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Clause 20—(Supplementary Provisions As To Revocation And Modification)

Volume 437: debated on Monday 12 May 1947

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5.0 p.m.

I beg to move, in page 21, line 42, at the end, to insert:

"and any consequential loss or damage sustained by him by reason of the revocation or modification of the permission."

I think it might be convenient to discuss at the same time the Amendment in page 21, line 42, at the end, to insert:

"together with interest thereon, at such rate as may be prescribed."

I intended to propose that course for your approval, Major Milner. This Clause deals with compensation payable to an owner of property on the revocation of permission to develop. It provides that compensation shall be paid equal either to expenditure incurred by the owner in carrying out work, or to the expenditure in connection with his entering into a contract for work. The two Amendments seek to carry the amount of compensation a little further than is provided at present. In regard to the first Amendment, the Clause contemplates only a contract made by an owner for work to be done. It only permits compensation for such work though it may well be that the owner of property has entered into other contracts. For example, by virtue of having obtained permission to develop one piece of land, he may have entered into a much larger and more expensive contract in connection with another piece of property in the neighbourhood, the two contracts hinging together and one being dependent on the other. If compensation is only to be payable in respect of the contract for work done on the property which is to be abandoned, then clearly the owner of that property may suffer grave loss in respect of the other contract for which he would not be entitled to any compensation at all. I do not believe that the right hon. Gentleman intends that result. I hope he will say either that I am wrong in the view that I take of this Clause, or that he will consider making a suitable Amendment.

The other Amendment seeks to add interest to the amount of compensation which is payable. At present the amount payable is to be precisely equal to the expenditure incurred. I take it that that means the net expenditure incurred, and that it would have no regard at all to the time when such an expenditure was incurred, so as to permit of interest being added. It may be there are many people who have started to develop their property under a permission, obtained possibly before the beginning of the recent war. There may be people who, in order to carry out that development, have borrowed money from the bank and have had to pay interest to the bank for a number of years. This Clause would enable such a person to obtain compensation for the capital cost if he had to abandon the work. That is to say he would be able to obtain compensation in respect of the actual sum of money which he had borrowed from the bank, but no account would be taken of any interest which he had paid. Therefore, he would be seriously out of pocket by reason of the abandonment of his work on the revocation of permission. I do not believe that it can be the intention of the Government to do that. I hope that the right hon. Gentleman will see his way to make some suitable alteration.

We are discussing two Amendments which, in many ways, are quite dissimilar although they both have, for their object, an increase in the amount of compensation payable to an owner. In regard to the first, I am in sympathy with the purpose of the Amendment. I think it goes too far. I think that to give carte blanche for

"any consequential loss or damage sustained by him."
would be going very far indeed and would open the door to the widest possible interpretation. I am in agreement with the principle that there should be compensation in respect of loss directly incurred, directly flowing from the revocation, and I am prepared to give an undertaking that at a later stage an Amendment will be introduced in some such form as that, broadly carrying out the principle of the first Amendment but not accepting the language. I am afraid that I can give no assurance whatever in regard to the second Amendment. To provide for the payment of interest on compensation would be to introduce a novel but very dangerous principle. Compensation on interest has never been provided in any Act of Parliament. It was not provided in the 1943 Act, or the 1932 Act, and I do not think that it should be provided here. If, however, the compensation is provided in respect of loss incurred, then I think it will cover the point which has been made because, in fact, the loss will be based upon present-day values.

Is the right hon. Gentleman saying that where consequential loss was not incurred by reason of interest having had to be paid in the past, he is prepared to accept that?

I think there are two classes of interest on which compensation might be paid. We might compensate for interest which had been paid in the past by the person who had carried out the development, by reason of his having had to borrow in order to carry out the development; or there is interest which he might claim after the revocation of the permission. I think the right hon. Gentleman is saying that the first class of interest should be covered and that the second class should not.

No. What I was trying to say was that no interest can be provided at all. We cannot provide for interest as such. It may well turn out that any compensation in respect of loss directly incurred by the revocation of permission would be sufficient to meet any interest. The answer is that I am prepared to give an undertaking in regard to the first Amendment that, at a later stage, an Amendment will be introduced providing for loss sustained by an owner by reason of revocation, but not in the wide terms of this Amendment. I am not able to accept the second Amendment.

We are always grateful for small mercies and, therefore, I do not wish to appear ungrateful for the undertaking given by the right hon. Gentleman to reconsider the wider question of additional compensation. It was for the convenience of the Committee that the two Amendments were taken together, though the course followed by the discussion shows that the word "interest" has led to a certain amount of confusion which I will try to clear up. I was greatly impressed by the instance which my hon. Friend the Member for Hendon (Sir H. Lucas-Tooth) put before the Minister as a case of consequential damage which ought to be covered. I remember a case of a young man, a builder, who had bought a piece of building land before the war. The land probably fell into the category to be defined as "near ripe" land. The man intended to carry out building operations immediately, but the war intervened. He joined up and so he was prevented from carrying out the operation for which he had purchased the land. He had, perfectly properly, purchased it with a loan from the bank which, on a reasonable prospect of development, he was quite easily able to repay. But throughout the war, while serving in the Forces, he had to maintain the interest on this bank charge or lose what he had already invested. He had planning permission in respect of the land and, therefore, what he had done was in the public interest as measured by the judgment of the competent planning authority.

In such a case, should there be a revocation of the planning permission, that man is not merely prevented from going on with his building operations and recouping himself in respect of the finance which he expended, but he is in the position of having paid out a substantial sum of interest to the bank. I ask that in a case like that, when a planning permission is revoked, or conditions are imposed upon it which alter its character, these elements of consequential loss shall be taken into consideration. If they are not, great injustice will result. That is a case where interest is really a factor in consequential damage. The fact that that example is one of interest, does not alter the validity of the first proposition.

On the right hon. Gentleman's second point, he says that he does not wish to let himself in for paying interest on compensation which is adjudicated to be correct. The merit of paying interest is to encourage a prompt settlement of claims. I am sure that on reconsideration, the right hon. Gentleman will see that if he makes a moderate allowance for interest on payments of compensation it will encourage the prompt settlement of these claims, thus facilitating in his activities the man who is compensated.

In view of what has been said, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause ordered to stand part of the Bill.