§ 3.59 p.m.
§ LORD SALTOUN rose to ask His Majesty's Government whether and how it is proposed to relieve proprietors from loss by reason of claims in respect of obligations which they may be prevented from implementing by reason of the operation of the Town and Country Planning Acts; and to move for Papers. The noble Lord said: My Lords, although I have drawn my Motion in very wide terms (I have done so because I am told that it may cover cases in England) my experience is Scottish and, with your Lordships' permission, I propose to deal with the question at issue merely on that experience and to let any noble Lord who wishes to introduce an English experience come to my aid if he feels so inclined. The matter with which I am going to deal this afternoon arises not only out of the last Town and Country Planning Act but also out of all previous housing and town planning Acts that have been passed in recent times. It involves very important principles, and the remedy to the ills I shall mention seems to me, I am bound to say, to be quite simple. I hope that the noble and learned Viscount on the Woolsack will consider what I say and whether this remedy cannot be introduced.
§ As many of your Lordships know, planning, and very good planning, is, indeed no new thing. The City of Edinburgh still takes a proper and legitimate pride in her eighteenth century town plan, and many other cities and burghs in Scotland have followed her example. The only new thing about planning is that it should suddenly become a subject of popular discussion, very often by people who know little about it. Old feu charters—that is, title deeds which have been granted in the past—have been granted generally upon a recognized and accepted plan, a plan accepted by all parties of the burgh council concerned and by everybody else.577
§ These charters contain onerous obligations which have been framed in accordance with the plans. Owing, however, to the changed relationship between the various parties brought about by the recent Acts to which I have referred, it often happens that these onerous obligations become impossible of fulfilment. An owner, for example, may be bound to erect and maintain a certain type of house upon his land, but if that house should be destroyed by fire—and I cite a case that has occurred—the local planning authority may refuse him permission to re-erect his premises as before. That means that the man is subject to an action from a superior title, either for damages or for some form of compensation, because, of course, the security has disappeared. I mention that particular case to show that these obligations are not one-sided; they are double-edged, and may arise in either direction.
§ The case I am going to take for illustration of my point shows the whole difficulty more clearly than any other. Local authorities in Scotland have often been in the habit of allowing streets in their boroughs to be made by private enterprise to elaborate and expensive specifications. When the land along these streets is feued off to proprietors, space is left at the side of the street for side roads that have been planned to come in. It may and does happen that, by reason of Housing Acts or Planning Acts, it becomes impossible to construct those streets. It may be decided quite definitely that they should never be constructed. In such a case the neighbouring proprietors at the junction of the abortive street under their feu charter may be called upon to pay for the street when it is made, and there will also be an obligation in their title that that street shall eventually be made. I may say that I myself have had practically all these types of cases, and I am glad to say that I have settled them all. I cannot think that any new case of this kind will be brought against me, so I can give your Lordships an assurance that I have not, so far as I know, any interest. And I can also give an assurance that I am not bringing forward hypothetical cases, but cases which are liable and apt to arise.
§ It may be said that these matters should all have been foreseen when the plans were altered. I think that is rather 578 a difficult contention, for the reason that I will explain. Your Lordships know what has been the housing situation—and I am referring' now especially to the situation under the Housing Acts—in Scotland as well as in England during the past thirty years. I do not think any noble Lord in this House will dispute the statement that owners of land have been just as anxious as anybody else to see houses built, and the raising of questions of this sort would have involved a great deal of delay and expense in the carrying out of housing schemes. I do not think people could have been expected to think of that. Everybody was more intention getting the houses built than on anything else.
§ In reply to the contention that it is covered by Section 55 (4) (b) of the recent Act, I would point out that my question does not refer only to the last Act; the difficulty has arisen under all the Acts. Section 55 (4) (b) directs only that the tribunal may change the incidence of obligation in a planning scheme. Now the point I am trying to bring forward in regard to these claims is that you cannot really foresee them unless you are very fortunate. You cannot deal with them at the time because you must wait until you are attacked, and the owner of the ground who has this onerous obligation in his title, for the failure of which damages may be claimed, may take no action under the Town and Country Planning Act. He may prefer to wait and take his action under his title against the superior. He may well be out of the country at the time when the plan is fixed and does not know anything about it; and he may well think he has a better remedy by suing for damages under his title than is provided by the tribunal under the Town and Country Planning Acts.
