Mufasa Ltd, R (On the Application Of) v The Secretary of State for Communites and Local Government & Anor [2014] EWHC 1337 (Admin)

[2014] EWHC 1337 (Admin)Case No CO/11178/2013
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
THE ADMINISTRATIVE COURT
Venue Manchester Civil Justice Centre
1 Bridge Street West
Venue Manchester, Greater ManchesterDate Monday, 31st March 2014
M60 9DJ
B e f o r e:
HIS HONOUR JUDGE STEPHEN DAVIES
(Sitting as a Judge of the High Court)
Between
THE QUEEN ON THE APPLICATION OF MUFASA LIMITEDClaimant
Digital Audio Transcript ofWordWave International LimitedA Merrill Communications Company165 Fleet Street London EC4A 2DYTel No: 020 7404 1400 Fax No: 020 7831 8838(Official Shorthand Writers to the Court)
The Claimant appeared by its employee and duly authorised representative Mr KashabaMr Martin Carter (instructed by the Treasury Solicitor’s Dept, London) appeared for First Defendant
J U D G M E N T
[1]HIS HONOUR JUDGE DAVIES: This is an application brought by the claimant, a limited company, known as Mufasa Ltd, under section 23 of the Acquisition of Land Act 1981, under which a person who is aggrieved by a compulsory purchase order may apply to the High Court to question its validity. Under section 24 of that Act the court may, if satisfied that the authorisation granted was not empowered to be granted, or that the interests of the applicant have been substantially prejudiced by any relevant requirement not having been complied with, quash the compulsory purchase order or any provision contained therein.[2]The essential principles to be applied by a court in considering a challenge under this Act were considered by Laws J (as then was) in the case of Chesterfield Properties Plc v Secretary of State for the Environment [1998] 76 P & CR 117. Laws J, referring to certain observations made by Lord Denning in the earlier case of Ashbridge Investments Ltd v Minister of Housing and Local Government (1965) 1 WLR 1320, stated that it is, in effect, a statutory judicial review. He also stated that authority clearly establishes that those ordinary public law principles enunciated in the Wednesbury Corporation case apply as much to decisions in relation to compulsory purchase orders as they do to other statutory decisions, but he also observed that the Wednesbury standard is not a monolithic standard, and that where an administrative decision abrogates or diminishes a constitutional or a fundamental right, it requires that the decision maker provides a substantial justification in the public interest for so doing. He held that this principle should apply in the case of challenges to compulsory purchase orders made under this Act. I respectfully agree with those observations, and apply that approach to this case.[3]I have had the benefit of a written and oral presentation on behalf of the company from its duly authorised employee, a Mr Kashaba, who has argued the claimant's case fairly and effectively. I have also received written and oral submissions from Mr Martin Carter, counsel for the first defendant, the Secretary of State for Communities and Local Government and the relevant decision maker. The second defendant, Burnley Borough Council, has contested the claim but in a letter sent to the court has confirmed that it did not propose to make written or oral representations because it was standing by the position adopted by the first defendant, and I have not therefore heard separately from the second defendant today.[4]Before delving into the facts I should also refer to some further propositions of law which are set out in Mr Carter's skeleton argument, which are not controversial, and which are in my judgment plainly right. First, that the exercise of judgment and the weighing of the various issues in the context of a case such as this are matters for the decision maker and not for the court to decide afresh. Second, that an application of this sort is not an opportunity of the review of the merits of the inspector's decision or the Secretary of State's decision, so that the court must be astute to ensure that the challenge is not used a cloak for a re-run for the arguments. Third, that a decision letter must be read fairly and in good faith and as a whole in a straightforward, down to earth manner, without excessive legalism or criticism, as if by a well-informed reader who understands the principal controversial issues in the case. Fourth, that the reasons given must be adequate and intelligible. They must enable the reader to understand why the matter was decided as it was and what conclusions were reached on the principal important controversial issues. The reasons need only refer to the main issues in dispute, not to every material consideration. Fifth and finally, the Secretary of State need not deal with every issue in a decision letter, but is under a duty to deal with the principal controversial issues between the parties. In that respect both Mr Kashaba and Mr Carter have specifically referred me to the decision of the House of Lords in Bolton Metropolitan DC v Secretary of State for the Environment and Others [1996] 71 P & CR 309. As the relevant part of the headnote in that case states, the House held that there was nothing in the statutory language which required the Secretary of State in stating his reasons to deal specifically with every material consideration. He had to have regard to them but need not mention them. The Secretary of State must state his reasons in sufficient detail to enable the reader to know what conclusion he has reached on the principal important controversial issues, but to require him to refer to every material consideration and to deal with every argument would be to impose an unjustifiable burden.