Freemont (Denbigh) Ltd, R (on the application of) v The Welsh Ministers & Anor [2016] EWHC 482 (Admin)

Case Nos: CO/4480/2015 & CO/6000/2015

[2016] EWHC 482 (Admin)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

PLANNING COURT IN WALES

Date 10/03/16

The Law Courts

Bodhyfryd

Wrexham

Before

MR JUSTICE HICKINBOTTOM

Between

THE QUEEN on the application ofClaimant

FREEMONT (DENBIGH) LIMITEDClaimant

THE WELSH MINISTERSDefendants

DENBIGHSHIRE COUNTY COUNCILInterested Party

Between

FREEMONT (DENBIGH) LIMITEDClaimant

THE WELSH MINISTERSDefendants

DENBIGHSHIRE COUNTY COUNCILDefendant

Mark Evans QC (instructed by Bhailok Fielding) for Claimant

Emyr Gweirydd Jones (instructed by Government Legal Department)

for Welsh Ministers

Harriet Townsend (instructed by Head of Legal, HR and Democratic Services, Denbighshire County Council) for Denbighshire County Council

Hearing Hearing date: 4 March 2016

Judgment

Mr Justice Hickinbottom :

Introduction

[1]These claims concern the 20.6 hectare site of the former North Wales Hospital, Nantglyn Road, Denbigh (“the Site”), upon which stand several listed buildings (“the Listed Buildings”).

[2]The first hospital buildings were erected on the Site in the 1840s, to provide care for monoglot Welsh-speaking people suffering from mental illness who, to that date, had been sent to asylums in England. Those buildings included “the Main Range”, now Grade II* listed, which is described in its statutory listing as “an exceptionally fine and pioneering example of early Victorian asylum architecture, recognised as the best example of its kind in Wales”. The hospital was extended from time-to-time until, in the 1950s, it cared for about 1,500 patients. It continued to be used as a mental hospital until closure in 1995.

[3]The history of the ownership of the Site is fully set out in the judgment of Stephen Smith QC sitting as a Deputy Judge of the High Court in Freemont (Denbigh) Limited v Knight Frank LLP

[2014] EWHC 3347 (Ch)

(“Freemont v Knight Frank”), an action brought by the Claimant against the agents who valued the development land in August 2006 for the purposes of a bank charge to which I shall return (see paragraph 21(i) below). For the purposes of these claims, I can deal with the history shortly.

[4]In 1999, when the Listed Buildings were still in good condition, the Site was sold into private ownership, namely to NWH Limited, a company with which the Claimant has no association. Over the next four years, the condition of the buildings substantially deteriorated, and important assets (such as the lead roofing) were stripped. In 2002, following a report on the condition of the Listed Buildings, the Council threatened enforcement action; and the Site was put onto the market.

[5]In 2003, the Site was sold to Acebench Limited, and then sold on to Acebench Investments Limited, Freemont Limited and finally, in 2006, the Claimant. These are associated companies, with the Bhailok family playing the substantial part in their ownership and management. The Claimant is a company registered in the British Virgin Islands, with the sole purpose of developing the Site. Its sole shareholder is a man called Ahmed Patel. However, he appears to have played no part in the company’s affairs. Ayub Bhailok, a solicitor and partner in Bhailok Fielding, whilst having no direct interest in the Claimant, has been described as its controlling mind and has held himself out as its agent and representative. Certainly, but for a short time in 2011, he has been the main, if not sole, channel of communication with the company.

[6]Denbighshire County Council (“the Council”) is the relevant local planning authority for the Site.

[7]In these claims, the Claimant seeks to challenge two related decisions. i) In Claim No CO/4840/2015, by way of judicial review, the Claimant seeks to challenge the decision by the Minister for Natural Resources (“the Minister”) on behalf of the Welsh Ministers dated 7 August 2015 to confirm three notices served under section 55 of the Planning (Listed Buildings and Conservation Areas) Act 1990 (“the 1990 Act”), requiring the Claimant to pay the expenses of works carried out by the Council under section 54 of that Act. ii) In Claim No CO/6000/2015, by way of application under section 23 of the Acquisition of Land Act 1981, the Claimant seeks to challenge the Denbighshire County Council (Denbigh Hospital) Compulsory Purchase Order 2014, an Order by which the Council is authorised to acquire the Site from the Claimants compulsorily, made by the Council on 25 June 2014 and confirmed by the Minister on 29 September 2015.

[8]On 24 November 2015, I directed that the application for permission to proceed in the judicial review be adjourned to an oral hearing. By order of 26 January 2016, the statutory application (which gives rise to similar issues) was linked to the judicial review; and, therefore, at the hearing, both applications were before the court.

[9]At the hearing, Mark Evans QC appeared for the Claimant, Emyr Gweirydd Jones for the Welsh Ministers, and Mrs Harriet Townsend for the Council. The Law The Payment Notices

The Law

[10]Section 54 of the 1990 Act gives local planning authorities the power to carry out urgent works to preserve unoccupied listed buildings. To exercise the power, it must appear to the authority that the works are urgently necessary for the preservation of the building (section 54(1)). The authority has to give notice of the intention to carry out such works to the owner. Section 54(5) and (6) provide:

“(5) The owner of the building must be given not less than seven days notice in writing of the intention to carry out the works…. (6) A notice under subsection (5) shall describe the works proposed to be carried out.”

A section 54(5) notice is often referred to as an “Urgent Works Notice” (or “UWN”).

[11]Section 55 gives the authority the power to seek reimbursement of the costs of the works carried out under a UWN. By section 55(2), the authority may give notice to the owner of the building requiring him to pay. Section 55(4), as amended for Wales, provides:

“The owner may within 28 days of the service of the notice represent to the Welsh Ministers – (a) that some or all of the works are unnecessary for the preservation of the building; or (b) in the case of works for affording temporary support or shelter, that the temporary arrangements have continued for an unreasonable length of time; or (c) that the amount specified in the notice is unreasonable; or (d) that the recovery of that amount would cause him hardship and the Welsh Ministers shall determine to what extent the representations are justified.”

In practice, the Minister makes the relevant determination on behalf of the Welsh Ministers. The Minister must give reasons for his determination (section 55(5)). and the Welsh Ministers shall determine to what extent the representations are justified.”

The Compulsory Purchase Order

[12]By section 47 of the 1990 Act as amended, where it appears to the Welsh Ministers that reasonable steps are not being taken for properly preserving a listed building, they may themselves compulsorily acquire the building and any relevant land or authorise the appropriate authority to do so. Again, in practice, this function is performed by the Minister on behalf of the Welsh Ministers. However, steps towards compulsory purchase under section 47 cannot be taken unless a notice is served specifying the works that are considered necessary for the proper preservation of the relevant building (“a Repairs Notice”) (section 48(1)).

[13]The relevant policy for the exercise of section 47 powers is set out in Welsh Office Circular 61/96 on Planning and Historic Environment (“the 1996 Circular”) and National Assembly for Wales’ Revised Circular 14/2004 on Compulsory Purchase Orders (“the 2004 Circular”). Paragraph 14 of the 2004 Circular provides that “a compulsory purchase order (“CPO”) should only be made where there is a compelling case in the public interest” taking into account “the human rights of those with an interest in the land affected”. Both Circulars emphasise the need for resources for the works contemplated by the CPO to be considered and to be available (see paragraphs 136 and 139 of the 1996 Circular, and paragraph 17 of the 2004 Circular).

[14]By section 23 of the Acquisition of Land Act 1981, where a CPO is made, a person aggrieved may question its validity by way of application to the High Court.

The Factual Background

[15]It has been apparent for some time that the only effective way of preserving the Listed Buildings would be to return them to beneficial use, such as dwellings. The Main Range, in particular, is amenable to restoration as residential accommodation. However, given their dilapidated state, it is inevitable that the costs of restoration will exceed the value of the refurbished buildings. In practice, therefore, restoration is dependent upon enabling development.

[16]In 2003, the Council consulted the Phoenix Trust to assist with developing a strategy for the Site. A working group was developed, led by the Trust, and involving representatives from the Council, the Welsh Development Agency, Cadw and the owners who were represented by Mr Bhailok. The Trust was retained by Mr Bhailok on behalf of the owners to assist in developing a scheme, although this association ceased prior to planning consent being granted. In 2006, the Phoenix Trust merged with another trust to form the Prince’s Regeneration Trust (“the PRT”).

[17]In 2006, the Council granted the Claimant outline planning permission for “the restoration and partial demolition and change of use of former North Wales Hospital to residential, business and community uses, and development of adjacent land and buildings for residential, commercial and parkland uses…”. Under the grant, the permission lapsed if the development was not commenced within three years, i.e. by 29 September 2009. The underlying principle of the development scheme was that enabling residential development of 6.9 hectares of land adjacent to the former hospital would release capital and allow for the restoration of the Main Range Listed Buildings.

