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You are here: BAILII >> Databases >> England and Wales Lands Tribunal >> Crisa & Woodstock Engineering Ltd v Highways Agency [2000] EWLands ACQ_132_1998 (06 April 2000) URL: http://www.bailii.org/ew/cases/EWLands/2000/ACQ_132_1998.html Cite as: [2000] EWLands ACQ_132_1998

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[2000] EWLands ACQ_132_1998 (06 April 2000)

ACQ/132/1998

LANDS TRIBUNAL ACT 1949

COMPENSATION - compulsory acquisition of leasehold shop and premises - jurisdiction of Lands Tribunal where acquisition alleged to be unlawful - whether proof of loss - goods left on premises after entry - mitigation - loss of profits and goodwill - whether compensation can be awarded for loss of quality of life - compensation of £66,675 awarded to Woodstock Engineering Ltd and £1,000 to Mr Crisa.

IN THE MATTER of a NOTICE OF REFERENCE

BETWEEN GIOVANNI F CRISA

and Claimants

WOODSTOCK ENGINEERING LIMITED

and

HIGHWAYS AGENCY Compensating

Authority

Re: 340 & 340a, Horn Lane, Acton, London W3

Tribunal Member: P H Clarke Esq FRICS

Sitting in public at 48/49 Chancery Lane, London WC2 on 7 & 8 February 2000

The following cases are referred to in this decision:

Horn v Sunderland Corporation [1941] 2 KB 26

Mountgarret v Claro Water Board (1963) 15 P&CR 53

Advance Ground Rents v Middlesbrough Borough Council [1986] 2 EGLR 221

Salisbury (Marquess) v Great Northern Ry (1852) 17 QB 840; 117 ER 1503

Tiverton and North Devon Ry v Loosemore (1884) 9 App Cas 480

Grice v Dudley Corporation [1958] 1 Ch 329


 


Bonham - Carter v Hyde Park Hotel (1948) 64 TLR 178

Harvey v Crawley Development Corporation [1957] 1 QB 485

Director of Buildings & Lands v Shun Fung Ironworks Ltd [1995] 2 AC 111

Taylor v Greater London Council (1973) 25 P&CR 451

Wrexham Maelor Borough Council v Macdougall [1993] 2 EGLR 23

Roberts v Coventry Corporation [1947] 1 All ER 308

Hughes v Doncaster Metropolitan Borough Council [1991] 1 AC 382

Cole v London Borough of Southwark [1979] 2 EGLR 162

Fox v P G Wellfair Ltd [1981] 2 Lloyds Rep 514

Top Shop Estates Ltd v Danino [1985] 1 EGLR 9

Kentucky Fried Chicken (GB) Ltd v Secretary of State for the Environment [1978] 1 EGLR 139

Aquilina v Havering London Borough Council (1993) 66 P&CR 39

Swann v White [1996] 1 EGLR 199

Mr Giovanni F Crisa in person and, with leave of the Tribunal, for Woodstock Engineering Limited.

Mr David Forsdick of counsel, instructed by the Treasury Solicitor, for the compensating authority.

DECISION OF THE LANDS TRIBUNAL

1. This is a reference to determine the compensation payable for the compulsory acquisition of a leasehold interest in a shop and premises in Horn Lane, Acton, West London.
2. Mr Giovanni F Crisa, the first claimant, appeared in person and, with leave of the Tribunal, for the second claimants, Woodstock Engineering Limited. He called Miss Gianna Crisa, his daughter and company secretary of Woodstock Engineering Limited, Mr John Donald Ives, Mr George Willinski, Mr Kenneth Arthur Watts and Mr Alan Kirtley. Mr Crisa lodged a witness statement but did not give oral evidence. Mr Forsdick, for the Highways Agency, raised no objection to references to this statement at the hearing. I have had regard to it but give it little weight due to Mr Crisa's decision not to give oral evidence.
3. Mr David Forsdick of counsel appeared for the Highways Agency and called Mr Patrick McDara John Casey ARICS, district valuer of Ealing from 1991 to 1998.

FACTS

4. The parties have not prepared a statement of agreed facts. On the evidence I find the following facts.
5. On 31 July 1991 the Secretary of State for Transport made The A40 Trunk Road (Gypsy Corner Junction Improvement) Compulsory Purchaser Order (No.5) 1991. Plots 72A, 73 and 73A in this order were 340 and 340a Horn Lane ("the reference land"). Notice to treat and notice of entry were served in respect of plots 73 and 73A on 8 October 1991. Notice to treat was served in respect of plot 72A on 23 November 1992 with notice of entry on 1 March 1993. The acquiring authority, now the Highways Agency ("the Agency"), took possession of the land on 17 March 1995. This is the date of valuation.
6. The reference land is situated on the corner of Horn Lane and Western Avenue (A40) at Gypsy Corner in Acton, West London. It was the end property in a parade of shops built in the 1930s. It comprised a three-storey brick building with frontages to Horn Lane and Western Avenue, and an attached three-storey extension and enclosed yard, with access from a service road, containing a garage and store/workshop. The ground floor was occupied by Woodstock Engineering Limited ("Woodstock") for the retail sale of car accessories, servicing of brake and clutch systems and research and development of braking systems. It comprised a shop, store and garage. The first and second floors were living accommodation occupied by Mr Crisa and his daughter. Access was from the yard. On the first floor were an entrance hall, two rooms (one used by Mr Crisa as an office and the other as a store) and kitchen. On the second floor were two bedrooms and a bathroom.
7. Under a lease dated 20 July 1982 the reference land, described as "shop dwellinghouse outbuildings and premises ... 340 Horn Lane", was let for a term of 15 years from 24 June 1982 at an initial rent of £2,250 per annum. The lease contained rent reviews at the fifth and tenth years but these reviews were not implemented. The lease was assigned to Woodstock in August 1989 with Mr Crisa as guarantor. Mr Crisa and his daughter occupied the first and second floor living accommodation rent free and without a tenancy from Woodstock.
8. On 28 October 1998 Mr Crisa made a reference to this Tribunal claiming compensation of £700,000. Under nature of interest on the notice of reference Mr Crisa put "losses derived from the CPO No.5 1991 and subsequent entry on 17 March 1995." Under the statutory provisions under which the reference was made Mr Crisa referred to Horn v Sunderland Corporation, section 4 of the Compulsory Purchase Act 1965 and Protocol No.1 Article 1 of the European Convention of Human Rights. This was accepted as a reference for the determination of compensation on compulsory purchase. At a pre-trial review on 19 October 1999 leave was given for Woodstock to be joined as second claimants.

ISSUES

9. The issues in this reference concern the compensation payable to the claimants for the acquisition of the reference land. Mr Crisa claims £560,000 made up as follows:-

Loss of foundry patterns £460,000

Loss of quality of life £100,000

£560,000

Woodstock claim £380,000 made up as follows:-

Loss of machine tools and equipment £ 12,000

Loss of tools £ 28,000

Loss of profits and benefits £240,000

Damages for interruption of trading £100,000

£380,000

It is not entirely clear whether these sums are claimed as damages for alleged unlawful eviction by the Agency or as compensation for compulsory purchase.