[5]Turning then to the facts, the chronology of this matter, in outline, is as follows. On 31st October 2012 the second defendant made the compulsory purchase order in question which, referring to the inspector's summary, related to some 2.05 hectares of land sited along the Accrington Road approximately 1 km to the west of Burnley town centre, being an area of predominantly residential traditional terraced housing. Some land in the vicinity had already been developed by a developer known as Keepmoat Ltd (Keepmoat). In relation to the land the subject of the compulsory purchase order Keepmoat had also obtained planning permission to develop it, so that the purpose of the order so far as Burnley Borough Council was concerned was to enable that development to take place.[6]The claimant, Mufasa Ltd is, as I understand it, and this at least is common ground, the freehold reversionary owner of some 21 of the individual properties situated within the land the subject of the compulsory purchase order. However, the claimant also contends that in relation to those properties it had, prior to the making of the order, exercised rights of forfeiture in relation to the leases in question, where as I understand it the tenant was, or had become, Burnley Borough Council. The position, as I understand it, is that those forfeitures had been or were in the course of being challenged in various legal proceedings between Mufasa Ltd and Burnley Borough Council. Musafa’s position has always been that its exercise of those forfeiture rights was lawful and valid, so that therefore it should have been treated as being, in substance, not just the owner of the freehold reversionary interest but the substantial owner who was also in occupation of those properties.[7]The claimant was entitled to make objections to the order and it did so, with the result that an inquiry was convened and the Secretary of State appointed Mr Stephen Brown to act as an inspector to conduct an inquiry into those objections and to report to the Secretary of State. For that purpose he had to have regard to the written objections submitted by the claimant, which were in the form of lengthy written representations dated 22nd November 2012. The claimant decided to rest its case on those written representations and not to put in further representations or to attend at the inquiry, so that its case was confined to those written objections. They contain a great detail of material. So far as this case is concerned, they contain certain matters which are relevant to the three essential points which have been advanced before me today.[8]The first and perhaps the most substantial argument is that the inspector failed to give any proper, or indeed any, consideration to the claimant's argument based on the fact that it had, as it said, exercised its forfeiture rights in relation to those 21 properties and in the circumstances failed to have regard to that material factor when considering whether or not the justification for a compulsory purchase order had been made out and in considering whether or not it was an appropriate and proportionate order to be sanctioned when weighing in the balance the rights of the claimant under the European Convention on Human Rights.[9]The second argument is that the inspector and the Secretary of State, by adopting the inspector's report, had regard to irrelevant matters when confirming the compulsory purchase order and, in particular, whether or not it was necessary for all legal titles to the properties within the land the subject of the order to be obtained.[10]The third complaint, which is tied in with the first, is that the decision was unnecessary and disproportionate to the legitimate aim pursued being incompatible, as I have said, with the claimant's rights under the European Convention of Human Rights.[11]In the written objections, on the second page which is page 9 of the bundle, the claimant said that the 21 properties "have all been repossessed by us and will no doubt result in lengthy litigation." It went on to refer to a further five properties, where I understand it was accepted that there were outstanding leasehold interests and there had been issues raised as to valuation, and the point was made that those cases there would not be grounds for objecting to a compulsory purchase order "as the issue is compensation that is dealt with under the jurisdiction of the Lands Tribunal." It then went on to complaint that the second defendant had been acting inconsistently in making different offers to different owners with reversionary interests and continued "however, our argument here is not a compensation issue but just to highlight the half truth in [the council's statement]" in other words a complaint as to inconsistency. Over the page at page 10, there was a complaint that the border plan was wrong because it showed this particular area as being in the leasehold ownership of Burnley whereas it is said in reality the council no longer owned any of these properties, having been dispossessed by determination on forfeiture.[12]Mr Kashaba submits that the question of the ownership of these 21 properties, and in that respect the accuracy of the plan, was raised fairly and squarely by the company in its objections, and his fundamental complaint on behalf of the claimant is that this was simply not addressed at all by the inspector. Elsewhere in the written objections one sees an argument that there was no need for the council to acquire the properties owned by the claimant and one also finds, as I have said, an allegation that the order conflicted with the claimant’s Convention rights.[13]There was also, and this is another point raised by the claimant, a contention that the wrong procedure was being used because, as I have said, the compulsory purchase order was applied for under the statutory power contained in section 226 of the Town and Country Planning Act 1990, under which a local authority has power, on being authorised to do so, to acquire compulsorily any land in its area(a) if the Authority think that the acquisition will facilitate the carrying out of development, redevelopment or improvement on or in relation to land or(b) which is required for a purpose which it is necessary to achieve in the interests of the proper planning of an area in which the land is situation. But by virtue of s.226(1A) the local authority must not exercise that power unless they think that the development, redevelopment or improvement is likely to contribute to the achievement of any one of the following objects: (a) the promotion or improvement of the economic well-being of their area; (b) the promotion or improvement of the social well-being of their area;(c) the promotion or improvement of the environmental well-being of their area.