[18]The permission involved an agreement dated 29 September 2006 under section 106 of the Town and Country Planning Act 1990 to which the Council, the Claimant and Lloyds TSB Bank plc (“the Bank”) were parties (“the Section 106 Agreement”). This, in effect, ensured that moneys would be released from the enabling development for the restoration purposes; and set out the mechanics for that release. The Second Schedule to the Agreement set out covenants between the Claimant and the Council relating to the restoration of the Listed Building, which included an obligation upon the Claimant to pay the Council sums towards a Restoration Fund to be held by the Council and used for the restoration of the Listed Building in accordance with an identified specification. There were two payments to be made by the Claimant to the Fund – a Restoration Deposit and a Restoration Payment – totalling £4.8m index linked. These payments were to be triggered at various stages of the development, reflecting the principle that the enabling development would in effect fund the restoration works. The payments were to be held by the Council as “fundholder”, i.e. as stakeholder on behalf of the Claimant for a specific use.

[19]However, the Council wished to have the comfort of some back-stop, in case, contrary to its firm hopes and expectations, the planning permission was not implemented and the enabling development did not proceed. Consequently, although clause 9.2 of the Section 106 Agreement provided that the Agreement would cease to have effect on the expiry of planning permission, clause 11 provided:

“If the Planning Permission shall lapse without having been implemented then this Agreement shall (without prejudice to… the obligation of the [Claimant] to pay to the Council the Restoration Deposit and the Restoration Payment in accordance with this Agreement) lapse as regards to the obligations which shall not have come into force at the date of lapse and upon performance of all obligations then in force the Council shall confirm the same in writing to the [Claimant]”; and clause 3.4 provided: “Notwithstanding any terms of this Agreement… the [Claimant] shall be and remain in all circumstances subject to the obligation to pay to the Council the Restoration Deposit and restoration Payment in accordance with the Second Schedule to the Agreement”

. The Council intended these provisions to have the effect that, if planning permission lapsed without the development having been commenced, the Claimant would in any event be obliged to pay the full £4.8m Restoration Payment; and the Council believed that, in law, they did have that effect.

[20]On the same day (29 September 2006), the Council and the Bank entered into a Bond in support of the Claimant’s obligations under the Section 106 Agreement (“the Bond”). Under this document, the Bank gave its bond and guarantee in the sum of £4.8m, and undertook to pay the Council on receipt of the Council’s demand stating that the Claimant was in breach of its obligation to make payments under the Second Schedule of the Agreement. The Bank undertook to fulfil that obligation “without proof or conditions”, i.e. to make payment upon the Council’s demand and certification that the Claimant had breached its obligations to make the Restoration Payments under the Section 106 Agreement. Although the liability of the Bank to pay would be triggered by a breach of the Agreement by the Claimant (and the Claimant paid the Bank £250,000 for the facility of the Bond), the Claimant was not a party to the Bond.

[21]As part of the same series of transactions: i) on 29 September 2006, the Claimant charged the Site to the Bank by way of Mortgage Deed; and ii) on 31 October 2006, the Claimant and the Bank entered into a Facility Agreement, whereby the Bank agreed to a line of £5.1m. The Council was of course not a party to either of those documents.

[22]In the event that, by 29 September 2009, it had failed to commence the development and had failed to pay the Restoration Payments, the Claimant understood that: i) The purpose and effect of these documents was to provide a bank guarantee to the Council of payment of £4.8m into the Restoration Fund in the event, “at the time deemed unlikely”, that that sum would not be forthcoming from the sale of enabling development land (paragraph 7 of the Claimant’s Case Summary in Case No CO/6000/2015). ii) In the event that the Council made a demand on the basis of non-payment of the Restoration Payment, the Bond was payable by the Bank “on demand” (paragraph 8 of the same document). iii) If the Bank paid out on such a demand, the Claimant would remain liable to the Bank for moneys paid out and that liability was secured by the Bank’s charge on the Site; and the Claimant would also remain liable to the Council for any balance of the Restoration Payment (paragraph 9 of the same document).

[23]There was some early interest from other potential developers in buying the development land. The Deputy Judge in Freemont v Knight Frank referred to two offers of £10.45m and £11.1m made in 2005, shortly before the Claimant purchased the Site. As I understand it, there were other offers, to which I shall return when I consider the grounds of challenge. However, following the collapse of the property market, that interest generally waned (paragraph 10 of the Claimant’s Case Summary in Case No CO/6000/2015).

[24]The Claimant says it attempted to start works by doing some required demolition, but it did so without the relevant wildlife authority (“bat licence”), with the result that it was prosecuted. It is said that, although there was a guilty plea, by the time the prosecution had run its course, the planning permission had lapsed (ibid).

[25]In the event, the development was not commenced, nor the Restoration Payment made, by September 2009. Relations between the Claimant and the Council became strained. The Council lost faith in the Claimant’s willingness and ability to deliver the development, or preserve (let alone restore) the Listed Buildings. On the other hand, the Claimant blamed the Council for what it considered to be a non-cooperative attitude and its consequences, including the frustration of its efforts to develop the site and/or sell parts of adjoining land to another developer.

[26]From 29 September 2009, the Claimant was in breach of the Section 106 Agreement by neither commencing the development nor paying the full Restoration Payment in default. However, the Council says that no demand was made on the Bond. In response to enquiries from the Claimant (and after the confidentiality agreement between the Council and the Bank was varied to allow the Council to disclose some of the background to the settlement: see paragraph 28 below), the Council’s Acting Head of Corporate Governance (Jane Kennedy) wrote to Mr Bhailok as follows:

“Can I make it perfectly clear that at no time was any Demand made upon [the Bank]. However, in August 2009, an approach was made by [the Bank] to the Council which resulted in a deed being executed, the terms of which are subject to a confidentiality clause. Earlier this year, a further deed was executed, which permits the Council to disclose that a payment of £1.9m was received by the Council.”

[27]Since then, this has been the view of the Council as consistently set out in correspondence, and proceedings. In the event of the development not proceeding, it considered that it had a fail-safe, namely a right to call on the Bond for the full amount of the Restoration Payment. However, no call was made. The Claimant was in breach from 29 September 2009. Before that date, the Bank approached the Council, with a (withheld) legal opinion, that cast doubt on the Council’s expectation from the arrangement. In the light of that doubt, the Council compromised the issues it had with the Bank, in an arrangement that involved the Bank paying the Council £1.9m and the release of the Bank from any further obligation to the Council under the Bond.

[28]The Claimant was not a party to the negotiations or settlement with the Bank. Indeed, it knew nothing about the settlement until 2011. The settlement was the subject of a confidentiality agreement; but, in about June 2011, when the Council was considering how the UWN works were going to be initially funded, it obtained a variation to the confidentiality agreement to enable the fact that the Council had received £1.9m to become public. At about the same time, the Bank also wished to make the payment public, so that it could seek to recover the sums paid out from the Claimant.

[29]As well as coming to a compromise with the Bank at the end of 2009, the Council, by now having serious doubts as to the Claimant’s willingness and ability to preserve the Listed Buildings, began to explore an alternative strategy for preserving the buildings. It used the PRT as an advisor; and a steering group, chaired by the PRT, was set up.

[30]A “Route Map” for this strategy was prepared by the PRT in 2010. That noted that the Claimant had failed to protect the Listed Buildings, and had failed to heed repeated warnings from the Council that continued failure would result in enforcement action. The settlement the Council had made with the Bank meant that it had “a significantly reduced sum of money with which to kick-start a repair and regeneration of the Site” (Route Map Executive Summary). In the event that the Claimant continued to fail to carry out necessary repairs and implement the scheme for the Site, then (the document said) “the Council needs either to do this itself or find someone else who can” (paragraph 4). It referred to measures available, including UWNs and a CPO. Given the complexity and size of the project, if the Claimant failed to perform, one identified “delivery option” was to form a single purpose development management company, which would procure and manage developers for each phase (paragraph 7(b)). In respect of funding, it was said that the initial safeguarding of the Site and “shell repair” could come from “the funding the Council holds” (i.e. the £1.9m), with funding for full repair coming from the developers selected and notably from enabling development (paragraph 14). The Claimant was not involved in any of these discussions and, in 2010-11, did not know that an alternative strategy to its 2006 scheme was being developed.

[31]No significant steps had been taken to maintain the Listed Buildings since 2006 (or indeed, as I understand it, since 1998). The buildings were in severe and increasing disrepair. Planning permission having lapsed, the Council repeatedly invited the Claimant to put forward realistic proposals for the repair of the buildings. None was forthcoming. In December 2010, the Council issued the Claimant with a final warning; and then, the warning not having been heeded, a draft UWN was sent to the Claimant on 26 January 2011, which set out the works required. That, too, met with no positive response; and so, on 6 June 2011, following a partial collapse of the buildings in the meantime, a formal UWN was served on the Claimant in similar form to the earlier draft. The notice set out the works considered urgently necessary for the preservation of the Listed Buildings, and gave notice that, on the expiration of fourteen days, the Council intended to carry out those works.