10. At the hearing Mr Crisa attempted to add a claim for loss of stock, omitted by oversight. This was not accurately quantified - it was put at £50,000 to £60,000. No evidence was put forward to prove this loss. Mr Crisa said that his accountant might attend the hearing and give evidence, although he did not in fact do so. I refused leave for this additional claim. There was a lack of supporting evidence; the late introduction of this claim was in breach of directions given at the pre-trial review in October 1999; no explanation was given for the oversight in not making the claim earlier.
11. The Agency, through the evidence of Mr Casey, offered compensation of £62,675 to Woodstock and £2,000 to Mr Crisa, made up as follows:-

Woodstock

Leasehold interest £15,000

Goodwill £40,000

Losses prior to entry £ 6,000

Surveyors' and accountant's fees £ 1,675

£62,675

Mr Crisa

Domestic disturbance £1,000

Mr Crisa's time £1,000

£2,000

12. Within the issue of compensation or damages, and in addition to the contention by Mr Crisa that the reference land was taken unlawfully, I have identified five questions which I need to answer in order to make a determination in this reference. These relate to the adequacy of the evidence to support the claims; Mr Crisa's right (if any) to compensation for loss of foundry patterns left on the reference land; whether the compulsory acquisition caused the loss of foundry patterns, machine tools and equipment and tools left on the reference land; the relationship between the claims for loss of profits and for interruption of trading, and whether there is a double-counting; and the power of this Tribunal (if any) to award damages (or compensation) for loss of quality of life. I deal with these questions below but first I consider Mr Crisa's contention, which he raised many times during the hearing, that the taking of the reference land was unlawful. This appeared to be his main grievance and at the root of his claims. It involves a consideration of the jurisdiction of this Tribunal.

JURISDICTION OF LANDS TRIBUNAL

13. Mr Crisa's contention that the acquisition was unlawful appears to rest on two grounds: allegations of bribery and corruption and section 4 of the Compulsory Purchase Act 1965 ("the 1965 Act"). Mr Crisa has challenged the acquisition in the courts. He sought an injunction in the High Court to prevent entry by the Agency. This was refused on 16 March and his appeal to the Court of Appeal was dismissed. On 10 May 1995 he unsuccessfully challenged the validity of the compulsory purchase order. I was not given any further details of this litigation. Mr Crisa said that he was told by the courts that he must pursue his claim in the Lands Tribunal. He took this to mean that I will deal with the unlawful taking of the reference land. This is, however, a matter outside the jurisdiction of this Tribunal.
14. The Lands Tribunal was established under the Lands Tribunal Act 1949. Section 1(3)(a) transferred to the Tribunal the jurisdiction on questions of disputed compensation on compulsory purchase formerly exercised by official arbitrators under the Acquisition of Land (Assessment of Compensation) Act 1919. Section 1 of the Land Compensation Act 1961 ("the 1961 Act") provides that "any question of disputed compensation" on compulsory purchase shall be referred to and determined by the Lands Tribunal. A similar provision is contained in section 6 of the 1965 Act. This Tribunal is statutory and has only the jurisdiction given to it by Parliament under statute. The Tribunal has power to decide whether it has jurisdiction in any particular case (see eg. Mountgarret v Claro Water Board and Advance Ground Rents Ltd v Middlesbrough Council) but it cannot enlarge its jurisdiction beyond that given to it under statute. In this reference my jurisdiction is limited to the determination of disputed compensation. No challenge was made to this jurisdiction. I am satisfied that I can determine the compensation payable to the claimants. That is the extent of my jurisdiction. Mr Crisa has been unsuccessful in the courts in his attempt to prevent the acquisition of the reference land. It is not for me to reopen the matter nor can I award damages for the alleged unlawful taking of the land. I am satisfied that my jurisdiction to award compensation has not been removed by any failure by the Agency to comply with section 4 of the 1965 Act. This requires compulsory purchase powers to be exercised within three years of the operative date of the compulsory purchase order. These powers are exercised by service of notice to treat (Salisbury (Marquis) v Great Northern Ry, approved in Tiverton & North Devon Ry v Loosemore and applied in Grice v Dudley Corporation). The notices in this reference were served within the three year period in section 4. I am also satisfied (although the matter was not raised at the hearing), and following receipt of further information supplied at my request regarding the compulsory purchase order, that the time limit in section 5(2A) of the 1965 Act does not apply to this acquisition (see Planning and Compensation Act 1991 (Commencement No.1 and Transitional Provisions) Order 1991, art 4(1)(b) and Sch 2 Pt I (SI 1991 No.2067)).

COMPENSATION

15. I now consider the five questions referred to above.

Proof of loss

16. My first question is whether the claimants have produced sufficient evidence to support their claims or whether they should be rejected for lack of evidence, leaving the compensation to be determined by reference to Mr Casey's evidence?
17. Mr Crisa made no submissions on this point. Mr Forsdick submitted that insufficient evidence has been adduced by the claimants. Unsuccessful attempts were made by the Agency and the Tribunal at the pre-trial review to persuade Mr Crisa to obtain expert advice. No criticisms have been made of Mr Casey's figures. I should reject the claims for lack of supporting evidence and base my determination on Mr Casey's evidence.
18. It has been emphasised by this Tribunal many times that a claimant seeking disturbance compensation (as in this reference) must prove his loss. The position is similar to the burden of proof in damages. "The plaintiff has the burden of proving both the fact and amount of damage before he can recover substantial damages" (McGregor on Damages (16th edition) paragraph 2051). In Bonham - Carter v Hyde Park Hotel Lord Goddard CJ said (page 179):-

"Plaintiffs must understand that if they bring actions for damages it is for them to prove their damage; it is not enought to write down the particulars, and, so to speak, throw them at the head of the court, saying: 'This is what I have lost, I ask you to give me these damages.' They have to prove it."

That is also the position where a claimant seeks compensation for disturbance. First, he must prove the amount of the loss. Secondly, he must prove that it was caused by his dispossession from the land, that is to say that it was the natural, direct and reasonable consequence of the dispossession and not too remote (Harvey v Crawley Development Corporation at page 338 and Director of Buildings and Lands v Shun Fung Ironworks Ltd at page 126). The business of Woodstock has been extinguished and proof of loss lies with the company. Mr Crisa has claimed for losses which are in the nature of disturbance and he must prove his loss, in addition to showing that he has a right to compensation at all. Against this background I look at the evidence which purports to support each item of claim.

