recover those costs.

Flushed with success, the Council also argued that they should be entitled to recover their costs from WRP because of the latter's unreasonable conduct of the claims. This was pushing their luck a bit far, and the tribunal did not see anything in WRP's conduct which would justify the unusual action of awarding costs against an organisation which was not a party to the dispute.

Rydes' scale

While it is not surprising that the council disputed the entitlement of WRP to the costs of the lands tribunal hearing, it is astonishing that they also disputed any entitlement to the Rydes' scale fee, which is normally paid to any surveyor dealing with a compensation claim. Their argument was similar to the one they put forward in respect of costs. WRP had made it very clear to their clients that they would look to the Council for payment of their fees, and that under no circumstances would the client have to pay. Again, it is the reasonable surveyor's fees payable by the client which the Council is obliged to pay. If the client has no fee to pay, then there is nothing to be reimbursed. WRP have agreed to seek payment direct from the Council but, as WRP do not have a valid claim, they have no right to any payment.

This is a very pedantic argument which was unlikely to receive the sympathy of the lands tribunal, regardless of its past criticisms of WRP. The argument is that WRP should have told their clients that they would have to pay a surveyor's fee, but that they would be fully reimbursed by the Council. By phrasing their terms of engagement to say that the Council would pay the fee direct to WRP, which is the usual practice, they had lost any right to a fee from either the Council or the client.

The implications of the Council's interpretation would be enormous for surveyors dealing with this type of claim throughout the country, most of whom work on a similar basis. Many of them could have found themselves committed to dealing with large numbers of claims, with no prospect of receiving payment from either the client or the authority. Clearly the Royal Institution of Chartered Surveyors recognised the danger, the chairman of the compensation group giving evidence before the tribunal to the effect that the approach adopted by WRP is, indeed, common practice in respect of the Rydes' scale fee, though not in respect of the way they approached the lands tribunal hearing. To refuse to pay any surveyor's fee simply because the surveyor has agreed to seek his fees direct from the authority rather than from the claimant was, in his opinion, ''contrary to the spirit of the legislation and avoided the duty to reimburse reasonable costs by means of an alleged technicality''.

The tribunal clearly agreed and, without giving detailed consideration to the nature of the fee arrangements made between WRP and its clients, awarded fees based on Rydes' scale, less a deduction of 10 per cent to reflect the repetitive nature of the work.

While the surveyors were successful in this case it may well be worthwhile for all firms handling work on a conditional fee basis, to make it clear in their terms that the client will be legally responsible for any fees, regardless of whether they are recoverable from a third party.