[32]The Claimant did not perform any of the works. It formally responded to the notice, objecting to the notices and asking for further information, on 20 June 2011, the same day as contractors for the Council began the works identified in the UWN. No formal challenge to the UWN was made. The works, it is said, “saved the building from outright collapse” (paragraph 23 of the Council’s Summary Grounds of Opposition in Claim No CO/4480/2105). They took a year to complete, at a cost of £940,000. Payment was initially made by the Council from the sum of £1.9m earlier paid to it by the Bank.

[33]Between August 2011 and April 2013, as provided for by section 55 of the 1990 Act, the Council served five notices for recovery of the sums spent. In accordance with section 55(4), the Claimant was entitled to make representations to the Minister in respect of these notices, within 28 days of service and on the statutory grounds. The Claimant made no representations in respect of one of the notices, and it lodged representations late in respect of another. Representations were lodged in time, and accepted by the Minister as valid, in respect of the other three. The value of the notices not subject to valid challenge was about £455,000. The value of the challenged notices was about £485,000. The statutory grounds relied upon by the Claimant were Ground (a) (some or all of the works were unnecessary for the preservation of the building), Ground (c) (the amount specified in the notice was unreasonable) and Ground (d) (the recovery of that amount would cause him hardship).

[34]The Minister appointed a planning inspector Robert Gardener BSc MRTPI (“the First Inspector”) to report; and he held an inquiry over nine days in the period April to July 2014, at which the Claimant was represented by Counsel (“the First Inquiry”). The First Inspector published his report on 30 December 2014 (“the First Inspector’s Report”). It recommended that, subject to minor adjustments reflecting works that fell outside the UWN, the notices be confirmed.

[35]At the First Inquiry, the Claimant made no allegation that the Council had acted fraudulently or otherwise unlawfully. However, at the pre-inquiry meeting, the Claimant said that the source of the funds and the payment of the £1.9m were fundamental to its case, particularly under Grounds (c) and (d) (see paragraph 15 of the First Inspector’s Report); and it asked the Inspector to examine the source of the funds used to pay for the works, and the circumstances in which the Council was paid the £1.9m by the Bank.

[36]There was a preliminary issue as to whether the Inspector should hear evidence on these issues. In a letter of 6 March 2014, he determined that such evidence was inadmissible. That ruling was not challenged, by way of judicial review or otherwise. The First Inspector referred to the Bond and the £1.9m again in his eventual report. He confirmed his earlier ruling that these matters were not relevant to any of the section 55(4) grounds identified; and that, consequently, evidence in respect of these issues would not be admissible at the inquiry (see paragraph 15 of his Report). He returned to the question of the £1.9m held by the Council at paragraphs 549 and following of his Report, setting out at paragraphs 556-557 his reasoning for finding that issues concerning that money were not for the inquiry to consider or determine. In short, he considered that the inquiry concerned whether the authority could recover from the Claimant as owner the costs which it has incurred, and not whether the authority might have had some other money with which to cover the expense.

[37]The Inspector identified the relevant issues in the inquiry, as follows (paragraphs 19-23 of his Report): i) In addition to section 55 Grounds (a), (c) and (d), in the First Inquiry, the Claimant questioned the validity of the section 54 UWN; and, as a result, the First Inspector identified as issues (see paragraph 22 of his Report): a) were the works adequately described in the UWN, and b) did the works carried out exceed those described in the UWN? ii) Ground (a): Were the works necessary for the preservation of the building? iii) Ground (c): Given the works that were necessary, was the sum sought in the notice to perform the works reasonable in amount? iv) Ground (d): Would ordering the owner to pay the sum cause him hardship?

[38]The First Inspector’s Report dealt with those issues as follows: i) The Inspector dealt with the adequacy of the UWN in paragraphs 153-167 of his Report. He properly referred to R v Secretary of State for the Environment ex parte Hampshire County Council

[1982] P&CR 343

(“Hampshire”) at pages 349-350, as requiring some detail of the contemplated works albeit tempered by the fact that section 54 is an emergency procedure. He concluded that, as to the works required, not only was the notice clear on its face (paragraph 157), but that “both the nature of the works and their scale should have been apparent to [the Claimant] and its advisers [including Mr Bhailok]”. Indeed, he said:

“The suggestion that the schedule of works attached to the notice, amply supported by drawings, could not be understood or appreciated is difficult to understand” (paragraph 156)”

The Inspector expressly found that Mr Bhailok (and, thus, the Claimant) did appreciate the scale of the works involved (paragraph 159). In addition, he found that it was – or should have been – apparent to the Claimant from the UWN and its accompanying documents that the Council had in mind “possibly ‘vastly expensive works’”; and, to be valid, the notice did not have to have an estimate of costs or any other documents available such as a schedule of works (paragraph 160). I pause there to note that, at paragraph 85 of his Report, the First Inspector referred to advice having been taken from a firm of architects engaged by the Council (Graham Frecknall Architecture & Design (“Graham Frecknall”)), which had been referred to the Council’s Cabinet meeting of 14 December 2010 when it authorised an exemption from the contract tendering rules for the section 55 works; but that advice was not available to the Inspector. Its absence from – and the Council’s failure to disclose it at – the First Inquiry founds one basis of challenge to the section 55 notices (see paragraphs 78-81 below). ii) The Inspector concluded that, with a minor exception (boarding up of windows and doors) which the Council accepted and gave credit for during the course of the inquiry, the works described in the UWN and carried out were necessary to ensure the preservation of the building (paragraphs 382-383). It had not been shown that any of those works was unnecessary for that purpose (paragraph 356). Those findings are not challenged in these claims, nor could they be. iii) The Inspector dealt with the costs of the works at paragraphs 465-493. He concluded that, the costs actually incurred were reasonable (paragraph 493). Neither is that finding challenged in these claims. iv) In respect of hardship, the Inspector proceeded on the basis that he should consider hardship to both the Claimant company and to Mr Patel as its sole shareholder (paragraph 559); and he appropriately referred to the consideration of “hardship” in this context by Donaldson LJ in Hampshire at page 351. Of course, the Claimant was in any event required to pay £455,000 under the section 55 notices that were not validly challenged (see paragraph 33 above) The Inspector concluded that the Claimant had failed to establish that, by confirming the other three payment notices, hardship would be caused to either the Claimant or Mr Patel.

[39]As I have indicated, at the inquiry, the Claimant alleged that the Council had maintained an uncooperative attitude towards it. To an extent, the First Inspector accepted that the Council had been uncooperative; for example, in relation to the UWN, although he considered that “Mr Bhailok’s obfuscation over his role in the matter no doubt added to the… Council’s reluctance and lack of confidence in [the Claimant], as did the view that, despite warnings, no tangible action had been taken to preserve the building”, he found that “the… Council’s apparent reluctance to keep [the Claimant] informed and its resistance to a meeting… was not helpful” (paragraph 164). However, at the First Inquiry, the Claimant did not make any allegations of fraud or unlawful conduct against the Council, as opposed to merely a lack of cooperation on its part. The inquiry closed with the publication of the First Inspector’s Report on 30 December 2014.

[40]The Claimant first made allegations of unlawful conduct on the part of the Council in representations sent by Mr Bhailok to the Welsh Government on 8 January and 14 April 2015, following disclosure of various documents by the Council, sent on 19 December 2014 and received by Mr Bhailok on 2 January 2015. That disclosure followed a request for information by the Claimant, then the subject of an outstanding appeal to the Information Commissioner.

[41]Whilst, the allegations made by the Claimant in respect of the Council’s conduct have become increasingly overt over time, these two letters in substance complain of fraud and deceit on the Council’s part. In particular, they raised the payment of the £1.9m by the Bank to the Council; and the course of conduct from 2009, involving the Council and the PRT, which had “engineered the route strategy to CPO the property in 2009”. That strategy had, it was claimed, included the UWN/section 55 procedure.

[42]In addition, in the CPO Inquiry (referred to below: see paragraph 48 and following), the Council’s witnesses were cross-examined on the architect’s advice referred to in paragraph 85 of the First Inspector’s Report (see paragraph 38(i) above). Several witnesses said that they had no recollection of it. However, towards the end of the Second Inquiry hearing, it came to light. In a supplementary statement prepared for that hearing, the Council’s Head of Planning & Public Protection (Graham Boase), who had been one of the witnesses who had said that he had not recalled it, caused a trawl of emails to be performed, and a report was found attached to an email, which appeared to be the “advice”. It was a Description of Works and Schedule of Work Items (Revision b) dated 16 September 2010, produced by Graham Frecknall (“the 2010 Schedule of Works”). It was marked “Confidential”. It set out details of the works that were considered to be required, and a cost estimate of about £800,000. Mr Boase and Mr Frecknall gave evidence to the Second Inquiry that they had each forgotten about this document, Mr Frecknall explaining that it was an informal report produced by an architect who no longer worked for the practice, on the basis of limited access because of the poor condition of the building.

[43]Once found, this document was disclosed in the CPO Inquiry, at a time after the First Inspector’s Report but before the Minister’s determination on the section 55 notices. In the 14 April 2015 letter from Mr Bhailok to the Minister, he referred to this report, complaining that it was directly relevant to the section 55 applications, and particularly to the issue of whether the UWN properly identified the magnitude of the works suggested. It was said that this report, indicating a cost of about £800,000, was available at the time the UWN was served and ought to have been disclosed then. The letter suggested that it had been suppressed. If the letter is considered ambiguous in that regard, before me, Mr Evans firmly and positively asserted that it was deliberately concealed by the Council.