§ However that may be, the difficulty, so far as I can see, is that when anybody is attacked, under his charter he cannot plead the action of Parliament, and he cannot plead any Town and Country Planning Act as a defence against an action for damages. In the street case which I have mentioned to your Lordships the man may escape with a claim for a few pounds. On the other hand, the proprietor of the premises at the corner of the street may come to him and say: "I took this property under the assurance that I was going to have two frontages. 579 My premises were built on that understanding, and I have developed my business in the absolute confidence that I was going to have two frontages; now you are telling me that I am not going to have them, and the actual structure of my house is rendered vain by the change of plan." In such a case the claim for damages may be very heavy. It may be for much more money than this superior is likely to get out of the property.
§ That concludes my case. It seems to me that the matter can be very simply remedied. I am asking His Majesty's Government whether they will consider passing a short Act to say that, in all these cases where the local planning authority, acting under Statute, alters development plans so as to render impossible the exercise of owners' obligations to one another contained in the feu charters, that fact will be a defence against any action for damages; that these Statutes which have been passed by Parliament shall be a defence against everything except the return of money that has been specifically given for the purpose of these obligations. We have had this afternoon, in regard to the Education Act relating to Scotland, an example where the Government have done precisely that. As the matter which I have raised is likely to give rise to a good deal of unnecessary litigation, and to lead to a lot of trouble, I suggest that something of the kind should be done in the present case. I beg to move for Papers.
§ 4.8 p.m.
§ THE LORD CHANCELLOR (VISCOUNT JOWITT)
My Lords, the problem to which the noble Lord has referred today is an old problem which arises not only under the Town and Country Planning Act. It may arise, and frequently does arise, under a much wider range of Acts than that: for instance, where you have compulsory acquisition of land by a body having powers compulsorily to acquire land such as a railway company, or where you have compulsory acquisition of land by a local authority under many of the Statutes which go back for very many years, or whenever you have a statutory prohibition against doing something which was essential to the performance of the contract. The problem is one which goes back in English law certainly for two or three hundred years 580 and, so far as I know, goes back in Scottish Law for the same sort of period. One could give from the cases innumerable instances of supervening legislation resulting in the subject-matter of contract being removed from the control of the parties. My answer, which has been prepared for me, deals with both English and Scottish law; it will be difficult for me now to separate the sheep from the goats—and I would not like to say which is which.
With regard to Scottish law on this topic, I think I am bound to say that it has shown itself in the past to be superior to the English law. We have now made English law roughly correspond to the Scottish law. In England, until nearly a hundred years ago, the rule was that supervening impossibility did not normally excuse a party from performing a contract, upon the principle that the party might have inserted a provision in the contract excusing himself from performance in certain eventualities and had not taken the precaution of doing so. An impossibility which was caused by an alteration in the law itself has, however, long been recognized as an exception to that rule. If I may, I will quote the words of Chief Justice Holt, who in 1697 said:Where a man covenants not to do an act or thing which it was lawful to do, and an Act of Parliament comes after and compels him to do it, the Statute repeals the covenant; so if a man covenants to do a thing which is lawful, and an Act of Parliament comes in and hinders him from doing it, the covenant is repealed.That rule has been followed in many cases, and is so well established that I need say nothing further about it, except this. The position of a Lord Chancellor who is asked to give, as it were, an opinion on the law ex cathedra is a very embarrassing one, and I do not want to do it because I may have to sit in judgment upon a case and I shall then have the advantage of hearing arguments by counsel. And hearing arguments in these cases, may I say, makes all the difference in the world. I should, moreover, be sitting with my brethren. In the circumstances, therefore, I do not want on the spur of the moment to make any pronouncement upon the law which might perhaps be taken as though, without the benefit of hearing a case argued, I had already decided it. I am sure that your Lordships will always bear in mind the difficulty in which a Lord Chancellor feels 581 himself to be in these matters. That is why I and my predecessors have always declined respectfully to pronounce on points of law. But there is here a point of law that is so firmly established that I am certain that I may pronounce on it.