19. The first claim is for loss of foundry patterns; the claimant is Mr Crisa. It is alleged that these were left on the reference land when possession was taken in March 1995 and were subsequently stolen or sold by the Agency's agents.
20. In Mr Crisa's witness statement he said that he used Woodstock for advertising and marketing his designs. He sustained consequential loss by being deprived of a show place and high profile position from which to market his development projects and through which to get enquiries and inspiration for new projects. His first to reach fruition was a brake drum for taxis developed in 1977. The rights were assigned to Automative Products Plc for £30,000 plus VAT. Marketing had been stopped by an agency of the Department of Transport in 1980 until the design had been purchased by Automative Products. Mr Crisa said that, if he had not been stopped by the compulsory purchase, 46 prototypes with production patterns would have yielded £30,000 each. Potential income of £1,380,000 plus VAT has been lost. Mr Crisa still holds the copyright but they cannot be sold without the prototypes and patterns. The loss is £10,000 each. The patterns did not appear in the accounts of Woodstock for tax reasons.
21. Mr Watts said that he was a sub-contractor for Woodstock from 1990 to 1995. He observed the manufacture of patterns to be used for the casting of brake discs and drums. All the necessary machining was done in the workshop at 340 Horn Lane. Mr Crisa had the necessary skills to produce the patterns. Weeks of work are required to produce a pattern.
22. Miss Crisa gave evidence of each head of claim. For this item she said that the £460,000 claimed represents 46 patterns at £10,000 each. She counted the 46 patterns. The figure of £10,000 represents the net cost of making each pattern and is supported by a letter dated 6 March 1990 from S & F Precision Engineering of Acton. The selling price would be £30,000. The letter from S & F Precision Engineering is a quotation for the supply and manufacture of 1,000 brake drums per month, budget price £13 to £13.50 each, cost of tooling for new casting approximately £6,000. Unsuccessful attempts were made to obtain a cost quotation from a Yorkshire pattern maker. The quotation from S & F Precision Engineering was given five years before the valuation date. I am unable to reconcile the figures in it with the £10,000 cost of manufacture claimed. I cannot find in the evidence support for this claim.
23. The second and third items of claim are £12,000 for machine tools and equipment and £28,000 for tools for these machines and equipment left on the reference land at entry. The claimants are Woodstock. The claim figures represent the second-hand value of the tools and equipment. Miss Crisa said that she accepted the schedule of contents left at the reference land on entry prepared by Mr Thompson and Mr White of the district valuer's office on 23 March 1995. I note that the only item on this schedule which could refer to machine tools and equipment and tools is "further items of plant and machinery including a lathe on the side of the shop and a lathe in the front, both are very old." I was given no evidence to support the figures claimed and I reject them as unsupported claims.
24. The fourth item of claim is £240,000 loss of profits and benefits; the claimants are Woodstock. Miss Crisa referred to a graph which showed the net profits and losses for Woodstock from 1988-89 to 1995-96. An annual loss of £30,000 has been calculated by comparing the net profit of £20,000 in 1990-91 with the net loss of £10,000 in the following year. Miss Crisa said that this drop in profitability was caused by the compulsory purchase order and should be applied to the three years before entry and the five years after entry. I find this explanation to be unrealistic and inadequate. This claim is also unsupported. I refer in more detail to the financial position of Woodstock when I consider Mr Casey's evidence of loss of goodwill later in this decision.
25. The fifth item of claim is £100,000 damages for prolonged interruption of trading; the claimants are Woodstock. Miss Crisa said that this is a spot figure, arrived at by guesswork, to compensate for losses after entry in March 1995. Mr Crisa, in his closing, said that this claim represents losses in the three to four year period after entry needed to re-establish Woodstock's business. I find these explanations unconvincing and the claim unsupported. An admission that a claim figure is pure guesswork when it is £100,000 is inadequate proof of entitlement to compensation at that figure.
26. The final claim is £100,000 for loss of quality of life over five years. The claimant is Mr Crisa. Miss Crisa put the annual loss at £20,000. No explanation was given as to the way in which this amount has been calculated. I find this claim to be wholly unsupported.
27. My conclusion is that the claimants have failed to prove the amount of any item of claim. The evidence is wholly inadequate to establish the alleged losses. I reject the claim figures of Woodstock and Mr Crisa. I will determine the compensation payable to each claimant on the evidence of Mr Casey. Strictly speaking, because the claimants have failed to establish their losses, it is unnecessary for me to consider whether the claimants have a right to the compensation claimed and whether the losses were caused by the acquisition. The claims, however, also fail for other reasons and, in order to give a comprehensive decision and deal with the many points raised by Mr Crisa, I deal with these other reasons before making my determination of compensation. I can do this by considering the other questions referred to earlier in this decision.

Foundry patterns

28. My second question is whether Mr Crisa has a right to compensation for loss of the foundry patterns? This claim is on the basis that Mr Crisa is the copyright holder of the designs of the prototypes and patterns left on the reference land at entry and later stolen or sold, and the copyright cannot be sold without those prototypes and patterns. Mr Forsdick submitted that Woodstock were the tenants of the reference land, they carried on the business and suffered any business loss. Mr Crisa was a director and shareholder of Woodstock and cannot claim for losses suffered in those capacities. He referred to Taylor v Greater London Council and the Encyclopaedia of Compulsory Purchase and Compensation, paragraph B-0465.
29. The whole of the reference land was let to Woodstock, a limited company. At the valuation date Mr Crisa was sole director and sole shareholder of the company. Woodstock occupied the ground floor for its business and Mr Crisa and his daughter occupied the first and second floors rent free and without a tenancy. The question is whether Mr Crisa can claim for the loss of the patterns which were left on premises let to and occupied by Woodstock? Woodstock as a limited company and Mr Crisa are separate legal persons.
30. This claim may be for disturbance, that is to say "the personal loss imposed on the owner by the forced sale" (Horn v Sunderland Corporation at page 49), or perhaps any other matter not directly based on the value of land. Mr Crisa did not make submissions as to his right to compensation for this head of claim and it is necessary for me to consider each of the ways in which it could arise (see Wrexham Maelor Borough Council v Macdougall at page 25 K).
31. An owner of land, including a lessee for a term of years, is entitled to compensation for disturbance as part of the value of the land taken. This right is preserved by rule (6) of section 5 of the 1961 Act. Mr Crisa had no rights of ownership and cannot claim under this head.
32. Section 20 of the 1965 Act gives to a person with a yearly tenancy or a tenancy for a year a right to compensation "for any loss or injury he may sustain" following his dispossession from the land. Mr Crisa had no tenancy of any part of the reference land and cannot claim under this provision.
33. A party not in occupation of land may claim for disturbance where an occupying tenant holds its interest in trust for that other party. There is no evidence that Woodstock held its leasehold interest in trust for Mr Crisa.
34. Section 37 of the Land Compensation Act 1973 gives a right to a disturbance payment where a person has been displaced from the lawful possession of land and had no interest in the land which entitled him to compensation under any other enactment. Mr Crisa cannot succeed under this provision because he was not in lawful possession of the ground floor of the reference land. "Lawful possession" requires the person in possession to be in physical occupation with the permission of the owner and with the intention of excluding unauthorised intruders (see Wrexham Maelor at page 28H). That was not the position at the reference land. Woodstock were tenants and occupiers; Mr Crisa used the ground floor in his capacity as sole director of Woodstock. He was not in occupation or possession of the ground floor. Woodstock were in occupation and possession.
35. Section 37(5) of the 1973 Act gives an acquiring authority power to make a discretionary disturbance payment where no payment can be made under the other provisions of section 37. No discretionary payment has been sought by Mr Crisa nor offered by the Agency.
36. In my judgment, Mr Crisa has no right to compensation under disturbance for any consequential loss arising out of the sale or theft of the foundry patterns left on the reference land. This loss is too remote.
37. I have also considered whether Mr Crisa could claim for this loss under the second limb of rule (6) of section 5 of the 1961 Act, i.e. as "any other matter not directly based on the value of land." In Wrexham Maelor compensation was awarded to a director of insurance companies trading from premises compulsory acquired for loss of a service agreement with those companies following the extinguishment of their business. These facts have some similarity with this reference but there is a material difference. In Wrexham Maelor the director held the lease of the premises in which the companies traded (which was compulsorily acquired) and his consequential loss formed part of the compensation payable for the acquisition of that lease. In this reference Mr Crisa had no interest in the reference land other than the right to use the first and second floors. This loss is also too remote under the second limb of rule (6).
38. I was referred to the decision of this Tribunal (J H Emlyn Jones FRICS) in Taylor v Greater London Council. Mr Taylor owned the freehold of the acquired property which was occupied rent free and without a lease or tenancy agreement by a limited company running a travel agency. Mr Taylor was a director and shareholderof this company. In addition to the value of the land, he claimed for disturbance to the business carried on by the company. This was rejected on the grounds that Mr Taylor and the company were separate legal persons. Any disturbance was suffered by the company but no compensation could be awarded as they were not a party to the reference. This case, however, differs from this reference on the facts. In Taylor Mr Taylor claimed for loss which was suffered by his company: he was the wrong claimant. Mr Crisa, as I understand his case (and it was not entirely clear), claims for personal financial loss suffered independently of the losses incurred by Woodstock. It is consequential loss following the loss of the patterns and prototypes left on Woodstock's premises. Mr Crisa is probably the correct claimant but he has no right to compensation. His loss (if any) is too remote. The decision in Taylor is relevant, however, due to the distinction made there between a limited company and its directors and shareholders.
39. Also relevant is Roberts v Coventry Corporation, a decision of the High Court on an appeal from the award of an official arbitrator. Mrs Roberts was the owner of land compulsorily acquired. She was also a director and shareholder of the limited company which occupied and carried on business on the land as yearly tenants. Mrs Roberts claimed for the depreciation in the value of her shares which would arise when the company is dispossessed under the compulsory acquisition. This was rejected on the grounds that this loss is too remote. A distinction was drawn between the company and its directors and shareholders: the latter could not claim for loss suffered by the company. Croom-Johnson J observed (page 310) that "a director is only a servant and agent of the company, with special duties and special responsibilities."
40. I find that, even if Mr Crisa had been able to substantiate his loss under this head, compensation could not be recovered on the grounds that he had no right to compensation for this loss and that the loss was too remote.

