Kingston Apartments Yorkshire Limited v Kingston Upon Hull City Council & Anor [2025] UKFTT 542 (GRC)

[2025] UKFTT 00542 (GRC)Case Reference: CR/2023/0007
First-tier Tribunal
(General Regulatory Chamber)
Date 2 June 2025
Community Right to Bid
Decided on the papers on 13 th May 2025
Before
JUDGE DWYERJUDGE ARMSTRONG-HOLMES
Between
KINGSTON APARTMENTS YORkSHIRE LIMITEDAppellantKINGSTON UPON HULL CITY COUNCILRespondentHULL COMMUNITY PUB GROUPRespondentDecision: The appeal is DismissedREASONS
[1]This appeal concerns a decision made by Kingston Upon Hull City Council (the “1st Respondent”) on 22nd August 2023 and confirmed in a review decision of 28th November 2023, to list the property known as the New Clarence Public House (“the property”) as an asset of community value (“AVC”) under the Community Right to Bid provisions of the Localism Act 2011 (“The Act”), following a submission of an ACV nomination by Hull Community Pub Group (“the 2nd Respondent”). The Appellant is the owner of the property and appeals the decision on the basis that the nomination was not valid.[2]Both the Appellant and the Respondent requested that the appeal be decided without a hearing. The Tribunal has had the benefit of both the Appellant’s skeleton argument and the Respondent’s response, grounds of appeal and supporting evidence from the parties, including a 381-page bundle. We did not consider that further information was required from either party in order to make an informed decision. We are therefore satisfied that we can properly determine the issues without a hearing in accordance with Rule 32(1)(b) of the Tribunal Procedure (First-tier Tribunal) (General Regulatory Chamber) Rules 2009.

Background

[3]On the 12 July 2023, the 1st Respondent received an application from the 2nd Respondent, nominating the property as an ACV. The application was considered against the criteria set out in Localism Act 2011, and by reference to Regulations 5 and 6 of the Assets of Community Value (England) Regulations 2012 (“the Regulations”) and was found to be valid application. In accordance with the relevant procedures the 1st Respondent notified the then registered proprietor, Hawthorn Leisure of the nomination on 21 July 2023. The 1st Respondent received no objections to the nomination of the property and after considering the nomination against the statutory criteria, the 1st Respondent concluded that the property was an ACV.[4]The property was formally included within the List of Assets of Community Value (“the List”) on 4th September 2023. Notification of this decision was sent out to the parties understood to be affected by the decision in accordance with section 91 of the Act. Subsequently, it was brought to the attention of the 1st Respondent that the freehold title of the property had been transferred from Hawthorn Leisure to the Appellant on 14 July 2023. Unfortunately, the Title was only updated with the Land Registry on 3rd August 2023, and by this time, the 1st Respondent had already checked the Title with the Land Registry on 21st July 2023, which detailed, at that time, that Hawthorne Leisure was the Listed Freeholder of the property. Consequently, the Appellant had not been notified of the nomination, though of course the 1st Respondent had acted in accordance with the information that they had obtained from the Land Registry.[5]On 13th September 2023, the Appellant requested a review of the 1st Respondent’s decision to include the property in the List, and on 27th September 2023, the 1st Respondent sent out letters to the affected parties, including the Appellant, detailing the review process and inviting the Appellant to submit written representations regarding the listing by 12th October 2023.[6]Written submissions were submitted by the Appellant on 11th October 2023, and on 28th November 2023, the 1st Respondent wrote to the Appellant, informing them that the original decision to list the property as an ACV had been upheld.[7]The Appellant submitted an appeal to the Tribunal by email on 20th December 2023. The appeal was originally brought on 8 grounds. Grounds 1 to 3 related to procedural impropriety, in that the failure to notify the Appellant of the initial nomination of the property as an ACV in breach of Regulation 8 of the Assets of Community Value (England) Regulations 2012, resulted in the Appellant being prejudiced when making representations ahead of the review, before the initial decision was taken by the 1st Respondent, and during this appeal to the Tribunal.[8]Grounds 5 to 8 related to the property not being an asset of community value. All grounds of appeal were subsequently withdrawn by the Appellant, save for ground 4, which is advanced on the basis that the nomination was invalid because it was not a community nomination within the meaning of section 89 of the Act. In support of this proposition, the Appellant points to the fact that no evidence was provided to the 1st Respondent by the nominating party (the 2nd Respondent) to confirm that either it did not hold any funds or that it does not distribute any surplus it makes to its members, as required by Regulation 5(1)(c)(ii).