[14]What the claimant submits is that this was a case where the properties, if they were to be acquired, should have been acquired under section 17 of the Housing Act 1985, under which a local housing authority is authorised to acquire land as a site for the erection of houses. The claimant's essential case was that in circumstances where the counsel's argument was that the existing housing stock was in disrepair, section 17 enables that to be undertaken in a focused selective way rather than the blanket procedure under the compulsory purchase provisions.[15]The inspector's report was produced in July 2013, after an inquiry held in April 2013. The report is a lengthy and detailed report, comprising 92 separate numbered paragraphs over 17 pages. It began by identifying the order lands and surroundings. It next sets out the case for the council. My attention has been drawn, in particular, to paragraph 18 where it was recorded that the council's position was that to date it had acquired 96 percent of all leasehold interests, leaving five properties outstanding. The claimant's complaint is that this ignored the fact that, as it has contended, in fact 21 of those leasehold interests related to its properties which it said it had forfeited.[16]In paragraphs 28 through to paragraph 37 the inspector recorded what he understood to be the case for the claimant, describing its interest in the properties as being "owners of the reversionary freeholders" and in paragraph 28 he summarised it in this way:
"The objector argues that the council have given regard to irrelevant factors and disregarded relevant factors in drawing up their reasons for making up the order. In doing so they have made no case for the CPO being made in a public interest. In particular they have given little weight to the claimant's objections in disputes over compensation of purchase of properties and have outlined the planning permission that exists for a single dwelling-house on its land to the eastern side of Perth Street. Furthermore the council have been inconsistent in their negotiations and agreements with freeholders."
In paragraph 29 he recorded its objection to the order map and in paragraph 30 he recorded its objection that it would have been more appropriate for the council to purchase the relatively few remaining and acquired properties under section 17 of the Housing Act, given their general state of disrepair.[17]In paragraph 32 he recorded amongst other things its complaint that the land that the council was trying to acquire exceeded what was reasonably required, and in particular that it should exclude the claimant's properties. He then identified a series of other recorded complaints, including an objection at paragraph 36 to the council's case that it would be necessary to purchase or obtain all outstanding reversionary freehold interests, contending that this was not a substantial reason to impose a blanket CPO on the lands. Finally he recorded the claimant’s complaints that its Convention rights would be infringed by the CPO.[18]The inspector then recorded the council's response to those objections. At paragraph 38 they dealt with the complaints about the order map. At paragraph 39 the council set out its arguments that the powers under section 226 were the most appropriate for making the proposed compulsory repurchase and the powers under the Housing Act would have failed to achieve those results, and that point was picked up again in paragraph 42. It dealt with issue of planning permissions. It dealt with the question of removing the claimant's lands from the scope of the order. It submitted that the claimant's own actions clearly demonstrated the need to extinguish all remaining interest and in paragraph 54 it contended that the council had considered the owner's human rights and asserted that the claimant's rights had not been infringed in a disproportionate way.[19]At paragraphs 64 through to 91 the inspector set out his conclusions. Again I need refer only to the most significant. The inspector dealt, as one would expect, in some detail with the proposals of Keepmoat and how the proposed redevelopment would contrast with the existing position, and he also dealt with the question of the claimant's planning permission, and with the question as to whether or not individual development rather than blanket development would be satisfactory. Then in paragraph 82 he rejected the criticism of the order maps and he concurred with the council's view that the use of Housing Act powers would be too selective to secure the comprehensive redevelopment they seek. He also at paragraph 85 concurred with the council's view in relation to excluding the claimant's properties from the scope of the order, and at paragraph 89 he set out his overall conclusion, that confirmation of the order would be necessary to enable the redevelopment or regeneration of the area without hindrances that might arise if any freeholds or rights of way or legal covenants were to remain in existence, and he considered that the schemes put forward would result in a redevelopment and improvement of the area which in turn would contribute to the promotion and improvement of the economic, social and environmental well-being of the area. He was satisfied the council had access to the necessary funds. In paragraph 90 he said that he had considered the question of the rights of the property owners and objectors under the Convention and that it appeared to him that the council had struck a balance between the rights of owners to enjoyment of their possessions and the rights to their homes as against the public benefits of the proposals as he concurred. He said this:
"In coming to this balance account has been taken of the owner's right to receive compensation for their loss of property as well as for disturbance."