[44]The Minister treated these letters (including the 2010 Schedule of Works) as if the First Inquiry had been subject to the Town and Country Planning (Inquiries Procedure) (Wales) Rules 2003, and the letters had been representations submitted after the close of the inquiry, i.e. the Minister reached a decision based upon the evidence submitted at the inquiry and then assessed how the post-inquiry representations affected that decision (see paragraphs 30 and following of the Minister’s decision letter dated 7 August 2015). There is, as I understand it, no criticism of that approach.

[45]The Minister dealt specifically with the post-inquiry material in paragraphs 30 and following in his decision letter. He concluded that(i) there was no reason why the decision process should be delayed by (e.g.) reconvening the inquiry, and

(ii) the new representations did not alter the conclusion the Minister had reached on the basis of the evidence at the inquiry (paragraphs 34 and 47). He considered that the new material was irrelevant to the issues which he had to determine under section 55 (see paragraphs 6, 25 and 44 of his decision letter dated 7 August 2015). In particular, he concluded that: i) The new representations did not alter his view as to the relevance of the £1.9m payment to the issues with which he had to deal under section 55 (paragraphs 36 and 37). ii) Even with benefit of the 2010 Schedule of Works (which, unlike the First Inspector, he had before him), the works were adequately described in the UWN; and, further, there was no obligation on the Council to obtain a more detailed schedule and costings, and its failure to disclose the schedule and costings that it had did not affect the validity of the UWN (paragraphs 11 and 38).

[46]In the event, the Minister accepted the First Inspector’s recommendation and, in his letter of 7 August 2015, confirmed the three section 55 notices requiring the Claimant to pay the costs of the works carried out by the Council under section 54 of the 1990 Act. It is, of course, that decision which the Claimant seeks to challenge in Claim No CO/4480/2105.

[47]In the meantime, the Claimant still showing no signs of taking any steps to preserve the Listed Buildings, on 14 May 2013, the Council served a section 48 Repairs Notice on the Claimant, setting out the works it considered were necessary for the preservation of the building; as a precursor to making a CPO under section 47 of the 1990 Act. The Order (the Denbighshire County Council (Denbigh Hospital) Compulsory Purchase Order 2014) was made by the Council on 25 June 2014.

[48]The Claimant lodged a statutory objection to the Order on 29 September 2014. It was the only objector. The Minister appointed a planning inspector Alwyn B Nixon BSc (Hons) MRTPI (“the Second Inspector”) to inquire and report. I shall refer to the CPO inquiry as “the Second Inquiry”.

[49]The Claimant issued two applications for judicial review in relation to the CPO procedure and inquiry.

[50]First, on 6 February 2015, the Claimant had sought to adjourn the inquiry; and brought proceedings to challenge the decision of a third inspector (A D Poulter) not to do so (Claim No CO/583/2015). The Claimant made a series of allegations, set out in paragraph 3 of its grounds, that the Council had acted improperly; but focused upon the allegation that:

“… [T]he Council had… adopted an active policy not to cooperate with the [Claimant] and to contrive a situation whereby it could proceed to acquire the property by compulsory purchase and pass the same to a new owner in which the Council itself had a proprietary or quasi-proprietary interest by improper and unlawful means…”

. The Council had (it was said) unlawfully and in secret obtained the £1.9m under the Bond, and used those funds to promote that policy and in an attempt to persuade the Bank to foreclose and repossess the Site; and it had set in motion the UWN procedure with the improper motive of promoting this scheme.

[51]Rose J refused an application for interim relief on the day of issue, on the basis that the matters raised would be “best investigated in the course of the inquiry that [the Claimant] seeks to postpone”. On 19 February 2015, at a hearing at which the Claimant was represented by Counsel, Wyn Williams J refused an application to adjourn, refused interim relief and refused permission to proceed.

[52]The second judicial review application (Claim No CO/649/2015) was issued against the Council on 11 February 2015. In it, the Claimant sought to challenge various aspects of the compulsory purchase procedure, including the order itself. The claim was, again, based upon the same allegedly improper and deceitful conduct of the Council; and it sought, amongst many other things, a declaration that the £1.9m received by the Council from the Bank was held on trust for the Claimant. On 23 February 2015, Singh J refused permission to proceed and declared the application to be totally without merit, observing that the £1.9m had not been obtained from the Bond and, even if it had been, there was no arguable legal basis for saying that those funds were held on trust for the Claimant. Singh J ordered the Claimant to pay the Council’s costs of the claim, which he summarily assessed in the sum of £3,750. Those costs have never been paid. The Council initially sought a stay of Claim No CO/4480/2015, on the basis that the Claimant should not be allowed to proceed with a claim based upon the same facts and matters as Claim No CO/649/2015 unless and until the Claimant had paid the Council’s costs of that claim. However, given the serious allegations made in the claims before me, Mrs Townsend realistically did not pursue that application, although she reserved the right to rely upon that failure in respect of matters consequential upon these two claims, such as costs.

[53]Consequently, the Second Inquiry proceeded. It ran for twelve days in March 2015. The Second Inspector reported on 2 July 2015 (“the Second Inspector’s Report”).

[54]The Inspector identified the two principal issues with which he had to deal, as follows (paragraph 269 of his Report):

“1. Are reasonable steps being taken for properly preserving the listed building (the Grade II* listed primary hospital range)? 2. If not, is there a compelling case in the public interest for the CPO?”

Question 2, of course, reflects paragraph 14 of the 2004 Circular (see paragraph 13 above).

[55]Those were the determinative issues for the inquiry as identified by the Second Inspector. However, the issues said to be at the heart of the claims now before me were certainly at the forefront of the submissions made on behalf of the Claimant before the Second Inspector, who summarised them, in paragraph 8 of his Report, as follows:

“A feature of the inquiry process has been the repeated assertions on behalf of [the Claimant] that [the Council] has withheld information from it that [the Claimant] considers important to its case, and that full disclosure of all of this information is a necessary pre-requisite to consideration of whether the Order should be confirmed. The information sought spans a period of many years, but in essence concerns two principal and related allegations. First, that [the Council] has effectively pursued a secret agenda to sabotage and frustrate [the Claimant]’s genuine endeavours to develop the land and through this deliver the restoration and beneficial use of the grade II* listed building, and has attempted to deliberately engineer a case for compulsory acquisition. Second, that [the Council], principally through its actions concerning the £1.9m paid to it by [the Bank] in connection with the Bond entered into by [the Claimant] concerning the £4.8m restoration fund, has sought to appropriate and itself utilise money which should have been available to [the Claimant] to spend on the listed building. The full circumstances surrounding the £1.9m payment to [the Council] have not been disclosed, since the matter is subject to a confidentiality agreement between [the Council] and [the Bank].”

As will be seen in due course (paragraphs 61-63 below), these are the main elements of the Council’s allegedly improper conduct upon which the two challenges before me are based.

[56]The Claimant made several applications to the Second Inspector for the adjournment of the inquiry, to enable further disclosure to be made of the arrangement between the Council and the Bank which resulted in the £1.9m payment. Having noted that the Information Commissioner had determined that the Council did not hold any additional information other than that which it has disclosed – a determination which, I understand, is currently the subject of appeal to the First-tier Tribunal – and that he considered the remaining information properly withheld, the Second Inspector dealt with the adjournment question as follows (paragraph 18 of his Report):

“[The Claimant] seeks an adjournment coupled with an order for [the Council] to disclose further information. This would serve no proper purpose. There is no reasonable basis for an order of disclosure. There is no evidence that [the Council] has done other than exercise its statutory powers in accordance with its view of the public interest. If it has done otherwise, it is not explained how [the Claimant] is prevented from exposing this on the information it has. Equally, there is no basis for any claim by [the Claimant] to the sum of £1.9m paid by Lloyds Bank in settlement of the dispute over the Bank’s liability under the bond. Of that, some £950,000 was used by the Council to carry out the urgent works necessary to preserve the buildings in 2011. The decision of Singh J against [the Claimant] on 23 February 2015 makes clear that there is no arguable basis for [the Claimant’s] claim that it has any entitlement to the £1.9m paid to [the Council]. Moreover, since the funds have been used to preserve [the Claimant’s] only asset from collapse, [the Council] has in fact conferred a collateral benefit on [the Claimant] by its actions. [The Council]’s witnesses have explained the position in their evidence, so far as they are able under the confidentiality restrictions which bind it.”