The law

[9]Under section 87 of the Act, local authorities are required to maintain a list of land in its area that is land of community value (s.87(1)). That list is referred to within the Act is known as a List of Assets of Community Value (s.87(2)). Once an asset is placed on the list it will usually remain there for five years. The effect of listing is that an owner intending to sell the asset must give notice to the local authority. A community interest group then has six weeks in which to ask to be treated as a potential bidder. If it does so, the sale cannot take place for six months. In this period known as “the moratorium” it affords a community group an opportunity to come up with an alternative proposal or to raise the funds to make an offer. At the end of the moratorium, it is entirely up to the owner whether a sale goes through, to whom and for how much. There are arrangements for the local authority to pay compensation to an owner who loses money in consequence of the asset being listed.[10]Section 89(1) of the Act provides that land which is of community value may be included by a local authority in its list of assets of community value only in response to a “community nomination”, or where permitted by regulations made by the appropriate authority.[11]Under section 89(2), a “community nomination”, in relation to a local authority, means a nomination which nominates land in the local authority's area for inclusion in the local authority's list of assets of community value, and is made by either a parish council in respect of land in England in the parish council's area, a community council in respect of land in Wales in the community council's area, or a person that is a voluntary or community body with a local connection.[12]Regulation 5 of the Assets of Community Value Regulations 2012 defines what is meant by a voluntary or community body, and is as follows:(1) For the purposes of section 89(2)(b)(ii) of the Act, but subject to paragraph (2), “a voluntary or community body” means – (a) a body designated as a neighbourhood forum pursuant to section 61F of the Town and Country Planning Act 1990; (b) a parish council; (c) an unincorporated body – (i) whose members include at least 21 individuals, and (ii) which does not distribute any surplus it makes to its members; (d) a charity; (e) a company listed by guarantee which does not distribute any surplus it makes to its members; (f) [a co-operative or community benefit society] which does not distribute any surplus it makes to its members; or (g) A community interest company.(2) A public or local authority may not be a voluntary or community body, but this does not apply to a parish council.(3) In this regulation “co-operative or community benefit society” means a registered society within the meaning given by section 1(1) of the Co-operative and Community Benefit Societies Act 2014, other than a society registered as a credit union.[13]Regulation 4 of the Regulations defines the local connection requirement. It stipulates, for an unincorporated body under Reg 5(1)(c) that the body’s activities must be wholly or partly concerned with the local authority’s area or that of a neighbouring authority. Any surplus it makes must be wholly or partly applied for the benefit of one of those areas, and at least 21 of its members must be registered to vote in local government elections in one of those areas.[14]Regulation 6 prescribes the necessary contents of a community nomination. This includes a requirement for evidence that the nominator is eligible to make a community nomination.[15]Regulation 7 requires the authority to make its listing decision within 8 weeks of receiving the nomination. There is no right to appeal against the lack of any decision, should the authority fail to make its decision in that time.[16]Regulation 8 imposes an additional procedural requirement on the authority. When considering whether to list an asset, it must “take all practicable steps” to notify the owner and any lawful occupier of the land that “it is considering listing the land”.[17]Regulation 10 concerns procedure on review to the authority. That procedure is contained in Schedule 2 of the 2012 Regulations. Schedule 2, para 1 requires the owner to request the review within 8 weeks beginning with the day on which written notice of inclusion of the land “was given”, subject to any “longer period as the authority may in writing allow”.[18]Regulation 11 permits an appeal to the Tribunal against the authority’s review decision. Evidence and discussion The Tribunal’s Role

Evidence and discussion

[19]The Appellant submits that the Tribunal’s role is limited following the FTT decision in Newton v Derbyshire Dales [2024] UKFTT 435 (GRC) (“Newton”) in determining appeals in relation to the listing of an ACV. It is not clear what the Appellant is asking the Tribunal to rely upon, but appears to suggest that the Tribunal should apply a narrow approach akin to a more limited public-law review as opposed to a fresh appeal in the form of a complete reconsideration of whether the property should be included as an ACV. That decision was of course a decision of the First-tier Tribunal, and as such is not binding upon this Tribunal. However, the Tribunal agrees that the narrow approach, cited in Newton, and expressed by the Court of Appeal in Waltham Forest LBC v Hussain [2023] EWCA Civ 733, which is that the Tribunal’s role is “to determine whether the decision under appeal was wrong at the time when it was taken” [at para. 63] is the correct approach to be taken in this appeal.[20]The sole issue for this Tribunal to determine is whether the 2nd respondent’s nomination was a valid community nomination in accordance with sections 89(1)(a) and (2)(b)(iii) of the Act at the time the decision was taken. In accordance with Regulation 11, the decision under appeal is the review decision of 28th November 2023. The Tribunal can therefore consider whether any errors made by the 1st Respondent during the listing review could have affected the overall outcome of the decision.