He concurred with the view that the council had reached that its actions were proportionate and confirmation of the order would be justified in the public interest. He rejected the argument that they had acted inconsistently with the objector's Convention rights. In those circumstances, he recommended that the order should be confirmed without modification.[20]The matter then went to the Secretary of State for his decision, which was communicated in a letter written on 1st August 2013, which was a relatively short letter comprising 11 paragraphs in which the Secretary of State, in short, accepted the inspector's recommendations.[21]In paragraph 3 the maker recorded the main grounds of objection. In paragraph 7 there was specific consideration given as to the European Convention rights of the objector and a conclusion that the Secretary of State was satisfied that in confirming the compulsory purchase order a fair balance would be struck between the public interest and the interest of the objectors. In paragraph 8 the Secretary of State said that careful consideration had been given to the inspector's reports and the submissions of the parties and that he accepted the inspector's findings and agreed with his conclusions.[22]So that is the factual position. This challenge was made shortly thereafter, on 14th August 2013, and after some procedural difficulties which I need not refer to, the case has duly come on for hearing.[23]Witness statements have been submitted, both by Mr Kashaba on behalf of the claimant and by a Mr Saulle on behalf of Burnley, but it is not necessary for me to refer specifically to their content, which I have read.[24]Dealing then with the grounds of challenge, the first and most substantial argument is, as I have said, that the inspector failed properly to consider, let alone to reach a proper decision on, the question of the claimant's interest in these 21 properties.[25]It is accepted by the claimant that it was not for the inspector or the Secretary of State to make a decision as to whether or not there had been an effective forfeiture or whether or not relief should have been granted against forfeiture, if it was effective. The claimant's argument is that this was an important issue, which had to be engaged with and considered, and that the inspector's failure to do so, effectively treating the claimant as solely the reversionary freehold owner, was something which was significantly important to vitiate the decision overall.[26]In response to a question from me, where I asked what the significance of this objection was, and in particular whether or not its only significance was the nature and extent of the claimant's right to compensation for compulsory purchase, Mr Kashaba contested that interpretation. He submitted that its interest as an owner/occupier, as he put it, was relevant for example to the nature of any interference with its rights, in particular, for example, its right to tenant those properties, its right to make application for planning permission in relation to those properties and generally. But he also submitted that the way in which the compulsory purchase process had been gone through by Burnley had the effect of subverting the process whereby those entitlements were to be determined by the civil courts because, in effect, the order followed by a vesting declaration has had the effect of extinguishing the claimant's rights and thereby prejudicing its ability to contest the forfeiture in the civil courts. In those circumstances, he submitted, the Upper Chamber, as it now is, would be unable to investigate those questions and that therefore, in effect, the compensation payable would not take into account the exercise of its forfeiture rights.[27]In my judgment, there are a number of fundamental difficulties with this argument. The first is that it seems quite clear to me that this was not a point which was properly set out in the objections. The claimant did say, as I fully accept and have said, that those properties had been forfeited and repossessed by it, and that there was litigation on foot in relation to those forfeitures and repossessions, and it did also say that this was relevant to the valuation of its interest in those properties, and made a complaint about inconsistent approaches by the council. But it did not say at all that it was also relevant to the question as to whether or not the interference that would be caused to its Convention rights should be assessed by reference to its asserted interest in the properties. In other words, as it seems to me, the point was being made in the objection letter purely on the basis of the value of the claimant’s financial interest in those properties.[28]In those circumstances, it seems to me to be difficult to criticise the inspector for not somehow understanding that this was the way in which the claimant was seeking to put its case in this respect. Moreover, as Mr Carter has submitted, by reference to the Bolton authority to which I have referred, given that the letter of objection raised a number of very substantial matters which the inspector did consider at length and decided upon, it is difficult to see that the inspector can fairly be criticised for not dealing with this point specifically, in that it is difficult to categorise it as one of the principal controversial issues between the parties that the inspector was obliged to determine and the Secretary of State obliged to refer to in the decision letter.