[57]With regard to both the issue of disclosure and the general substantive allegation that the Council had acted improperly in the way it had dealt with the Bank, the Second Inspector said (paragraphs 27-30 of his Report):

“27. [I]t was not the remit of this CPO inquiry to investigate or determine the propriety or lawfulness of [the Council’s] conduct in this matter. The primary questions are whether reasonable steps are being taken for the proper preservation of the listed building and whether it is expedient to confirm the Order, bearing in mind that it is the Welsh Ministers’ policy only to do so where there is a compelling case in the public interest for its acquisition. Detailed evidence was before the inquiry concerning the history of the 2006 planning permission and the terms of the associated section 106 agreement and bond. Whilst the intention of the bond was plainly to ensure funding of the restoration of the building even if the restoration fund mechanisms did not produce the desired result and the planning permission were to lapse, [the Council’s] concern that the bond could not be enforced once the planning permission had lapsed is understandable. The submissions on behalf of [the Council] illustrate why this may well have been the case. 28. … 29. That [the Council] obtained £1.9m from the Bank as a result of discussions about [the Council]’s ability to call on the Bond and the status of the section 106 obligations which the Bond backed, and that it did not disclose this to [the Claimant] at the time, clearly are matters which aggrieve [the Claimant]. However, these are matters which, if [the Claimant] wishes to pursue, it should pursue elsewhere. I do not consider that further disclosure of information concerning [the Council] or [the Claimant]’s dealings with the Bank on this matter was necessary in order for the inquiry to properly consider the question of whether the CPO should be confirmed. 30. I do not consider that the non-disclosure of this information has denied [the Claimant] proper opportunity to make its case concerning the CPO. Although [the Claimant’s] stance is that the £1.9m paid to [the Council] by the bank is money to which [the Claimant] is rightfully entitled, and that this issue therefore goes to [the Claimant’s] and [the Council’s] respective abilities to fund the restoration of the listed building, I find the counter-submissions for [the Council] on this cogent and convincing. No legally coherent way of finding [the Claimant] entitled to the £1.9m appears to have been demonstrated; the findings of Singh J dated 23 February 2015 in relation to [the Claimant’s] judicial review application unequivocally accept [the Council’s] Grounds of Defence against that application and conclude that ‘The fact is that the funds from [the Bank] were not obtained under the Bond, even if they might have been. But, even if they had been, there is no arguable basis in law for saying that they would have been held on trust for the Claimant’. 31. Having regard to the peripheral nature and limited relevance to the main issues for this CPO inquiry of the matters on which further disclosure was sought, and taking into account also the statutory purpose of an order for disclosure and additionally that such an order would require disclosure against the will of another party (the Bank) without having heard their reasons for resisting, I determined that an order for disclosure of further information was not necessary. I therefore declined to order disclosure.”

[58]He returned to these issues at paragraph 311-312 of his Report, where he specifically dealt with the second element of the alleged impropriety by the Council, namely that it had taken steps to frustrate the 2006 development scheme:

“311. A thread running through much of [the Claimant’s] objection is that from around 2009 [the Council] pursued an ongoing conspiracy (acting in concert with others such as the PRT) to frustrate the implementation of the planning permission and thereafter dispossess [the Claimant] of the site. It is not for this CPO report to investigate and determine whether the Council’s various actions, either in this regard or in relation to the various other complaints and allegations made on behalf of [the Claimant] during the course of the inquiry, were improper (and I make no attempt to do so). It is clear that the working relationship between [the Council] and Ayub Bhailok as [the Claimant]’s representative has not been an easy one. 312. However, I am unconvinced by [the Claimant’s] allegations that [the Council], or its officers, actively sought to prevent [the Claimant] from successfully implementing the 2006 planning permission. Put simply, I find nothing in the evidence that indicates that [the Council] did not wish the 2006 planning permission to succeed as a means of securing the proper preservation of the listed building. The progressively deteriorating condition of the building clearly was a constant source of concern to [the Council]. Having recognised throughout that the best way of securing the building’s long-term future was through restoration to beneficial use, and worked hard with [the Claimant] to produce a scheme designed to bring this about, it is extremely unlikely that [the Council] would then seek deliberately to undermine what at that time represented the best outcome for the building’s future. It is clear that the relationship between [the Council] and Ayub Bhailok deteriorated with the failure to find agreement on the amount and disposition of residential new-build development considered acceptable for the site and the lack of action in the meantime to halt the listed building’s worsening condition. However, the Council’s actions at that time strike me as those of a local planning authority, realising that its efforts to progress an acceptable development scheme that would secure the restoration of the listed building were running into the sand, therefore turning to other powers and actions to secure the proper preservation of the listed building, pursuant to its responsibilities in this regard.”

[59]In respect of the two principal issues with which he considered he had to deal, he concluded that reasonable steps were not being taken for properly preserving the Listed Buildings; and there was a compelling case in the public interest for a CPO, which he recommended should be confirmed (paragraph 322 of his Report). The Minister duly followed that recommendation, and confirmed the Order on 29 September 2015.

[60]It is, of course, the CPO made by the Council on 25 June 2014, and confirmed by the Minister, that the Claimant seeks to quash in Claim No CO/6000/2105.

The Grounds of Challenge : Introduction

[61]In his oral submissions, Mr Evans focused on what he described as a course of conduct by the Council – which, he said, “unequivocally” amounted to fraud. He urged me to look at the matter as a whole. He submitted that it was the Claimant’s underlying case that, in 2009, the Council determined upon a course, designed to result in obtaining the Site back from the Claimant at a very low price (by way of a CPO) and selling the land to another developer. That course was not in pursuit of the Council’s proper statutory purposes and functions, and was singularly designed to benefit the Council and its pocket. It involved deliberately manipulating the Claimant into a position in which it could not properly defend itself, or ultimately oppose a CPO.

[62]He submitted that this course of conduct had the following main strands: i) The dealings with the Bank in 2009, which led to the payment of £1.9m by the Bank to the Council. This was the start of it all. Those dealings were secret; and, by entering (or purporting to enter) into a deal outside the Section 106 Agreement, it prejudiced the position of the Claimant. The Council was aware that the Bank would be able to seek reimbursement from the Claimant for any payment made by the Bank as part of the settlement arrangement. The Council, without any reference to the Claimant and without the Claimant knowing about its new liability, in effect made a unilateral call on the Claimant’s bank account. The Council could – and, Mr Evans submitted, should – simply have made a call on the Bond. He accepted, with alacrity, that the Claimant was in breach of the Section 106 Agreement obligation to pay the £4.8m after 29 September 2009. He was contemptuous of any argument that the full amount was not due from the Claimant, and consequently from the Bank under the guaranteeing Bond. The £4.8m so obtained from the Bank would have been put into the Restoration Fund, and used for restoration purposes. The Claimant would, he suggested, then have been in a position to raise capital, presumably on the basis of a charge over the Site. In any event, he asserted that the Council entered into the secret deal with the Bank to undermine the Claimant’s commercial position, and as the first step of a deliberate, designed and improper plan to take the Site from the Claimant cheaply. ii) This was done at the same time as engaging with the PRT, with a view to setting up a development company through which it could develop the Site, once it had obtained it by way of a CPO. Again, that engagement was done secretly, and done as another step towards its ultimate goal of depriving the Claimant of the commercial benefit of the Site without giving full value. iii) The UWN procedure was another step in this course of conduct. Mr Evans asserted that the section 55 notices were based upon a UWN that was obtained as a result of deceit. The Council actively and positively suppressed the 2010 Schedule of Works, to the detriment of the Claimant (which, as a result of the suppression, was unaware of the scope and potential cost of the contemplated works) and of the Inspector who was deliberately misled as to those matters. iv) Furthermore, again in pursuit of its ultimate goal and linked to (ii) above, the Council interfered with the Claimant’s dealings with developers, who were potential purchasers of the Site (or, at least, the development land). Indeed, the Council went so far as to direct such potential purchasers to withdraw offers made for the land, at a stage when a sale was not only a possibility but close. Mr Evans particularly referred to, and relied upon, the minutes of the Steering Group Meetings chaired by the PRT, which indicate that offers for the Site were received from a company called Bespoke, first in the sum of £460,000 and then £1.9m. It was expected that the sale would be completed on 10 February 2012, but Mr Bhailok suddenly asked for more money, and it fell through (paragraph 4 of the minutes of the 10 February 2012 meeting). That offer however appears to have been repeated, because there is reference to a completion date “in 4-5 weeks” in paragraph 4 of the minutes of 29 March 2012. On 13 June 2012, there is a minute (paragraph 2):

“KM [Kit Martin of the PRT] recommended Bespoke should formally withdraw their offer to Bhailok and to specifically say that repair costs are very high. PE [Phil Ebbrell of the Council] agreed to suggest this to Bespoke.”

That was done, and the request for the offer to be withdrawn renewed (paragraph 2 of the minutes of the 6 July 2012 meeting). The offer is recorded as having been withdrawn at the 15 August 2012 meeting (see paragraph 2 of those minutes). Any sale would, of course, have destroyed the possibility of the Council being able to acquire the Site by way of a CPO. Mr Evans submitted that this was evidence of the Council deliberately interfering with the proper commercial negotiations between the Claimant and potential buyer, to further its own (unlawful) ends. Element (iii) was a new focus of the Claimant’s allegations; but these assertions directly reflect the Claimant’s case before the Second Inspector, as referred to above (paragraph 55 and following). It is clear from the passages I have quoted from the Second Inspector’s Report that he identified the two main grievances the Claimant had laid at the door of the Council which are still the focus of Mr Evans’ submissions with regard to fraud, namely its dealings with the Bank concerning the Bond (including the £1.9m covert, or at least confidential, settlement) and the allegation that, with others including the PRT, the Claimant had sabotaged the Claimant’s efforts to develop and/or sell the site in favour of engineering a situation whereby it could purchase the site itself by way of a CPO.