Is the nomination valid?

[21]The Appellant submits that, the fact that the 1st Respondent did not request evidence from the 2nd Respondent to confirm whether or not a surplus existed, and in the event of a surplus existing, that the 1st Respondent did not seek confirmation that any surplus was not distributed to its members, renders the nomination invalid for the purposes of the Act. That submission is premised on the requirement of Regulation 6(d), which states that a community nomination must include ‘evidence that the nominator is eligible to make a community nomination’, and that the council should have obtained evidence or an assurance from the 2nd Respondent, at the listing review stage, to satisfy the requirement of Regulation 6(d).[22]The 1st Respondent submits that it had sufficient information about the 2nd Respondent, at the listing review stage, to be satisfied that it was eligible to make a community nomination. In support of that contention, the 1st Respondent points to the fact that the 2nd Respondent’s application stated that it had only just been formed, and that there was no indication that any funds were held at all, and that it was communicated in a letter, dated 10th August 2023, that the 2nd Respondent would seek to raise funds via crowdfunding, issuing community shares, and applying for grants, if it were given the opportunity to bid for the property. In essence, the 1st Respondent submits that there was no indication that the 2nd Respondent held any funds at the time, and that it was reasonable to conclude that the nomination was valid, without the need for further evidence or assurance of that fact. Furthermore, the 1st Respondent contends that by the time of the review, the 2nd Respondent had registered as a not-for-profit company (no. 15278696), by the name of Hull Community Pub Limited, and the Articles of the Company provided that “no assets shall be paid or transferred directly or indirectly, at less than full consideration, to members of the Company”.[23]Before this appeal the 2nd Respondent had converted itself into a community benefit society in January 2024. The society’s rules confirm that there could be no distribution of any profits to members. Therefore, there is no evidence to suggest that the 2nd Respondent has at any time held a surplus that has been to distribute to it members. It is of course logical that the 1st Respondent and this Tribunal may consider evidence that occurs after the date of a decision, if it casts light on the position at the time of the initial decision.[24]Although not binding on this Tribunal, In Hawthorn Leisure Acquisitions Limited v Northumberland County Council(CR/2014/0012), Judge Warren considered that in the absence of a written constitution, a public authority “should at least invite an assurance from the organiser of the group that any surplus it makes is not distributed to members”. However, he went on to conclude that he was satisfied that the requirement of Regulation 5(1)(c) was satisfied where “there is no evidence of any surplus being available and I do have evidence of the group’s intention to organise into a local charity”.[25]In Russell v Bracknell Forest Borough Council & Punch Partnerships (PML) Ltd [2022] UKUT 75 (AAC), the Upper Tribunal indicated that the need to comply with the rules on surplus distribution only become necessary if a surplus in fact exists. Judge Jones commented [at para 44] that “a body does not necessarily need to hold or use funds in order to constitute an unincorporated body and therefore rules as to the distribution of funds may not always be necessary”, before going on to state [at para. 45] that “Nonetheless, if the body does collect and use funds then it must comply with the Regulations. The body is not prohibited from making a surplus (or profit) from its activities, but this must not be distributed to its members by virtue of Regulation 5(1)(c)(ii).”.[26]In concluding that the First-tier Tribunal had erred in its decision to find that the group in question was not a community body for the purposes of Regulation 5(1)(c), the Upper Tribunal in Russell stated that “there was no evidence that the Group held or would make any surplus funds (or profits) which it would be required to distribute. The evidence relied upon was that over half the Group stated that they would be interested in offering financial support to buy the Pub. The fact that is not clear how any funds collected would be used or distributed was not evidence that the Group would make a surplus which it was required to distribute to members. It is not apparent how any such financial contribution to purchasing the pub (which is the obvious use for which funds collected would be put) would involve the Group holding any surplus funds or needing rules about this.”.[27]We have been referred to the First-tier Tribunal case of Hamna Wakaf Limited v London Borough of Lambeth and Camra South West London (CR/2015/2026), which similarly concerned a public house being nominated as an ACV. Judge Lane (as he then was) provides some assistance as to how the subordinate legislation (the Regulations) should be interpreted, when [at paragraph 80] he stated:
“By conferring power of nomination on a “voluntary or community body with a local connection”, in addition to parish and community councils, Parliament in my view envisaged that the nomination process may fall to be undertaken by those without any expertise in compiling formal legal documentation. Furthermore, Parliament would have been aware that a voluntary or community body may often be one formed at short notice in response to a previously unforeseeable threat to a community asset. In such circumstances, the body may well find itself having to make the nomination in haste.”
[28]And [at paragraph 81],