Loss of foundry patterns, machine tools and equipment and tools

41. My third question is whether the losses alleged to have been suffered by the claimants in respect of the foundry patterns, machine tools and equipment and tools, left on the reference land at entry and subsequently stolen or sold, were caused by the compulsory acquisition? This question relates to the claim for £460,000 made by Mr Crisa (considered above in the context of his right to compensation) and the claims for £12,000 and £28,000 made by Woodstock. My overall question can be divided into three questions. First, did the claimants fail in their duty to mitigate their losses by failing to remove the patterns, tools, etc from the reference land before or after entry? Secondly, what happened to those patterns, tools, etc after entry: were they sold by the Agency's agents, as alleged by the claimants, or stolen by an unknown third party, as alleged by the Agency? Thirdly, in the light of the answers to these two questions, were the losses the natural, direct and reasonable consequence of the acquisition and dispossession and not too remote?
42. Mr Crisa said that he did not remove the patterns, tools etc for two reasons. First, he formed the view, based on his reading of section 4 of the 1965 Act, that the Agency were unable to acquire the reference land three years after the compulsory purchase order was made. He therefore directed his energies to preventing what he saw as an unlawful acquisition. He sought an injunction to prevent entry and challenged the validity of the compulsory purchase order. He started proceedings twice in Willesden County Court seeking compensation or damages and in the High Court seeking judicial review. All this litigation was unsuccessful. Secondly, Mr Crisa said that, in the absence of an advance payment of compensation, he had insufficient funds to take alternative premises for storage. Miss Crisa said that they looked at alternative premises and some goods were removed and stored in Balham. No application was made to the Agency for financial assistance, no application was made for a bank loan or overdraft and no attempts were made to sell the patterns, machine tools etc on the extinguishment of Woodstock's business.
43. Three witnesses were called by Mr Crisa as to the fate of the patterns, tools, etc after entry on 17 March 1995. Mr Ives is a car breaker who lives in Shepherds Bush. He has known Mr Crisa for many years. He was told about the hearing on the day before and agreed to give evidence. On 20 or 21 March 1995 Mr Ives went to 340 Horn Lane to see Mr Crisa. There was a notice on the door directing callers to the rear of the premises. The back door was open and he bought brake linings, plant and equipment, etc for £3,000 in cash. They were worth £10,000. He believes that they were sold by security guards who told him that they now owned all the goods on the premises. Mr Ives did not receive a receipt and this purchase did not appear in his accounts for tax reasons. He is sure of the dates because it was just before he went into hospital. Mr Willinski spoke of various visits he made to the reference land between 25 March and the end of May 1995. The gist of this evidence was that security guards were in occupation; the tools, machinery, etc were in the property until after Easter, when they had been removed; the rear entrance to the property was not made secure until the end of May; he saw a van at the rear of the property on 20 or 21 March 1995. Mr Kirtley said that on 18 and 19 March 1995 he saw a BMW parked at the rear of 340 Horn Lane. A security guard was loading goods belonging to Woodstock into this car. The rear of the property was not secure.
44. Mr Casey said that the reference land was inspected by Mr Thompson and Mr White of the district valuer's office on 23 March 1995. An inspection note was put in evidence. Mr Crisa visited the property on 21 November 1995, some eight months after entry, and wrote to the Agency three days later stating that 90% of the stock, tools and equipment had been "selectively removed from the premises." He put the replacement value of the remainder at about £5,000. Mr Casey said that Mr Crisa removed very little on that visit: he does not know what happened to the residue. Mr Crisa made little attempt to run down his stock levels prior to closure; he made no attempt to dispose of the remaining stock, plant and machinery at closure nor to arrange for storage. The foundry patterns were readily removable in a car or van. They could have been put into secure storage; several firms in the area offered storage facilities. Mr Crisa did not advise the Agency of their alleged high value. Following entry by the Agency a private security firm was engaged to provide 24 hour security for the reference land. On 21 March 1995 the Agency wrote to Mr Crisa telling him that the contents remained available for removal by prior arrangement until 7 April 1995. The letter recorded that Mr Crisa had been asked what he proposed to do with the contents left on the reference land and he replied "that they were all ours." On 9 May 1995 Mr Casey was advised by the Agency that the reference land had been burgled, probably on 6 or 7 May, and the majority of the stock and equipment left by Mr Crisa had been stolen. Demolition took place in early 1996 but the scheme for which the property was acquired was cancelled in July 1997.
45. As to compensation, Mr Casey said that Mr Crisa submitted a claim in November 1991 and enquired regarding an advance payment of compensation in March 1992. He was required by the Department of Transport to submit accounts. No estimates of compensation could be prepared without these accounts and further information from the claimants. The accounts were supplied in November 1992. In June 1994 it was agreed that the basis of compensation would be total extinguishment. An offer was made to Mr Crisa in November 1994 but not accepted. Further accounts were supplied in October 1995. On 21 July 1995 an increased offer was made. On 21 March 1995 a letter from the Agency to Mr Crisa recorded his signature on a statutory advance payment agreement in the sum of £27,900 and arrangements for a payable order were made. On 5 June 1996 Mr Casey wrote to Mr Crisa with a final open offer of compensation of £60,000 plus an ex gratia payment of £20,000 for the cessation of trading in 1992 and loss of goods due to theft.
46. Mr Forsdick submitted that a discretionary advance payment of compensation could be made before entry with the co-operation of the claimants, where it was known whether they would relocate or extinguish the business. Otherwise payment could only be made after entry. The claimants failed to mitigate their loss regarding the patterns, etc left on the reference land. They made no attempt to store them elsewhere before or after entry. They made no request to the Agency for payment for storage. The ownership of these goods remained with the claimants after entry: at most the Agency were involuntary bailees with a duty not to damage the goods but no obligation to look after them. Security guards were hired and, even if they unlawfully sold the goods, the Agency are not liable for actions in excess of statutory powers, including actions by their agents. He referred to the Encyclopaedia of Compulsory Purchase and Compensation paragraph B-0467. There is no direct link between acquisition and loss regarding the patterns, tools, etc. The causes of loss are the claimants' failure to mitigate their losses by failing to remove the goods and the subsequent theft by a third party.
47. A person whose land is compulsorily acquired has a duty to mitigate his loss. In Director of Buildings and Lands v Shun Fung Ironworks Ltd Lord Nicholls said (page 126F):

"The law expects those who claim recompense to behave reasonably. If a reasonable person in the position of the claimant would have taken steps to eliminate or reduce the loss, and the claimant failed to do so, he cannot fairly expect to be compensated for the loss or the unreasonable part of it. Likewise if a reasonable person in the position of the claimant would not have incurred, or would not incur, the expenditure being claimed, fairness does not require that the authority should be responsible for such expenditure. Expressed in other words, losses or expenditure incurred unreasonably cannot sensibly be said to be caused by, or be the consequence of, or be due to the" [compulsory acquisition].