[63]Mr Evans did not mince his words: he made it unequivocally clear that it was the Claimant’s case that the Council had engaged upon a course of conduct that was not only unlawful, but fraudulent, deceitful and for improper purposes. That course of conduct, he submitted, rendered unlawful both the section 55 notices and the CPO.

[64]I should make clear that Mr Jones and Mrs Townsend did not flinch from responding to each of those four elements of asserted fraudulent conduct. They submitted that there is no evidential basis for any of them. However, as they properly emphasised, this is not a public inquiry into the Council’s conduct: I have before me, and must deal with, two specific public law challenges to the three section 55 notices and the CPO respectively. Although I appreciate that this asserted course of conduct by the Council underlies each of the grounds relied upon, I therefore propose to deal with Mr Evans’ submissions in the context of those challenges.

Grounds of Challenge: The Section 55 Payment Notices

[65]The Claimant seeks to challenge the decision of the Minister dated 7 August 2015 to confirm the three section 55 payment notices on four grounds. Grounds 1 and 2: Failure to take into account (and, in the case of the Welsh Ministers, condoning) fraud

[66]These two grounds can conveniently be dealt with together.

[67]Mr Evans submitted that the First Inspector (and, in his turn, the Minister: see paragraph 25 of his decision letter dated 7 August 2015) erred in ruling as irrelevant and inadmissible “incontrovertible evidence of fraud, unlawful conduct, deceit and deception by [the Council] in carrying out their statutory duties which permeate every aspect of the matters under consideration and vitiate the lawfulness of decisions and actions in doing so” (Ground 1). The Minister erred in thus condoning, and being complicit in, the unlawful activities of the Council (Ground 2).

[68]In my judgment, these grounds have no arguable force, for the following reasons.

[69]The First Inspector did not exclude the evidence now sought to be relied upon. That evidence was not before him; indeed, in the First Inquiry, there was no allegation by the Claimant of fraud, deceit or unlawfulness on the part of the Council, and so the evidence would not have been material to any issue before the Inspector.

[70]That evidence was before the Minister – as I have described, it was made available to the Minister by the Claimant between the close of the inquiry (i.e. the First Inspector’s Report) and the Minister’s decision upon it – and the Claimant made representations upon it to the Minister in Mr Bhailok’s letters of 8 January and 14 April 2015 (see paragraph 40 above). However, it is clear from the Minister’s decision letter that he did take the new material into account in the manner I have described, deciding that it did not change his view that these issues were irrelevant to the issues that he had to determine under section 55 (see paragraph 45 above).

[71]In the First Inquiry, without alleging fraud, deceit or any other form of unlawfulness on the part of the Council, the Claimant did raise the issue of the source of the funding for the works performed by the Council and the circumstances in which the £1.9m was paid. The First Inspector held that evidence as to these matters was not relevant, and was inadmissible, for the purposes of the inquiry. As I have already indicated, the Minister agreed with that view, even having taken into account the new evidence which the Claimant had provided which (it said) evidenced deceit by the Council.

[72]In my view, the Inspector and the Minister were unarguably right to consider these issues irrelevant, and thus evidence that went to them immaterial and inadmissible. Under section 55, representations can be made to the Minister objecting to a payment notice, but only on the basis of the four matters specified in section 55(4), which I have already described. They are the matters, and the only matters, which the Minister is able to take into account in considering the representations. If the Council had been deceitful in respect of other matters, the Welsh Ministers have other powers to make an investigation and take steps against the authority; but the role of the Minister under the section 55 procedure is limited. In particular, the general question of the validity of UWNs or section 55 notices is not a matter for the Minister (and, thus, not a matter for any appointed inspector) under the section 55 procedure; nor does the Minister have a general discretion as to whether payment notices should be confirmed. He is able and required merely to consider representations on the four specified matters and, having done so, to decide whether to confirm the notices. If the Claimant had wished to challenge the validity of the UWN or section 55 notices on the basis that some overarching fraud had made it inequitable for the Council to rely upon them or enforce them, then that was not a matter for Inspector or the Minister under the section 55 procedure.

[73]In any event, the assertions of impropriety by the Council now relied upon by the Claimant were considered by the Second Inspector in relation to the Second Inquiry. Whilst, of course, this was a separate inquiry, heard months after the First Inquiry, the Second Inspector’s consideration of these matters cannot be ignored, particularly as: i) it is the Claimant’s case that the same course of conduct by the Council underlies the alleged unlawfulness of both the payment notices and the CPO (see paragraph 61 above); ii) the Second Inspector had before him all of the material now relied upon by the Claimant in its assertion of fraud against the Council; and iii) the Second Inspector’s Report was published before the Minister made a determination on the section 55 payment notices.

[74]At the Second Inquiry hearing, the Claimant’s witnesses were cross-examined on these matters – “vigorously”, I am told and believe. The Second Inspector, like the First, found that the general conduct of the Council was beyond the remit of his inquiry; but he nevertheless proceeded to consider the assertions of impropriety which had been made before him and, at paragraphs 308 and 311-317 of his Report, he commented upon those assertions and evidence which had been adduced in support of them. i) In relation to the Bond, the Claimant asserted before the Second Inspector that it was entitled to the £1.9m paid over to the Council. Like Singh J before him, the Inspector considered there was no tenable argument that it was entitled to that money (at paragraph 30 of his Report, quoted at paragraph 57 above). ii) In relation to the alleged conspiracy to defeat the Claimant’s 2006 development scheme in favour of a CPO, the Inspector firmly rejected the Claimant’s case that the Council had improperly and unlawfully pursued the CPO. In addition to paragraphs 311 and 312 which I have already quoted (at paragraph 58 above), he concluded, at paragraph 317:

“The Route Map and the process followed by [the Council] and the PRT Steering Group is clearly and demonstrably focused on securing the proper preservation of the Listed Building in the public interest…. The decision to make the CPO in September 2013 was plainly made in order to achieve this objective, in line with the lawful purpose of the enabling power conferred by section 47 of the Act, under which the Order was made…”

. In short, he rejected the Claimant’s case that, in pursuing the CPO, the Council had acted improperly, let alone fraudulently or deceitfully. He expressly found that the Council had made the relevant decisions, including the decision to make a CPO, for lawful purposes – indeed, he considered this to be “plainly” so. He indicated that he could find no evidence of any impropriety on the Council’s part. Those findings are reflected, to an extent, in the robust remarks of Singh J when refusing permission to proceed in the judicial review claim brought last year. They are findings to which the Second Inspector was clearly entitled to come, and a challenge to them on rationality grounds would be clearly unarguable. Mr Evans suggested that, as the Second Inspector had concluded that these matters were not relevant to his inquiry, these findings should in some way be discounted, but (a) the Claimant was forceful in making these allegations before the Second Inspector, and they appear to have been fully made and argued; (b) the Inspector had all of the documentary evidence before him that this court now has; (c) the Inspector had the benefit of hearing all relevant witnesses; and (d) he was encouraged by the Claimant to make findings on these issues, and, to the extent I have indicated, he clearly made firm findings. iii) For the sake of completeness, I should say that the Second Inspector also dealt with the allegation that the Council had interfered with the negotiations between the Claimant and Bespoke for the sale of the Site (see paragraph 62(iv) above), upon which he also heard evidence. At paragraph 308 of his Report, he said:

“As regards alleged interference by [the Council] with Bespoke’s commercial interest in acquiring the site, the evidence concerning this indicates that Bespoke’s interest in the site was moribund, owing to Ayub Bhailok’s inconsistent approach to negotiation. [The Council’s] concern that a rejected offer should not be left lying on the table, thereby creating an opportunity for use in a false bidding war, is understandable.”

Thus, the Second Inspector found that there was no force in the Claimant’s allegations in this regard either.

[75]I emphasise that the evidence upon which the Second Inspector made these findings was the evidence now before this court. Had the evidence been available to the First Inspector, there is no reason to suppose that he would not have made the same findings. Indeed, on the evidence, it would have been at least surprising if he had not (see paragraphs 96-108 below).

[76]For those reasons, the Minister did not arguably err in law in agreeing with the First Inspector that the Claimant’s representations and objection under section 55(4) were not justified, and in accepting the Inspector’s recommendation that the section 55 notices be confirmed subject to the minor amendments to which the Inspector referred.

[77]That is sufficient to determine the public law issues before me in respect of Grounds 1 and 2. Neither is even arguably made good.

Ground 3: Adequacy of the UWN

[78]It is submitted that the UWN could not be understood by the Claimant and was legally inadequate, and the Minister’s conclusion to the contrary was wrong in law.