I have heard demands from all sorts of quarters for alterations in the law; but I have not heard of any demand, apart from that made by the noble Lord, Lord Saltoun, for alteration of the law on this topic. Certainly so far as I know, the Government have No 1ntention of introducing legislation to deal with this question. The noble Lord, Lord Saltoun, fears that an injustice will be done to a property owner who has entered into obligations which he cannot fulfil by reason of the provisions of the Town and Country Planning Acts. He will of course know that those Acts specifically safeguard development plans which were approved by the local planning authority, at any time between July 21, 1943, and the appointed day in the case of England, and between November 11, 1943, and the appointed day in the case of Scotland. This should, to some extent, mitigate the difficulties which the noble Lord envisages. I recognize, however, that there may well be cases of difficulty. A man may, for instance, have covenanted to build a road on his land and may find himself subsequently prevented from so doing. He may be prevented by the refusal of the local planning authority to permit the development, or by the compulsory purchase of the land by that or some other authority. If the local planning authority have refused to permit the development, so far as one can express any opinion on the matter without knowing the circumstances and terms of the particular covenant, I should think that the contract will have been frustrated, that is to say, brought to an end by reason of impossibility of fulfilment without the fault of either party.
Until 1942, the law in England, following a decision of the Court of Appeal in 1904, had been that where A contracted to do certain work for B, and B had made a pre-payment in respect of the work under the contract, and then the contract had been frustrated, A could retain the money pre-paid. This decision was, in quite recent times, declared by the House of Lords to be erroneous, but although the decision of the House of 582 Lords obviated the hardship which the old rule frequently imposed on the party who had made pre-payment, yet other hardships remained. The Law Revision Committee were asked to consider this rule and indeed had reported just before the war. Their recommendations had not been acted upon, but the decision of the House of Lords in the Fibrosa Case made it expedient to act, and, accordingly, the Law Reform (Frustrated Contracts) Act, 1943 was passed to remedy the defect in the English law on this subject. This Act applies to the contract which is frustrated by the local planning authority refusing to permit the development, so far as that contract is governed by English law.
Broadly speaking, the Act provide: first, as regards sums paid, or payable, by any party before the date of frustration, these shall be recoverable, or cease to be payable, by him, subject to this: that the other party can retain, or recover, expenses already incurred by him. Secondly, where one party has obtained a valuable benefit by reason of anything done by the other party before the date of frustration, he must pay a quantum meruit for it, and that the court will fix. There is no corresponding Scottish Statute, for the excellent reason that the Law Reform (Frustrated Contract) Act, which applies only to England, merely declared what was substantially already case law in Scotland, and that is illustrated in the case of Cantiare San Rocco, S.A., against the Clyde Shipbuilding and Engineering Company. The noble Lord will find the law of Scotland precisely stated in the report of that case.
Finally, there is the question of compulsory purchase of land. In this case either the covenantee becomes entitled to compensation under the Statute which authorizes the compulsory purchase—in the case of Town and Country Planning Acts, it is governed by Part V of the English Act and Part IV of the Scottish Act—or the covenant is frustrated and my observations on frustration apply. Very much more might be said upon this, and if the noble Lord cares to communicate with me I will give him a list of some of the authorities, with regard to both English law and Scottish law, which he might conveniently look up if he warts to get his mind clear upon this interesting but somewhat obscure branch of the law.
§ 4.19 p.m.
My Lords, I am greatly obliged to the noble and learned Viscount, the Lord Chancellor, for the great pains he has taken to give me an answer. I am not sure that it completely covers my point, but perhaps that is because I am not sufficiently learned, and I very much hope that it does. I have had a good deal of correspondence in Scotland over this matter, and that, I think, justifies my bringing it before your Lordships, quite apart from its happening in my own case. In these circumstances, I once more thank the noble and learned Viscount, and beg leave to withdraw my Motion.
§ Motion for Papers, by leave, withdrawn.