My first question is whether the claimants failed to mitigate their losses by not removing the pattern, tools etc before or after entry?

48. Although in the early period after confirmation of the compulsory purchase order the date of entry changed, by October 1994 at the latest a definite date of 23 February 1995 had been fixed. Mr Crisa therefore had at least four months to arrange the removal of the goods. He gave two reasons why he did not do so. He said that section 4 of the 1965 Act made the compulsory acquisition unlawful, and that, due to the lack of an advance payment of compensation, he was unable to remove and store the goods elsewhere.
49. As to section 4 of the 1965 Act, I find that Mr Crisa acted unreasonably in his reliance on this section. He apparently did not seek legal advice before embarking on litigation in the courts. He apparently took the view, from his literal reading of the section, that, three years after the compulsory purchase order, the Agency were acting unlawfully in seeking to acquire the reference land. I considered section 4 earlier in this decision. The law of compulsory purchase is not easy to understand. Mr Crisa is not to be criticised for his incorrect interpretation of section 4. But he can be criticised for not seeking legal advice before embarking on unsuccessful litigation to the detriment of his obligation to mitigate his losses by removing and storing or selling the patterns, equipment, etc left on the reference land. As to the second reason given by Mr Crisa, lack of funds to allow him to remove and store his patterns, equipment, etc, I am not persuaded that he made any attempt to seek alternative storage premises or funding to allow removal and storage of the goods left on the reference land. This was not due to the lack of an advance payment of compensation. Mr Crisa and Woodstock abandoned the goods; I can accept that he told the Agency that the goods were now theirs (see letter of 21 March 1995).
50. I find that the claimants failed to mitigate their losses in respect of the patterns, tools, etc left on the reference land at entry by failing to remove and store or sell those goods, before or after entry, or attempting to make arrangements to do so.
51. My second question is what happened to the patterns, tools, etc left on the reference land: were they sold or stolen? None of the evidence is entirely satisfactory. Mr Crisa's case is that they were sold unlawfully by the security guards employed by the Agency. He relies on the evidence of Mr Ives, Mr Willinski and Mr Kirtley. I view this evidence with scepticism. The evidence of Mr Ives gives most support to Mr Crisa's case but I regard it as unreliable. I find it surprising that he should have been discovered to have helpful information the day before the hearing; that five years later, he was able to remember almost the exact date on which he bought goods at the reference land; and that he was carrying £3,000 in cash to enable him to make the purchases. I should add that, after he had given his evidence, Mr Ives started to take a vocal part in the proceedings to such an extent that, after warnings, I had to ban him from the second day of the hearing. The evidence of Mr Willinski and Mr Kirtley is of limited assistance to Mr Crisa's case and to some extent contradictory. Having seen these three witnesses give evidence I have reached the conclusion that its accuracy is doubtful and I give it no weight. I prefer the evidence of Mr Casey that he was told on 9 May 1995 of the theft of the goods. I find that the patterns, tools, etc left on the reference land at entry were stolen by an unknown third party on or about 6 or 7 May 1995. I note that this date is approximately one month after the last date given to Mr Crisa by the Agency for the removal of the goods (see letter of 21 March 1995).
52. Mr third question is whether, in the light of my findings on the above two questions, the losses were the natural, direct and reasonable consequence of the dispossession and not too remote?
53. The classic statements of the scope of disturbance compensation are in Harvey v Crawley Development Corporation. Denning LJ said (page 492):-

[The claimant] "is entitled to 'compensation for disturbance,' which is specifically preserved ..., and includes all damage directly consequent on the taking of the house under statutory powers."

Romer LJ said (page 494):-

"It seems to me that the authorities to which our attention was drawn do establish that any loss sustained by a dispossessed owner (at all events one who occupies his house) which flows from a compulsory acquisition may properly be regarded as the subject of compensation for disturbance, provided, first, that it is not too remote and, secondly, that it is the natural and reasonable consequence of the dispossession of the owner."

54. In Shun Fung Lord Nicholls said (page 126A):-

"The application of the general principle of fair and adequate compensation bristles with problems. As useful guidelines there are three conditions which must be satisfied. First, it goes without saying that a prerequisite to an award of compensation is that there must be a causal connection between the resumption or acquisition and the loss in question......

The adverse consequences to a claimant whose land is taken may extend outwards and onwards a very long way, but fairness does not require that the acquiring authority shall be responsible ad infinitum. There is a need to distinguish between adverse consequences which trigger a claim for compensation and those which do not. A similar problem exists with claims for damages in other fields. The law describes losses which are irrecoverable for this reason as too remote ...

The familiar and perennial difficulty lies in attempting to formulate clear practical guidance on the criteria by which remoteness is to be judged in the infinitely different sets of circumstances which arise. The overriding principle of fairness is comprehensive, but it suffers from the drawback of being imprecise, even vague, in practical terms. The tools used by lawyers are concepts of chains of causation and intervening events and the like. Reasonably foreseeable, not unlikely, probable, natural, are among the descriptions which are or have been used in particular contexts. Even the much maligned epithet 'direct' may still have its uses as a limiting factor in some situations.

... Suffice to say as a matter of general principle, to qualify for compensation the loss must not be too remote. That is the second condition.

Fairness requires that claims for compensation should satisfy a further condition in all cases. The law expects those who claim recompense to behave reasonably. ...Expressed in other words, losses or expenditure incurred unreasonably cannot sensibly be said to be caused by, or be the consequence of, or be due to the" [compulsory purchase].

55. The question is whether the loss of the patterns, tools, etc left on the reference land was the direct result of the claimants' dispossession from the land or whether the chain of causation between dispossession and loss was broken by an intervening factor or factors? In my judgment two intervening factors broke the chain of causation and rendered the losses irrecoverable. The first was the conduct of the claimants in failing to act reasonably to mitigate their losses by removing, or attempting to remove, the goods from the reference land before or after entry. The second was the conduct of a third party in stealing the goods. Either of these intervening acts was sufficient to break the chain of causation. I find that the alleged losses suffered by the claimants, even if they could be proved and were otherwise recoverable, were not caused by the acquisition and dispossession and are not recoverable as compensation.