[79]The ground was clarified, or refocused, at the hearing before me. Mr Evans submitted that the Claimant and the First Inspector had been positively and deliberately misled as to the magnitude of the works contemplated by the UWN by the Council’s failure to disclose the 2010 Schedule of Works; and the Minister, having been sent that document and the Claimant’s representations upon it in the meantime, erred in concluding that the UWN was adequate.

[80]However, I do not consider that this submission has any force. In substance, this issue was dealt with by the First Inspector who, whilst not having the 2010 Schedule of Works, did have(i) the UWN,

(ii) the actual costs of the works performed by the Council and

(iii) evidence (including oral evidence) from various witnesses, including Mr Bhailok. The Inspector considered that the Council had been less than helpful in informing the Claimant. Nevertheless, he found the submission that the UWN was inadequate – in the sense that the contemplated works could not be understood or appreciated – “difficult to understand” (paragraph 156). He found that the UWN was clear on its face as to the works that were required, and costings were not required to make the UWN adequate; and, importantly, he expressly found that Mr Bhailok (and, thus, the Claimant) did in fact appreciate the scale of the works involved from the documents that he had (see paragraph 38(i) above). In the circumstances, the Minister was clearly entitled to take the view that the 2010 Schedule of Works (and, thus, any failure to disclose it) was not material to the issue. Indeed, given the First Inspector’s findings, the Minister was not only entitled to take that view, it was logically inevitable.

[81]This ground too is unarguable.

Ground 4: Hardship

[82]Finally, it is contended that, in considering the criterion in section 55(d), the First Inspector’s conclusion – that recovery of the amounts sought in the notices would not cause the Claimant hardship – was wrong in law.

[83]The Inspector appropriately referred to the consideration of “hardship” in this context by Donaldson LJ in Hampshire at page 351. What amounts to hardship is a question of fact, although of course a question of fact which has to be approached on a correct legal basis.

[84]The First Inspector considered, in some detail (in paragraphs 497-532 of his Report), the submissions made on behalf of the Claimant, including the steps the Claimant said it had taken to preserve the building. Having considered the Council’s case, he proceeded to analyse the issue in terms of the financial consequences of payment on the Claimant (and its sole shareholder, Mr Patel), any disparity between the expense incurred and benefit achieved and, finally, whether hardship would be caused in this case. He concluded (at paragraph 582) that it would not.

[85]The only evidence in support of this ground of challenge is that the First Inspector failed to take into account the fraud and deceit which had been perpetrated by the Council on the Claimant. However, as I have already described, the Inspector made findings of fact adverse to the Claimant in that regard; they cannot be impugned; he adopted the correct legal approach to the issue of hardship; and, indeed, dealt with the issue at length and with considerable care. It is not arguable that his conclusion was wrong in law.

Conclusion

[86]For those reasons, I do not consider any of the grounds to be arguable, and I refuse this application for permission to proceed with judicial review of the Minister’s decision to confirm the three section 55 notices. The CPO: Grounds of Challenge Introduction

The CPO: Grounds of Challenge

[87]In the case summary provided by Mr Evans in support of the application to quash the CPO, he states that the matters in dispute are essentially the same as those I have already dealt with above in the context of the challenge to the payment notices. Indeed, in paragraph 1 of his skeleton argument for this hearing, he submits that “the material issues are largely identical”. He submits that, for the same reasons that the section 55 notices are invalid, the CPO is also invalid.

[88]For the same reasons I have given in relation to the section 55 notices, however, they are in my view equally unarguable. I have already considered how the Second Inspector dealt with the relevant issues in his Report (see paragraph 73-74 above). Put shortly, he had before him the evidence of fraud and deceit which the Claimant now relies upon, such as it is. The Inspector did not consider that evidence relevant to the issues before him. I agree. However, as I have described, he made clear that he was singularly unimpressed by the assertions and evidence of unlawfulness by the Council. Far from being the “incontrovertible evidence of fraud, unlawful conduct, deceit and deception by [the Council]”, as asserted in paragraph 1 of the Claimant’s Case Summary, he found that the Claimant had no sensible claim to the £1.9m in the hands of the Council, and he did not see any evidence of the alleged wrongdoing by the Council, either in respect of the Bond and that payment or the Council’s approach to the CPO including it dealings with other potential purchasers of the Site. Those were clearly conclusions to which he was entitled to come. Indeed, although a matter for him, on the evidence they were entirely unsurprising (see paragraphs 96-108 below).

[89]Each of the grounds relied upon in this application are heavily based upon an allegation that the Council acted unlawfully in that way, which I have already found has no proper foundation. However, I will deal briefly with the four grounds of challenge in turn.

Ground 1: Failure to direct further disclosure and/or adjourn

[90]It is said that the Inspector and the Minister wrongly proceeded without making a disclosure order in respect of the settlement between the Council and the Bank, and proceeding with the inquiry in the absence of such further disclosure.

[91]However, this ground too has no force. Whether in the light of the limited scope of the inquiry, further disclosure was necessary was a case management matter for the Inspector. His report – notably at paragraph 18, quoted at paragraph 56 above – makes clear that he considered the issue at length and with care, dealing with all arguments raised as to why the Claimant’s applications to adjourn and for further disclosure were rejected. In the light of the fact that the Claimant was unable to articulate any coherent case as to why it was the beneficial owner of the £1.9m, any further disclosure on that matter could not possibly have been relevant to the issues which the Inspector had to determine. It is noteworthy that the Claimant has still been unable to articulate such a case and, despite knowing of the settlement between the Council and Bank since 2011, it has not sought to bring any private law proceedings for the return or recovery of that sum.

[92]The Inspector was, at the very least, entitled to conclude, as he did, that he could deal with those issues properly and justly without any further disclosure and without any adjournment.

Ground 2: Failure to take into account fraud

[93]Mr Evans submits that the Minister acted unlawfully in regarding as irrelevant “incontrovertible evidence of the Council’s fraud”. However, for the reasons I have already given: i) The Second Inspector, and in his turn the Minister, properly regarded the matters raised by the Claimant as bearing on the issues with which they had to deal. ii) The Second Inspector dealt with the allegations of fraud etc, and came to unimpeachable conclusions in respect of them, finding none of the allegations made out on the evidence.

Grounds 3 and 4: Unlawful conclusion to uphold the CPO, and condoning fraud

[94]As his third and fourth grounds, Mr Evans submits that, as a result of the errors within Grounds 1 and 2, the Inspector’s conclusions cannot stand and the Minister cannot support those conclusions because, by doing so, he would be condoning or he would be complicit in the Council’s unlawful actions. Those are both parasitic grounds, which inevitably fall with Grounds 1 and 2.

Conclusion

[95]This is an application which, of course, does not require permission to proceed. However, for the reasons I have given, this claim too is unarguable; and I dismiss it.

Postscript

[96]Although that is sufficient to determine the claims before me – by dismissing both – Mr Jones and (particularly) Mrs Townsend submitted that, not only are the claims unarguable, but the documents relied upon by the Claimant do not in fact evidence the sort of fraud and deceit asserted, which underlies each ground of challenge. They pointed to the Second Inspector’s Report, in which he firmly concluded that the Council had not acted with any improper motive, or deceitfully, or otherwise unlawfully in compromising with the Bank on terms that it received £1.9m outside a call on the Bond, and in the course of conduct it pursued that ended in the CPO. He found no evidence to support any asserted impropriety. That was not only a conclusion to which he was entitled to arrive, they submitted; it was the only conclusion to which he could have come.

[97]There is considerable force in these submissions.

[98]With regard to the compromise between the Council and the Bank, I have set out above the Council’s explanation (paragraph 26). Mr Evans submitted that the Council’s explanation for how the £1.9m came into its possession could not be taken at face value. Full disclosure has not been given by the Council, even now. Furthermore, on 28 July 2011, the Bank wrote to the Claimant indicating that it would not unilaterally release its charge over the Site and claiming the £1.9m plus costs and expenses from the Claimant under “lay off letters” dated 3 July 2007. In that letter, the Bank said that:

“[I]n late 2009, [the Council] demanded payment under the two Bonds entered into by the Bank in support of the Section 106 Agreement…. In consequence of [the Claimant’s failure either to develop the land or to sell it, as was envisaged by the Section 106 Agreement, [the Council wanted to recover from the Bank under the Bonds the £5.1m owed under the Section 106 Agreement as at 26 September 2009. After protracted negotiations and the incurring of significant legal fees… settlement was reached pursuant to which the Bank paid [the Council] £1.9m. In consequence, the Bank became entitled to payment of that sum and of associated legal costs by [the Claimant], pursuant to various agreements with [the Claimant] (including, without limitation, the Lay Off Letters)…”

. Mr Evans submitted that, in respect of whether a call was made on the Bond, that is directly contrary to what the Council say.

