Select Committee on the Crossrail Bill Minutes of Evidence


Examination of Witnesses (Questions 10560 - 10579)

  10560. That is not your problem—you do not have to worry about reforming the Compulsory Purchase Act—but what we do earnestly ask you to do is not to put us into that scheme, grafted onto which is undertaking number B 234, because one can certainly see the legs in it to get to the Court of Appeal and, perhaps even, the House of Lords. The market tenants, whose means vary, do not want to spend their lives going to the House of Lords' Judicial Committee, if that is all right.

  10561. Piecemeal legislative intervention has, unfortunately, not helped. A weakness of the Compulsory Purchase Act was that it did not extend to losses arising out of the use of the works. So once you have built the station and everyone walks across your forecourt you could not complain; you could only complain when they were building the works.

  10562. CHAIRMAN: That has always been so, has it not, Mr Dingemans?

  10563. MR DINGEMANS: That is right, my Lord, yes. That is why they brought in the Land Compensation Act 1973. However, because that was passed some eight years after the 1965 Act it was a better provision in the sense that compensation was provided for depreciation—it was still tied to value in land—caused by "noise, smell, fumes and smoke from public works when completed". You did not need then to show it was a nuisance; you might have been able to show it was a nuisance or not, but if there was "noise, dust, smell", etcetera, you could claim compensation.

  10564. As we are stuck with the 1965 Act we are stuck with the old wording which has not even caught up with the 1973 Act. All we are asking, really, for you to do today in 2008 is give us the provision that does not restrict us to the common law remedy of showing a nuisance. Whether something is a nuisance or is not is great fun for lawyers to discern but not necessarily market tenants. I make the point at the end of paragraph 24 that it is on this unsatisfactory statutory regime that the Promoter seeks to graft undertaking B 234.

  10565. In paragraph 25, there will, in general terms, be no claims available to the market tenants under section 10 for escape of dust or inconvenience caused during the construction period. Then I explain the legal basis for why that happens. More significant is the provision that the event relied on must trigger a right for compensation for the market traders. That arises only if the nominated undertaker is carrying out works within the scope of the statutory authority—so works which are carried out negligently and not within section 10—and the market tenants are left to their claims in tort in nuisance, for example, or for breach of the undertakings if they can show that in the deed, but any such claim, no doubt, is defended on the basis that all reasonable care and precautions were taken, and best endeavours were used, etcetera.

  10566. On the other hand, where the works are carried out with reasonable care so as to be within the scope of the Act, it is unlikely that the consequences of those operations that do not cause actual damage but, instead, generate dust, fumes, smoke or rodent release would give rise to a cause of action. That is the dilemma that Lord Hoffman spoke about in Wildtree Hotels v Harrow. The damage is either outside the protection of the Act or not actionable at common law so as, again, to be outside section 10. That is really why we do ask for this specific provision.

  10567. Can I then turn to paragraph 28. We do say that in those circumstances it is submitted that it is unjust for the market tenants to bear these losses alone. The financial resources of each trader vary (and, if you want, you can ask details from the market tenants today) but even a short interruption to business could lead to the failure of the individual businesses. In reality, what we submit is required, as with all major infrastructures, is a fair balance between the interests of the public and the individual. I refer there to a bit of law, but I am not sure that the proposition that a fair balance is what you are after is controversial; it is a question of what is the balance. It is obviously not right, we submit, that the costs of providing the public benefit is borne in a disproportionate manner by an individual market trader.

  10568. I refer to Dennis v Ministry of Defence. That was a case which reached beyond the law courts, in the sense that it was the low-flying Harrier jets in Norfolk destroying, effectively, the peace and enjoyment of an individual property-owner, and he was then compensated for breach of his rights to life under Article 8 of the Human Rights Act.