Loss of profits and benefits

56. I now consider the claim for £240,000 for loss of profits and benefits, having regard to the claim for £100,000 for damages for the interruption of trading. The former is for £30,000 per annum for the three years prior to entry and five years after entry. This claim can be more accurately described as £90,000 for loss of profits before entry and £150,000 for loss of goodwill on the extinguishment of Woodstock's business at entry. The claim for interruption of trading is a spot figure of £100,000 for three to four years after entry.
57. It appears to be agreed that the business of Woodstock was extinguished when entry was taken in March 1995. Mr Casey assessed the compensation on this basis; Woodstock's claims also appear to be on this basis. Therefore, as at the valuation date Woodstock can claim for temporary loss of profits suffered in the period before entry and permanent loss of goodwill when the business was extinguished. Mr Casey put these figures at £6,000 and £40,000 respectively; Woodstock claimed, in effect, £90,000 for loss of profits and £150,000 for loss of goodwill. Woodstock have also claimed £100,000 for interruption of trading for a three or four year period after entry and closure of the business. Mr Forsdick submitted that this claim is double-counting. I agree. Where a business is extinguished compensation is paid for loss on extinguishment, including loss of goodwill, that is to say the present capital value of future profits. A claim cannot also be made for losses in re-establishing the business after it has been extinguished. That is double-counting. Compensation is being sought twice for the same element of loss. The compensation bases of relocation and total extinguishment are mutually exclusive. On relocation compensation may be recovered for losses incurred in setting up the business elsewhere, but on extinguishment a sum is paid for the closure and extinguishment of the business. Compensation cannot also be claimed for, in effect, losses on relocation or future loss. Future loss is included in the loss of goodwill. Mr Crisa cited the well-known dicta of Scott LJ in Horn v Sunderland Corporation, that compensation must be equivalent to the owner's loss (at pages 42 and 49), but I note that Scott LJ also referred to "the other side of the picture" that the "statutory compensation cannot, and must not, exceed the owner's total loss" (page 49). This part of the principle of equivalence applies here. I find that the claim for £100,000 interruption of trading is included in the claim for loss of profits and benefits and is therefore excluded on the grounds of double-counting.

Loss of quality of life

58. Finally, I consider the claim for loss of quality of life. This is made by Mr Crisa in the sum of £100,000. He made no submissions in support of this claim. The question is whether I have jurisdiction to award compensation for such loss, even if proved.
59. As a matter of law, compensation for compulsory purchase can be awarded under only two heads: for the land taken (including disturbance or any other matter not directly based on the value of land, which is treated as part of the land value) and for severance and injurious affection where part only of a claimant's land is acquired (see section 7 of the 1965 Act, Horn at page 42 and Hughes v Doncaster Metropolitan Borough Council at page 392). Clearly, compensation for loss of quality of life cannot be recovered as part of the value of land; it can only be recovered, if at all, as disturbance or any other matter under rule (6) in section 5 of the 1961 Act. Compensation for disturbance and, I suggest, any other matter not directly based on the value of land, however, can only be recovered where the claimant had suffered a tangible loss or incurred expenditure as a direct consequence of the acquisition (see Harvey at page 494 and Cole v London Borough of Southwark at page 163). There must be a financial loss capable of precise quantification which was directly caused by the acquisition and, in the case of disturbance, by dispossession from the land taken. That is not the position with regard to this claim. Although Miss Crisa quantified the amount claimed as five years loss of quality of life at £20,000 a year, this was essentially a spot figure plucked out of the air with no supporting financial loss or expenditure. It is similar to non-pecuniary loss in tort, for "loss of amenities" or loss of enjoyment of life, which the courts can award as damages but which this Tribunal cannot award as compensation. I have no power to award compensation for loss of quality of life.

Conclusions

60. I can now summarise my conclusions on the claims put forward by Mr Crisa and Woodstock. I reject all claims for lack of proof of loss. In addition I reject the claims for the following specific reasons. Mr Crisa's claim for loss of the foundry patterns is rejected because he has no right to compensation for this loss and it is too remote. The claims by Mr Crisa and Woodstock for loss of the foundry patterns, machine tools and equipment and tools are rejected on grounds of causation. The losses were caused by the failure of the claimants to mitigate their losses by failing to remove the goods and by the actions of a third party (theft). These factors broke the chain of causation between dispossession and loss. The claim by Woodstock for damages for interruption of trading fails on the grounds of double-counting: this loss is included in the claim for loss of profits and benefits. The claim by Mr Crisa for loss of quality of life fails on the ground that this Tribunal has no power to award compensation for this loss. Thus, all claims fail for lack of proof of loss and the claims, other than for loss of profits and benefits, also fail for the other reasons given above. The effect is that I reject in their entirety the claims made by Mr Crisa and Woodstock. I am left with the figures of compensation proposed by Mr Casey, on behalf of the Agency, which I consider below. This evidence was unchallenged, except to the extent that Mr Crisa put forward alternative figures which I have rejected, and I have therefore limited scope for disagreeing with Mr Casey's assessment of compensation. As an expert tribunal carrying out a judicial function, I can evaluate Mr Casey's evidence, and to a limited extent reject or amend it as necessary, but I cannot introduce evidence of my own nor go outside the evidence put before me in reaching my decision, at least not without disclosing these matters to the parties and giving them an opportunity to comment on them (see Fox v P G Wellfair Ltd, Top Shop Estates Ltd v Danino, Kentucky Fried Chicken (GB) Ltd v Secretary of State for the Environment, Aquilina v Havering London Borough Council and Swann v White).