Judge Lane went on to consider how Parliament intended the Regulations to be interpreted:

“In view of this, it would be contrary to Parliament’s purpose to interpret the subordinate legislation made by the Secretary of State in pursuance of section 89(4) as requiring strict adherence to each of the obligations set out in Regulation 6. The true construction of the overall statutory scheme is, I find, such that the local authority in question has discretion to waive a requirement in regulation 6, where the authority reasonably concludes that no substantial prejudice would be caused. Furthermore and in any event, the authority may, on the same basis, permit a nominator to make good a failure under Regulation 6, following initial receipt of the nomination documentation.”
[29]Whilst the Appellant contends that the 1st Respondent was obligated to seek an assurance or further evidence that the 2nd Respondent had no intention to distribute any surplus to its members, and that the council waived this requirement, the Tribunal finds no merit in that contention. There was no evidence of any surplus being in existence at the time of the nomination, and the subsequent actions of the group, in incorporating itself as a not-for-profit company before the review decision, provide a strong basis to support that proposition. Indeed, what evidence there was, as detailed a paragraph 22 above, when the second respondent stated in their nomination application that they “would seek to raise funds via crowdfunding, issuing community shares, and applying for grants, if it were given the opportunity to bid for the property”, supports the rationale by which the 1st Respondent reached its decision in concluding that there was no surplus at all.[30]Therefore, the Tribunal finds that the 1st Respondent’s initial and Review decisions were correct as there was no evidence before them as to any surplus being available when making the initial decision and at the review decision under appeal, they had evidence to confirm that no surplus was available before incorporation and if there were, it would not be distributed to members.[31]The Appellant also raises other issues relating to procedural impropriety, whilst we agree that with the 1st Respondent that those general grounds of appeal have been withdrawn, procedural impropriety is relevant to this remaining ground in so far as the Appellant was prevented from raising submissions about the validity of the nomination at the initial stage. However, by review stage the Appellant had been given the opportunity to make any representations. An appeal to this Tribunal is against the review decision in accordance with Reg 11 of the Regulations. Whilst it is disappointing that the Appellant was not informed in sufficient time, the 1st Respondent had taken all practicable steps to comply with Regulation 8, in that it had sought to notify the owner of the land that it was considering listing the land, but unfortunately the Land Registry had not yet updated its records.[32]The Appellant’s right to request a review remained intact. It exercised this right by requesting a review on 13 September 2023. The Appellant was also able to avail itself of the right to make representations before the Review Decision, engaging Freeths to do so in October 2023. The Appellant was informed that it was entitled to an oral hearing upon request, but no such request was ever made.[33]In any event, it is difficult to find any prejudice incurred on behalf of the Appellant. Had the Appellant specifically raised the issue of reassurance of surplus funds at the initial stage, all evidence points to the 2nd Respondent not holding any funds. By review stage it is clear there could not have been any surplus, otherwise the Company’s Articles could not have been applied. At no stage during the review decision or this appeal has any evidence been put forward that suggests that the 2nd Respondent in the few months from July 2023 to November 2023, had a surplus which it would distribute to its members, rendering the nomination invalid.[34]As discussed above, the case law suggests that the 1st Respondent, in the absence of direct evidence to the contrary are entitled to rely on, the implied evidence that no surplus was available and stop its enquiries there. Therefore, we find that procedural impropriety does not render the decision invalid by not specifically asking the nominator at the initial or review stage for reassurance that when it was an unincorporated body, it did not distribute fund to members.[35]Similarly, there was no need for the Council to waive any evidential requirements because the statutory criteria were met.[36]Therefore, the Tribunal finds that the 1st Respondent’s review decision was correct at the time it was taken and the appeal is dismissed. Signed Judge Dwyer Date: 16/05/2025