[29]It is now understandable that the claimant should, for forensic reasons, focus on this point in its challenge, but what I have to look at is the position as between the parties at the time when the objection was made, the inquiry was held, the report was produced and the decision was made. I am simply not satisfied that at that time it was being put forward in the way that the claimant now seeks to put it forward.[30]The other fundamental difficulty, it seems to me, is that although, as I have said, the claimant is now seeking to characterise this as a point which went to the question of infringement of its Convention rights, even now it seems to me to be impossible properly to characterise this as anything other than an argument about economic interest which is relevant only to compensation. Mr Carter did not accept, by reference to the provisions of the relevant Act, that the Upper Chamber would not be able to decide issues of compensation by reference to the actual position. But even if that is not right, the reality, as it seems to me, is that this was simply not a matter of critical significance in the context of the objections which were actually being taken at the time.[31]It also follows, it seems to me, that the objection, if there was one, to the map falls away because that was really only significant by reference to whether or not it showed the council's leasehold interest as extending to these 21 properties. Insofar as there was a further challenge it is clear that the inspector dealt with that in a way which is not open to contest.[32]It also clear, in my judgment, that the inspector dealt carefully, as did the Secretary of State with the arguments raised in relation to the claimant's Convention rights.[33]It must be remembered, standing back, that this is a case where in order to succeed the claimant would have to show that the way in which the inspector and the Secretary of State approached this matter was unreasonable in a Wednesbury sense, and that the way in which he dealt with these arguments was one which no rational person, in the position of the inspector and the Secretary of State respectively, could have arrived at. I am quite satisfied that this simply cannot be said in this case so far as the question of the nature and extent of the claimant's interest in these properties is concerned.[34]If the claimant is really saying, as at one point it seemed to me that it was, that the council was using the compulsory purchase process for an improper purpose, namely to try to circumvent quash the claimant's challenge to the efficacy of the forfeiture process, that is not something which is the subject of a claim in these proceedings, and in any event there is simply no proper evidence or basis to support it.[35]The other substantial point which has been argued by the claimant relates to which Act ought to have been used, and to challenge the decision of the inspector and the Secretary of State as to the appropriateness of the procedure used. But, as I have already said, this was a point which was raised by the claimant in its objections. The inspector noted the point. He also noted the council's response, and in paragraph 89 he reached a clear conclusion that it was not inappropriate to exercise the powers conferred by section 226 as opposed to the powers conferred by section 17 of the Housing Act and he gave perfectly coherent reasons for that.[36]The claimant may - it clearly does disagree with that conclusion - but it has not, in my judgment, even begun to make out a rational case for contending that the inspector's decision, endorsed by the Secretary of State, that he was satisfied that section 226 was appropriate was one which can be challenged on Wednesbury unreasonableness grounds or any other basis. I therefore reject that ground of challenge as well.[37]There have been complaints made in the grounds and the skeleton and the evidence about unfairness, not listening to the claimant's arguments, and adopting a one sided or rubber stamping approach. In my judgment, there is no foundation in those arguments either. What is quite clear is that the inspector carefully read the objections, noted them, considered the objections and the council's responses and came to his own decision, based on his analysis of the competing arguments. It is also clear, in my judgment, that the Secretary of State performed the same exercise. It is very easy for a disappointed objector to complain that the inspector and the Secretary of State simply rubber stamped the other side's arguments. But it is, in my judgment, not possible to make that complaint good on the facts of this case.[38]For all of those reasons I am satisfied that the grounds of challenge made by the claimant in this case have no substance and must be dismissed. In those circumstances, I am satisfied that the claim must also be dismissed. That concludes my judgment.