Practice note 4/2: Disturbance payments for persons without compensatable interests

The Valuation Office Agency`s technical manual covering all aspects of compulsory purchase and compensation.

General

1.1 Position pre 1973

Prior to the passing of the Land Compensation Act 1973 disturbance payments for persons without compensatable interests were discretionary and powers for making such payments were contained in a number of Acts.

1.2 Position post 1973

These powers (except section 22 Agricultural (Miscellaneous Provisions) Act 1963 - see Section 8) have now been replaced by section 37 LCA 1973 which gives a statutory right to disturbance payments in the case of displacements from land and buildings (other than land used for the purposes of agriculture) in consequence of:

  1. the acquisition of the land by an authority possessing compulsory powers
  2. the making of a housing order in respect of a house or building on the land
  3. the carrying out of any improvement to, or redevelopment of, a house or building on the land previously acquired by an authority possessing compulsory powers or appropriated by a local authority
  4. the carrying out of any improvement to, or redevelopment of, a house or building on the land previously acquired by a housing association that is a registered social landlord within the meaning of the Housing Act 1985

Entitlement to compensation

2.1 Conditions to be satisfied

The person displaced shall not be entitled to a disturbance payment from the authority concerned:

  1. unless he is in lawful possession of the land from which he is displaced (this requirement excludes persons whom the law does not regard as being in possession, such as squatters and lodgers - but see Paragraph 2.5 below regarding discretionary payments in this case)
  2. the person has no interest in the land for which there would be entitlement to compensation under any other enactment
  3. with reference to 1.2(b) above, if he is entitled to a payment in the case of a prohibition or demolition order under section 584A(1) HA 1985
  4. with reference to 1.2(d) above, unless the displacement occurred on or after 31 July 1974

2.2 Claim under alternative Acts

It should be noted that where a person would qualify for a payment by the same authority under these provisions and also under section 37 Landlord and Tenant Act 1954 in respect of the same land then the entitlement is to take one or the other at the persons own option but not both.

2.3 Houseboat and mobile home (caravan) owners

Acquisition of land which affects houseboats (land covered by water is still land) and mobile homes can pose problems but, unless the houseboat or mobile home owner has a compensatable interest in the land on or over which the mobile home or houseboat is situated, then entitlement is to a disturbance payment under section 37 LCA 1973.

2.4 Relevant date

The person must have been in lawful occupation of the land:

  1. in the case of compulsory acquisitions, the date of the first publication of the notice of the making of the compulsory purchase order prior to its submission for confirmation. If the compulsory purchase order is not one which requires confirmation, for example one made by the Secretary of State, the relevant date is that on which the notice of the making of the draft order was first published. If the acquisition is under the powers of an Act specifying the land as subject to compulsory purchase the relevant date is that on which the provisions of the Bill to that effect were first published
  2. in the case of purchases by agreement, the date of the agreement. Normally this should be taken to mean the date upon which the owner of the immediately superior interest and the authority arrive at arrangements that established a mutually enforceable contract in respect of the sale of the property in question
  3. in the case of housing orders, the date of the relevant order, resolution, improvement notice or undertaking as appropriate

2.5 Discretionary payments

Where a person who is displaced in the circumstances referred to in Paragraph 1.2 above was permitted to occupy land in a lesser capacity than legal possession (eg a lodger) and thus fails to qualify for a disturbance payment, section 37(5) permits the acquiring authority to make a discretionary payment, if they see fit.

The sub section makes it clear that an authority’s powers to make a discretionary payment are not available when a claimant has a statutory right under the section to a disturbance payment or to disturbance compensation under any other enactment, so that there can be no question of using such power to ‘top up’ statutory compensation (see also Paragraph 4.45).

2.6 Effect of the ‘Prasad’ case

Since entitlement to a disturbance claim under section 37 LCA 1973 is fixed as from a specific date then that date will also fix the earliest date for which a claim may be made. However, a claim for compensation under section 37 LCA 1973 would not fail simply because the claimant vacated prior to Notice to Treat but after the making of the Compulsory Purchase Order, so long as the dispossession was ‘in consequence of’ the making of the CPO (Prasad v Wolverhampton BC [1983] 1 EGLR 10).

Amount of disturbance payment

3.1 General

The amount of the disturbance payment is set out in section 38 and is independent of and not limited by, any other basis of compensation. In Barker v Hull City Council [1985] 2 EGLR 200 the Lands Tribunal stated “The language of the provisions is, to my mind, like enough to the language in which judges have stated the principle of fully compensating owners dispossessed by compulsory acquisition of their property to indicate the intention of Parliament to give to those classes of persons not previously entitled to compensation for disturbance the same right as those previously entitled to it enjoyed, not a reduced or lesser right”. It accordingly awarded the unemployed claimant compensation for increased travelling costs to the town centre from the property in which he had been rehoused by the local authority.