Determination of compensation

61. I now determine the compensation payable having regard to Mr Casey's figures.
62. Leasehold interest - At the valuation date Woodstock held a lease of the reference land with two and a quarter years unexpired at a rent of £2,250 per annum, fixed at the start of the lease in June 1982 and not reviewed. Mr Casey valued this lease at £15,000; no claim has been made by Woodstock. Mr Casey assessed the rental value of the reference land in March 1995 at £9,150 per annum having regard to four comparables, each a settlement of compensation relating to the freehold and headleasehold interests in the reference land and the adjacent premises, 334 and 336 Horn Lane. Each claimant was represented by surveyors. The profit rent for the reference land of £6,900 per annum was capitalised by Mr Casey for the short unexpired term of the lease at 12 and 4%. He then added for the value of tenants' improvements on the renewal of the lease. The profit rent for these improvements was £300 per annum which Mr Casey capitalised for 14 years at 12 and 4% deferred for the two and a quarter year period until the expiration of the lease. The resultant capital value is £13,750 which Mr Casey rounded up to £15,000 to take into account the possibility of key money on assignment. I accept Mr Casey's valuation and award £15,000 to Woodstock for the value of their leasehold interest in the reference land.
63. Goodwill - Mr Casey valued the goodwill of Woodstock, extinguished on entry in March 1995, at £40,000. The equivalent claim figure may be said to be £150,000. Mr Casey departed from the usual practice when valuing goodwill of using the average of the last three years accounts. He did this because the figures vary greatly. He based his valuation on turnover for the year ended March 1994, which was the highest turnover achieved by Woodstock, £41,974. He then deducted purchases of £13,000 to produce a gross profit of £28,974. To sustain this turnover Woodstock would have needed a consistent level of stock purchases. Mr Casey said that he was told by Mr Crisa that 62% of turnover related to servicing and the balance (38%) was retail sales, with a profit margin of between one-quarter and one-third. There were no design or development sales. Retail sales would have been £15,950 and the purchases needed to achieve those sales would have been between £11,960 and £12,760. Servicing would also have needed some purchases. The average purchases over three years was £12,216 per annum. This figure was distorted by the 1995 level of purchases; the average for 1993 to 1994 was £13,615. Mr Casey adopted £13,000. To arrive at the net profit Mr Casey deducted expenses of £17,218. Most of these expenses are based on past average figures. The only matters for comment are the inclusion within the figure for rent, rates, heat and light of the full rental value to avoid double-counting with the leasehold value, the absence of a deduction for director's remuneration (which is included in the accounts) on the grounds that Woodstock was essentially a one-man or family business and a deduction for interest on capital. Mr Casey capitalised the net profit of £11,756 by applying 3.25 years' purchase. This produced a rounded figure of £40,000 for loss of goodwill.
64. I have considered Mr Casey's detailed explanation of the above figures. I would have been assisted by some evidence from Mr Crisa on profitability, goodwill and the nature of Woodstock's business. He chose not to give it. I have therefore no evidence in rebuttal of Mr Casey. His calculation of goodwill appears to be fair and reasonable and I accept it. A goodwill calculation based on the net profit for the last year of trading (equivalent to £18,320 the second highest net profit achieved by Woodstock), adjusted by the deduction of profit rent and interest on capital would have been well below Mr Casey's figure. I award £40,000 to Woodstock for loss of goodwill on the extinguishment of the business.
65. Losses prior to entry - Mr Casey suggested £6,000 for these losses; the equivalent claim figure may be said to be £90,000. Mr Casey said that there is little evidence that the claimants did anything prior to March 1995 to run down the business of Woodstock and certainly no evidence of losses incurred in the year preceding entry. Stock levels changed little over the years. The Agency, however, accept that they were at fault in not keeping the claimants fully informed between November 1991 and December 1992 regarding changing entry dates. This could have caused uncertainty and loss but identifying this loss is difficult. Woodstock were apparently also planning to move independently of the compulsory purchase. It is almost impossible from the accounts to show a proven loss in 1991/92 which was due to the impending acquisition. Mr Casey said that the growth of turnover might justify the view that turnover in 1991-92 would have been £10,000 higher. If half were retail sales, additional purchases of some £3,750 would have been needed plus consumables for servicing, say £4,000 in total. Thus, an extra £6,000 gross profit would have resulted, the compensation suggested by Mr Casey.
66. Woodstock's accounts show that the company probably suffered loss in the year ended 31 March 1992. This may have been due to the making of the compulsory purchase order and the initial indication that possession would be required on or after March and then May 1992. The entry dates were varied after December 1992 to February 1994, and then February 1995, and finally March 1995. The accounts show that turnover fell from £33,621 in the year ended March 1991 to £8,035 in 1992, rising to £25,656 (1993), £41,974 (1994) and £39,961 (1995). Operating profit of £19,126 in 1991 became a loss of £10,139 in 1992 and then rose to profits of £1,416 in 1993, £12,407 in 1994 and £17,616 in 1995. Mr Casey suggested that turnover in 1992 would have been £10,000 higher in the absence of the impending acquisition, i.e. £18,035. Turnover in 1991 was £33,621 and £25,656 in 1993. I regard Mr Casey's figure of £10,000 as too low in the overall context of the turnover figures between 1991 and 1995. In my judgment £15,000 is a more realistic figure. I accept Mr Casey's figure of 50% for retail sales with the additional purchases increased to £5,625 plus consumables for servicing of £375, total costs of £6,000 to be deducted from the additional turnover of £15,000. The loss of profit figure is therefore increased to £9,000. I award this sum to Woodstock.
67. Domestic disturbance - Mr Casey's figure is £1,000; Mr Crisa made no claim for this loss. Mr Casey said that Mr Crisa and his daughter occupied the living accommodation and could have made a claim for removal expenses under section 37 of the 1973 Act. Strictly speaking, I am doubtful whether compensation can be paid for expenses in the absence of proof that such expenses have been incurred, but I accept Mr Casey's figure and award £1,000 to Mr Crisa for general domestic disturbance.
68. Mr Crisa's time - Mr Casey's figure is £1,000; the claimants have made no claim for this loss. Although Mr Crisa had surveyors acting for him for a short time he largely dealt with the compulsory purchase himself. I agree that compensation should be awarded for his time and, in the absence of other evidence, I accept Mr Casey's spot figure of £1,000. In my view, however, this compensation should be awarded to Woodstock for the loss of Mr Crisa's services as a director.
69. Fees - the fees charged by the claimants' surveyors were £1,500 (exclusive of VAT), this has been paid by the Agency, and by their accountant £175 (exclusive of VAT), this has not been paid. Mr Casey includes these figures in his compensation. The claimants have not claimed for these expenses. I award £1,675 to Woodstock for this head of claim.
70. I have now dealt with all heads of claim. The compensation payable to Woodstock is £66,675 calculated as follows:-

Leasehold interest £15,000

Goodwill £40,000

Losses prior to entry £ 9,000

Mr Crisa's time £ 1,000

Fees £ 1,675

£66,675

The compensation payable to Mr Crisa is £1,000 for domestic disturbance.

71. I determine that the total compensation payable to Woodstock Engineering Limited for the compulsory acquisition of their leasehold interest in 340-340a Horn Lane, Acton W3 is the sum of £66,675 (sixty-six thousand, six hundred and seventy-five pounds) and that the total compensation payable to Mr G F Crisa arising out of this acquisition is the sum of £1,000 (one thousand pounds). Interest on the compensation and any legal costs on the assignment of the lease are the subject of specific statutory provisions (sections 11 and 23 of the 1965 Act).
72. The above decision concludes my determination of the substantive issues in this reference. It will take effect as a decision when the question of costs is decided and at that point, but not before, the provisions relating to the right of appeal in section 3(4) of the Lands Tribunal Act 1949 and order 61 rule 1(1) of the Civil Procedure Rules will come into operation. The parties are invited to make submissions as to the costs of this reference and a letter accompanies this decision setting out the procedure for submissions in writing.

DATED:

(Signed: P H Clarke )

ADDENDUM

73. I have received written submissions on costs from the Agency but not from the claimants. The Agency seek their costs on three grounds. First, that an offer of compensation was made to Mr Crisa at a figure in excess of my award. Costs should be awarded under section 4(1)(a) of the Land Compensation Act 1961. Second, and in the alternative, the Agency should receive their costs under section 4(1)(b) of the 1961 Act, the claimants having failed to deliver claims and having failed to support their claims at the hearing. Third, that the claims were grossly inflated and unsupported and I should exercise my discretion as to costs in favour of the Agency (see Hood Investment Co Ltd v Marlow Urban District Council (1963) 15 P&CR 229).
74. Section 4(1) and (2) of the 1961 Act provide as follows:-

"(1) Where either -

(a) the acquiring authority have made an unconditional offer in writing of any sum as compensation to any claimant and the sum awarded by the Lands Tribunal to that claimant does not exceed the sum offered; or

(b) the Lands Tribunal is satisfied that a claimant has failed to deliver to the acquiring authority, in time to enable them to make a proper offer, a notice in writing of the amount claimed by him, containing the particulars mentioned in subsection (2) of this section;

the Lands Tribunal shall, unless for special reasons it thinks proper not to do so, order the claimant to bear his own costs and to pay the costs of the acquiring authority so far as they were incurred after the offer was made or, as the case may be, after the time when in the opinion of the Lands Tribunal the notice should have been delivered.

(2) The notice mentioned in subsection (1) of this section must state the exact nature of interest in respect of which compensation is claimed, and give details of the compensation claimed, distinguishing the amounts under separate heads and showing how the amount claimed under each head is calculated."

75. Under section 4(1)(a) the Agency contend that a letter dated 5 June 1996 from Mr Casey to Mr Crisa was an offer of compensation in the total sum of £80,000, a sum greater than my award. It was open to Mr Crisa to accept the offer and avoid these proceedings.
76. I reject this submission. The letter of 5 June 1996 was not an unconditional offer capable of acceptance; it gave indications of the compensation and the ex gratia payment which Mr Casey would recommend to the Agency. The following extracts make this clear:-

"The offer I am making is of course subject to my clients approval." (page 1)

"I am accordingly prepared to recommend that the sum of £60,000 (sixty thousand pounds) be paid in full and final settlement of your compensation claim. This is of course subject as I've explained to my client's approval." (page 2).