  10569. So proposed solutions. We have identified some other statutory schemes where compensation provisions have been provided. For example, in relation to the works at St Pancras an access agreement was made under the Railways Act 1993, which provided for compensation to be paid by the facility owner who was undertaking very substantial works (which we have all seen) and to the rail operator whose business would be affected. Effectively, because of the works, everyone knew the business was going to be affected and the Rail Regulator provided for compensation. Those compensation provisions provided for: loss of facilities or increases in walking distances, compensation for project liaison—at the moment, the market tenants have expended moneys on lawyers and experts which they simply cannot recover under any scheme whatsoever—and general damage compensation to cover the general effects of the construction works. The Rail Regulator directed a method of calculation, which the facilities owner challenged in the Administrative Court. In many respects, the details of that challenge are neither here nor there, but what was specifically said in the judgment was that the Regulator's approach, which was to hold the rail operator financially neutral, was rational, and, indeed, the Court placed considerable emphasis upon and approved the fact that compensation accurately reflected revenue lost—noting that this would strengthen the economic incentives on the facility owner to minimise the effect of their construction works.

  10570. If we are being entirely brutal and, I hope, frank about the matter, we rather suspect it is no complete accident that the works are now being remodelled to put the basement of the market sites away from the market because we are here. Similarly, if your Lordships were persuaded to grant us compensation provisions, that is likely to have a continuing effect, as was noted in the Rail Regulator case, to strengthen the economic incentives on the facility owner (here the Promoter) to minimise the effects of their construction works on the individual market tenant.

  10571. We therefore ask you to direct the Promoter to provide similar protection to the market tenants. I entirely accept a point that can properly be made against us, which is there are obvious differences between rail operators and facility owners, but the underlying rationale for compensation is the same. As far as the rail operator was concerned, he had to go into St Pancras—he could not go anywhere else; Midland Mainline runs into St Pancras—so when they were going to rebuild St Pancras he was going to suffer loss. However, as far as the market is concerned, when you grant statutory authority for them to build the Lindsey worksite and make Farringdon Station a truly modern station, we cannot go anywhere else; we are going to be affected by all the problems, and we ask for similar compensation provisions.

  10572. The Crossrail Bill proposes a scheme which simply could not take place without your authority. There will be very substantial public benefit to be derived from the scheme—no one doubts that—but the market tenants will be uniquely affected by the works and suffer losses from them. Permitted works are to be carried on beside and, as you have seen, below them—literally—and access to their businesses will be part-removed. There will be a taking of land, but the land to be taken is not part of their premises and the provisions of the relevant statutes forming part of the compensation code, even when modified by the undertaking, will provide no effective remedy to the market tenants. For all those reasons, we do respectfully submit that a fair balance requires more than undertaking B234. That is the outline of the case.

  10573. If it is all right with you, what I propose to do is then call very briefly the market tenants to give their evidence.

  10574. CHAIRMAN: Of course. I hope you are not going to leave it to us to draft the undertaking that you wish.

  10575. MR DINGEMANS: No, my Lord. It is actually in the Petition. I am sure it could be improved upon, but in terms of the wording I am afraid we simply copied the one from Midland Mainline adapted specifically for that. It is at paragraph 28 of the Petition on page 9 of the document. It is in the last four lines of paragraph 28, which was: "The Promoter will pay to any tenant or trader in the Smithfield Meat Market full compensation for all loss and damage including but not limited to loss of legal marketable commodities, loss of business income sustained by reason of the construction of the scheduled and connected works".

  10576. In fact, in the deed (can I ask for the deed to come back, which was your 36), at paragraph 13, you can see, at the moment, the Promoter has suggested putting undertaking B234 in the deed, which is that: "In the assessment of compensation payable to the trader as a result of an injurious affection claim, the undertaker will include an amount representing any consequential loss whether or not reflected in the value of land caused by construction and which he would have been liable to pay if authorised works were not authorised by the Act." We do not want that in the deed itself, for this reason: if we are able to show a breach of any of the other provisions of the deed then we will have our right to claim compensation or breach of contract. We think that if you were trying to construe the deed as a document as a whole, if you put clause 13 in headed "compensation" you might wrongly think that the deed itself restricted compensation simply to the market trader claiming for injurious affection, which is not anyone's intention.[15] So, for that reason, we prefer that it remained outside, if you were satisfied that undertaking B234 was all that we were entitled to.

  10577. CHAIRMAN: You are asking us—we cannot put a new clause into the Bill—we can recommend that it should be done.

  10578. MR DINGEMANS: It should be done.

  10579. CHAIRMAN: It would have to be done by government.



15   Committee Ref: P73, Draft Deed between the Nominated Undertaker and individual Smithfield Market Traders-Compensation (LONDLB-23-04-042) Back


 
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