3.2 Expenses in removing

The expression ‘expenses in removing’ in section 38(1)(a) is regarded as wide enough to cover such direct expenses of removal as would qualify for compensation under the heading of ‘disturbance’ in connection with the compulsory acquisition of an interest in land. For instance it would extend to all expenses in adapting furnishings, but not loss due to depreciation in their value. It should not extend to ‘Harvey’ costs incurred in buying an alternative dwelling since the claimant would thus be placed in a better position than before.

The following cases illustrate the types of loss that have been awarded under sections 37 and 38 LCA 1973:

Allen v Doncaster MBC (1996) 73 P&CR 98 – cost of new curtains where old curtains could not be adapted

Greer v Northern Ireland Housing Executive [1997] 37 RVR 262 – cost of redecoration

Davies v Newham LBC [1998] 38 RVR 11 – cost of new carpets where old carpets could not be adapted

3.3 Trade and business loss

In addition to any appropriate ‘expenses in removing’ as referred to in Paragraph 3.2 above, the dispossessed occupier may be entitled to a payment in respect of loss sustained because of the disturbance of his trade or business consequent upon his having to quit the land. Regard must be had to the period for which the land might reasonably have been expected to be available to the claimant and, except in the case of a person over 60, to the availability of other land suitable for the purpose. The provisions of section 46 LCA 1973 which permit certain claimants aged 60 and over to claim compensation on an extinguishment basis notwithstanding that suitable alternative premises are available, will also apply to a claimant under section 37, taking the date of displacement as meaning the date of giving up possession.

In MacDougall and others v Wrexham Maelor BC v MacDougall [1993] 2 EGLR 23 the Tribunal awarded compensation for a business on a total extinguishment basis under the provisions of sections 37 and 38 LCA 1973.

3.4 Houseboat and mobile home (caravan) owners

  • 1) A claim for a disturbance payment by a houseboat or mobile home owner under section 37 LCA 1973 and reflecting section 38(1)(a) of the Act might include the following admissible items:
    • a) the actual costs of physically removing the houseboat/mobile home and occupants.
    • b) expenses in re-siting elsewhere, including drainage, electrical connections etc as well as the costs of removing and relaying surrounding paving and fencing provided that these items were not what might be regarded as fixtures at the former site.
    • c) the fee required to be paid by the claimant to get on to the new site with his ‘old’ home (key money) representing the profit which the new site owner might have obtained by sale of a new mobile home or houseboat to the claimant.
  • 2) The following items, however, would not be acceptable in such a claim:
    • d) any part of a ‘coming-on’ fee that represents a premium - in effect commuted rent;
    • e) any loss on forced sale of a mobile home or houseboat for which there is either no suitable alternative site or which physically is incapable of being moved;
    • f) the cost of lifting and replanting hedges, plants etc.
  • 3) Discretionary payments may be considered under section 37(5) for houseboat and mobile home owners where there is otherwise no right to a disturbance payment under section 37 LCA 1973.

3.5 Disabled persons

a) General

Section 38(3) provides that the disturbance payment made to a person displaced from a dwelling, to which specified structural modifications have been made to meet the special needs of a disabled person, should include an amount equal to any reasonable expenses incurred by the person entitled to that payment in making comparable modifications to the alternative dwelling to meet the needs of that disabled person. The specified modifications are such as a local authority having functions under section 29 National Assistance Act 1948 would have provided assistance for (or would have if an application had been made to them). It will be noted that a 1948 Act authority also has functions under the Chronically Sick and Disabled Persons Act 1970 and the Housing Grants, Construction and Regeneration Act 1996 for making adaptations to the home of a disabled person.

b) Modifications with statutory assistance from the local authority

Where the modifications of the dwelling that is being vacated were provided with assistance from the 1948 Act authority (the local authority) the valuer need only consider the comparability and reasonableness of the modification to which a claim is made and the reasonableness of the expenses incurred. For this purpose a statement signed by the claimant that the modifications were so assisted will normally suffice as evidence that they qualify.

c) Modifications without statutory assistance from the local authority

Where the modifications were provided without such assistance the valuer should use judgement as to whether it would have been provided if an application had been made. In any case of doubt the instructing department or the displacing authority should be asked to supply the answer if they are also the 1948 Act authority. In any other circumstances not the subject of specific instructions the valuer should make local arrangements with the displacing authority as to who will obtain the information.

d) Claimant moving to another district

If the dwelling to which the claimant and the disabled person have moved is in another district, arrangements for any necessary inspection should be made direct by the valuer. Since assistance might have been obtained in providing the modifications at the replacement dwelling the valuer should take care to ensure that no more than the expenses incurred by the persons entitled to the disturbance payment are recommended.