[99]I have not seen the lay off letters, and do not know of the arrangements between the Claimant and the Bank – neither, apparently, does the Council – although, as a commercial matter, it would be surprising if the Bank did not have an indemnity or some other comfort in respect of liabilities it incurred as a result of its arrangements with the Claimant, a British Virgin Islands company. It seems that the Bank was in fact entitled (or considered that it was entitled) to an indemnity from the Claimant for monies paid out by it under the arrangements generally, and not just under the Bond. The important point made by the letter of 28 July 2011 was that the Bank had paid out recoverable monies, not that they had paid them out as a result of a call on the Bond. In all of the circumstances, I do not consider that there is any reason to doubt that no call was made on the Bond; and the £1.9m was paid by the Bank to the Council outside the Bond, but as part of wider arrangements which included the release of the Bank from any liability under the Bond.

[100]That is consistent with the letter which Miss Kennedy sent to Mr Bhailok on 30 October 2009, in which, for the purposes of the relationship between the Council and the Claimant, she adopted the stance taken by the Bank in respect of its liability under the Bond, i.e. that the lapse of the planning permission brought to an end any liability on the part of the Claimant to pay the Restoration Payment under the Section 106 Agreement. She said:

“… Following our meeting the terms of the s106 Agreement have been reviewed in the light of the fact that the outline planning permission of 29 September 2006 has now lapsed and is incapable of lawful implementation. The Second Schedule of the Agreement imposes an obligation (at paragraph 4 thereof) upon the Owner [i.e. the Claimant] to have paid the Restoration Payment prior to the commencement of development. There has been no commencement. The works of demolition have not implemented the consent. “Demolition” of a Listed Building (which includes curtilage structures) is excluded from the statutory definition of “demolition development” found in section 55 of the Town & Country Planning Act 1990. A further obligation requires (at paragraph 5) the Restoration Payment to be paid upon completion of the first sale or disposal to a third party. There has been no sale or disposal. Paragraph 6 operates to place a 3-year backstop of the site upon payment in the event of sales, partial or otherwise. Accordingly therefore, [the Claimant] has no liability to pay the balance of the Restoration Fund as there is no breach of its obligation to make payments under the Second Schedule. I am sure that this will come as a great relief. There is therefore, absolutely no reason to make an approach to the Bank, jointly or otherwise. I would however, remind you of the content of my letter dated 15 July 2009 in which I drew your attention to the continuing serious deterioration of the listed building on the site. Your Client Company, as Owner, has a duty of ensuring that the historic building is kept in good repair.”

[101]In a further letter of 7 December 2009, she confirmed that the Claimant had no liability to pay the balance of the Restoration Fund “and by implication there was no need to call upon the Bank”; and, on 7 January 2010, she confirmed to the Claimant that “the Council has released the Bank from its Bond as it was fully entitled to do without your consent”. The Council has never taken any steps to enforce the Claimant’s obligation to pay the Restoration Payment, or indeed suggested to the Claimant that it has any such continuing obligation.

[102]Mr Evans submitted that there was no conceivable argument that, after 29 September 2009, the Claimant was other than liable to pay the £4.8m under the Section 106 Agreement, and the compromise figure of £1.9m purportedly paid outside the Bond was incapable of sensible explanation, if the Council had been acting properly. However, before the Second Inspector, it was the Council’s case that it had been persuaded that enforceability was at least arguable. Mrs Townsend set out (in paragraphs 23-24 of her written submissions of 20 March 2015) several bases upon which it might be found that the obligation would have been unenforceable. The Second Inspector accepted that the Council was, genuinely and with some justification, concerned about the enforceability of the Section 106 Agreement in this regard (see paragraph 27 of his Report, quoted at paragraph 57 above). Without commenting on the strengths of those arguments, I do not accept that the Council did not have a rational and commercial basis for compromising the Bank’s liability under the Bond by the payment of £1.9m in return for a waiver of any rights the Council might have had under the Bond.

[103]In respect of the £1.9m, Mr Evans also complains that it has not been reserved for the costs of preserving and restoring the Listed Buildings, but has simply gone into the Council’s general funds. I accept that the status of the money in the hands of the Council may be different from the Restoration Fund, that Fund remaining the property of the Claimant, albeit held by the Council as fundholder for the specific purpose of restoring the Listed Buildings. However, in response to a direct question from the Claimant’s solicitors, on 20 November 2012, the Council confirmed that:

“[T]he Council has been given the money to use as it sees fit towards preserving the property [i.e. the listed Building] and no other property within the Council’s portfolio.”

There is no evidence to suggest that that is not the case. The Council has in practice drawn on those moneys to save the Listed Building from further deterioration and collapse, and for no other purpose. It is proposed to use the unused part for similar purposes. Mr Evans’ complaint has no foundation.

[104]Whilst it may not have been altogether satisfactory from the Claimant’s point of view to have matters between the Council and the Bank compromised as they were, the Claimant appears to accept(a) the Restoration Payment was overdue under the Section 106 Agreement, and the Claimant was thus in breach of its section 106 obligations;

(b) that triggered the Bank’s liability under the Bond; and

(c) the Bank and the Council could compromise the claim on the Bank’s liability Bond/guarantee without recourse to it (the Claimant). Insofar as those concessions are not made, I would in any event make findings to that effect. Furthermore, although Mr Evans described ownership of the £1.9m as “a grey area”, the Claimant has not at any time put forward any basis for the assertion that those moneys may beneficially belong to the Claimant. I agree with Singh J: there appears to be no possible argument to that effect.

[105]Indeed, as Mrs Townsend submitted, the Claimant accepts that, under the Section 106 Agreement, it owed the Council – and would, but for any concession by the Council as a result of its settlement with the Bank, continue to owe the Council – £4.8m. Given that the Council has confirmed that(i) it will not seek any money from the Claimant in respect of its liability to make the Restoration Payment under the Section 106 Agreement,

(ii) it will not seek any money from the Bank under the Bond , which might be reimbursable by the Claimant and

(iii) the £1.9m will only be used for the purposes of preservation of the Listed Building (the Claimant’s only significant asset), the Claimant’s sense of outrage expressed in these and other proceedings appears to be unwarranted. Indeed, that is the more so because, although the Claimant’s settlement with the Bank is also the subject of a confidentiality agreement, Mr Evans was able to confirm at the hearing before me that the Bank is no longer pursuing the Claimant for reimbursement of the £1.9m. Whilst the commercialities of these arrangements are not matters for these claims or this court, the Claimant’s stance – that the Council ought to have taken steps (including a full call on the Bond) that would have substantially increased the Claimant’s liabilities to the Bank – seems, at the very least, curious and counterintuitive.

[106]Similarly, with regard to the course of conduct upon which Mr Evans relies. I accept that the Council may not have been as open with the Claimant as it might have been – the First Inspector made comments to this effect (see paragraph 39 above) – but the Council was in a difficult position. The Claimant had failed to progress the development at all. It had been evasive. It had singularly failed to take any steps to preserve the Listed Buildings it owned. The buildings were in severe, and worsening, decay. The Claimant showed no signs of either progressing the development, or taking steps to preserve the buildings, in the future. The Council had, understandably, lost confidence in the Claimant (which, no doubt, explains to an extent the Council’s apparent caution about keeping the Claimant fully informed).

[107]However, looking at the documents as a whole, despite its alternative strategy criticised by Mr Evans, it is clear that, although the alternative strategy was conceived in 2010 under a cloak of confidentiality and even secrecy, by autumn 2012 (when the UWN procedure was in train), the Claimant was well aware that the Council was considering proceeding to a CPO if necessary (see, e.g., the letter from the Claimant’s solicitors to the Council dated 29 November 2012). It is equally clear that the Council did not embark upon a course of action predetermined to obtain the Site by way of a CPO: there is no significant evidence to that effect. It did not shut the door to proposals from the Claimant; and, indeed, even late on, the Council indicated that, if an agreement on the basis of worked-up proposals could be made, that would be preferable to a CPO (see, e.g., email from Mr Boase to Mr Bhailok dated 5 September 2013). Specifically, for the reasons given by the Second Inspector, it is not sensibly arguable that the Claimant improperly interfered with the negotiations between the Claimant and prospective purchasers of the Site (see paragraph 74(iii) above). Whilst the Council was always open to an approach from the Claimant, in the event, the Claimant never came forward with any substantial, realistic proposals.

[108]In my judgment, I find Mrs Townsend’s submissions compelling: the documents upon which the Claimant relies do not begin to lay a foundation for a case of fraud, deceit, improper motive or other impropriety against the Council; or, consequently, a case that the Welsh Ministers condoned or were complicit in such conduct. Certainly after the Second Inspector’s Report, a claim based upon such impropriety was bound to fail.

Disposal

[109]For the reasons I have given, both of these claims are unarguable. Indeed, given that the propositions upon which these claims were brought were evidentially and fundamentally unsound, as I have indicated, I consider that these claims were always bound to fail and, as such, were legally meritless. Having borne in mind the guidance recently given by the Court of Appeal in Samia W v Secretary of State for the Home Department; Hossain v Secretary of State for the Home Department

[2016] EWCA Civ 82

at [3]-[22], I declare each of these claims to be totally without merit.

[110]I shall, therefore,

order

i) The application for permission to proceed with the judicial review in Claim No CO/4480/2015 be refused, as totally without merit. ii) The application to quash the CPO in Claim No CO/6000/2015 be dismissed, as totally without merit.