"This leaves two other matters which are not strictly speaking admissible items of claim and as such are not reflected in the £60,000. As you know Highways Agency do not accept any liability for your decision to cease trading in 1992 but had instructed me to offer an ex gratia payment in respect of the losses you thus sustained. I put a figure to you of £15,000. At our meeting Peter Wilson suggested again without any admission of liability that he would consider instructing me to look at a further ex gratia payment in respect of losses arising from the theft of stock, etc, that you left in the premises when you were eventually dispossessed. To cover this matter I am prepared, entirely without prejudice to recommend the sum of £5,000 to Highways Agency making a total of £20,000 (twenty thousand pounds) in ex gratia payments. This sum is in addition to the compensation of £60,000 but is not part of the compensation properly payable and I can give no guarantee that it would remain on the table if the compensation question is referred to The Lands Tribunal or if you continue with other litigation against the Highways Agency." (page 3).

77. Even if this letter constituted an unconditional offer under section 4(1)(a) of the 1961 Act it referred to compensation of £60,000, a sum below my total award. The further £20,000 mentioned was an ex gratia payment, not statutory compensation. I was also referred to a letter dated 17 July 1996 from Mr P J Wilson of the Agency to Mr Crisa. Again, I cannot accept this letter as an unconditional offer. It refers to the above "offer" of £60,000, in the context of an advance payment of compensation, and to an ex gratia payment. The letter notes that Mr Crisa has now appointed a surveyor to act for him and refers to a reference to this Tribunal "as a last resort". It is a letter which forms part of the negotiations towards a settlement and was not an offer capable of acceptance. The Agency's claim for costs fails under section 4(1)(a) of the 1961 Act.
78. Under section 4(1)(b) the Agency contend that no claim complying with subsection (2) of section 4 has been received and that no evidence was produced at the hearing in support of the claim. This second point I consider below under my discretionary power to award costs. As to the lack of a claim the evidence is as follows.
79. Mr Crisa completed the claim form enclosed with notices to treat on 6 November 1991. His claim was £135,000 for extinguishment of business plus a home loss payment to be agreed. It was passed to the district valuer with instructions to negotiate terms for the acquisition of the reference land. Possession was not taken by the Agency until 17 March 1995 and it was, therefore, impossible for the claimants to make a realistic assessment of their losses until after this date. However, Mr Casey made an offer on 1 November 1994, presumably on the basis of sufficient evidence of possible loss. This was rejected but was used to calculate an advance payment of compensation. On 21 July 1995 Mr Casey increased his offer. On 5 June 1996 he made a final offer of £60,000 plus a possible ex gratia payment of £20,000. It is clear from this evidence, and other evidence given by Mr Casey, that soon after the claimants gave possession of the reference land he was in possession of sufficient information to enable him to make a recommendation to the Agency as to the compensation payable. This could have formed the basis of "a proper offer" to the claimants. I am not satisfied that the Agency should receive their costs on the grounds that section 4(1)(b) of the 1961 Act has not been complied with.
80. I have found that section 4(1) of the 1961 Act does not support the Agency's application for costs. I must award costs therefore in accordance with my the Tribunal's discretionary power contained in section 3(5) of the Lands Tribunal Act 1949 and rule 52(1) of the Lands Tribunal Rules 1996.
81. In the decision of the Scottish Court of Session in Emslie and Simpson Ltd v Aberdeen District Council (No.2) [1995] 35 RVR 159, Lord Hope said (page 164):-

"It seems to me that the underlying principle in" [cases of disputed compensation] "is that the acquiring authority is liable to pay compensation to the owner or occupier of the lands taken. The expenses of determining the amount of disputed compensation may be seen to be part of the reasonable and necessary expense which is attributable to the taking of the land compulsorily by the acquiring authority. The principle which applies to litigation, as expressed by Lord President Robertson in Shepherd v Elliott (1896) 23 R 695 and quoted by 'Maclaren on Expenses' at page 21, is that the cost of litigation should fall on him who caused it. The cost of determining the amount of the disputed compensation would seem, according to this principle, to fall on the acquiring authority without whose resort to the use of compulsory powers there would have been no need for the owner or occupier to be compensated. That seems to me to be the proper starting point for an examination of the question of expenses in these cases."

82. This principle was affirmed by the Privy Council in Lesquende Ltd v Planning and Environment Committee of the States of Jersey [1998] 1 EGLR 137, where Lord Clyde said (page 138F):-

"In a compulsory acquisition it is the acquiring authority who have brought about the problem through their use of compulsory powers and, while it can be argued that in particular cases there could be an unfairness in the authority being required to pay the owner's costs, the greater inequity must lie in an inevitable inability of the former owner to recover the costs of a determination of the compensation due to him on an acquisition of land, which the authority have decided to pursue."

83. I take therefore as the starting point for the exercise of my discretion on costs the principle that the costs of determining the disputed compensation in this reference should fall on the Agency. They did not protect their position, as they could have done, by making an unconditional offer. However, I have wholly rejected the claims of Woodstock and Mr Crisa, which were unsupported, although I made an award which was £3,000 above the Agency's figure of compensation.
84. I was referred to Hood Investment Co Ltd v Marlow Urban District Council. This case concerned the determination of compensation for the acquisition of a strip of land for a footpath. The claim included £49 for certain expenses. The Lands Tribunal (R C Walmsley FRICS) awarded the sum proposed by the acquiring authority for the land taken, found that the expenses had never been incurred and took an unfavourable view of this part of the claim. The claimant company was ordered to pay the authority's costs of the reference, even though an unconditional offer of compensation had not been made. This decision was upheld by the Court of Appeal. Where a claimant's conduct is outrageous and his claim fictitious, the Lands Tribunal has a discretion both to deprive him of his costs and to order payment of the authority's costs, notwithstanding the absence of an unconditional offer.
85. There is much to criticise in Mr Crisa's conduct of this reference. His claim figures were wholly unsupported; he chose not to give evidence himself (to avoid cross-examination) but put his daughter in the witness box who clearly gave prepared answers; he persisted in raising the issue of the lawfulness of the acquisition, not in the context of the jurisdiction of this Tribunal, but apparently as the basis of his claim; he called witnesses of fact whose evidence I viewed with considerable scepticism (to use a neutral term). If this were ordinary litigation Mr Crisa and Woodstock would undoubtedly have to bear the Agency's costs. However, I stop just short of labelling Mr Crisa's conduct as outrageous or his claims, although exaggerated and unsupported, as wholly fictitious. I must balance these criticisms with three other matters. First, the underlying principle that the costs of determining compensation should usually fall on the acquiring authority. Second, that the Agency could have sought to protect their position by making an unconditional offer but did not do so. Third, and perhaps most importantly, that my award was £3,000 above the compensation put forward by Mr Casey, on behalf of the Agency. Although Mr Crisa's conduct in this reference is open to criticism the fact remains that the claimants have been awarded compensation in excess of the Agency's figure at the hearing.
86. I have decided that I should depart from the principle that the Agency should pay the claimants' costs, having regard to Mr Crisa's conduct, but that, having regard to the matters referred to in the last paragraph, the claimants should not be ordered to pay the Agency's costs. Accordingly, I make no order as to costs.

DATED: 6 April 2000

(Signed: P H Clarke )