Court finds that compensation can be sought for reduction in land value following NI Water development

Northern Ireland’s Court of Appeal has determined that the Lands Tribunal was correct in its interpretation of Article 55 of the Water and Sewerage Services (NI) Order 1973, in finding that it allowed for compensation for reductions in land values, not was not limited to damage caused directly by work done by Northern Ireland Water Limited.

The case concerned work conducted by NI Water on Brenda and Liam Chiver’s land between 2006 and 2007.

The work involved the laying of a sewer pipe across the land, which Mr and Mrs Chiver claimed had rendered the land permanently incapable of being built on.

In consequence, they claim that the value of the land had been reduced and claimed compensation.

The Lands Tribunal determined that the claimants had suffered a loss which entitled them to damages, with the exact nature and extent of the loss and compensation to be determined at a further hearing.

However, NI Water applied to the Lands Tribunal to state a case for the opinion of the Court of Appeal, and did so in June 2015, asking whether the Tribunal had been correct as a matter of law to answer the preliminary issues as it did.

The Court noted that the Lands Tribunal had determined that the work executed on the claimants’ land was within the provisions of Article 55 of the Water and Sewerage Services (NI) Order 1973, which provides that compensation should be paid for any damage to the property of a person caused by or in consequence of the execution of works.

The compensation provisions of sub-sections (2) to (6) of Section 38 of the Mineral Development Act (NI) 1969 (“the 1969 Act”) were also applicable to claims for compensation under Article 55 of the 1973 Order.

The essential argument of NI Water was that the right to compensation was limited to direct physical damage to property, and any restriction upon the subsequent development of the lands due to the inability to build over the pipe or its immediate vicinity was to be categorised as “pure economic loss” and not a subject of compensation.

The claimants argued that there has been damage to their property for which, absent the protection of the statutory power to carry out the works on private land given to NI Water the 1973 Order, the land owners would have been entitled to sue for damages.

However, in those circumstances the assessment of compensation is to be such as legislation provides for, in the present case under Article 55 of the 1973 Order coupled with Section 38 sub-sections (2) to (6) of the 1969 Act.

The Lands Tribunal concluded that the words “in consequence of” must import something more than compensation for the direct physical damage caused ‘by’ installing the sewer.

It also concluded that NI Water had acquired ‘ancillary rights’ to install and maintain the sewer by virtue of Article 55(2) of the 1973 Order when read with Section 38(3) of the 1969 Act.

Finally, it concluded that if the land owners were not in fact entitled to compensation, such lack of entitlement would be inconsistent with the requirements of Article 1 of the First Protocol of the European Convention on Human Rights.

This was because the interpretation contended for by NI Water “would provide the state with the power to reduce the development value of the claimant’s land by restricting the claimant’s ability to fully develop their property in accordance with the outline planning permission while depriving the claimants of fair compensation therefor”.

The Court of Appeal noted that nothing in the 1973 Order provided for the acquisition of any legal interest in the lands over which the works were to be effected. The effect of the legislation was simply to make lawful actions by the statutory undertaker on the land of another which would otherwise have constituted a trespass.

Following the English case of St John’s College Oxford v Thames Water Authority 1 EGLR 229, the Court determined that no interest in land had been acquired and compensation was payable only for “damage to the property … caused by or in consequence of the execution of the works”

In terms of the compensation to be given, the Court also followed the St John’s case, finding that compensation could be claimed for any depreciation that could be proved in the value of the lands due to the presence of the sewer within them, as the the ordinary meaning of the words “in consequence of” the execution of the works in Article 55 of the 1973 Order encompasses damage following as a result or effect of the execution of the works”.

Thus, the Court found that the Lands Tribunal had not erred in law. However, the factual implications in terms of the compensation available to the claimants remained to be determined, and the Court noted that their conclusions must therefore be largely hypothetical.

As a side note, they observed that this format, of splitting trials into different issues, ought not to be sought nor ought they to be permitted unless in exceptional circumstances and for very good cause.

  • by Rachel Killean for Irish Legal News