Bell v Secretary of State for the Environment and another

Compulsory purchase — Application by owner of house, under section 23 of the Acquisition of Land Act 1981, to quash compulsory purchase order confirmed by the Secretary of State — The order, which was made under section 17 of the Housing Act 1985, followed a long history of conflict between the local housing authority and the applicant, including a large number of statutory notices and a direction as to numbers that could properly be accommodated both in the subject house and in an adjoining house also owned by the applicant — Applicant had obtained planning permission to convert the subject house into three self-contained flats and had received an improvement grant (later withdrawn because of delay in the works of conversion and failure to present accounts) — As the conversion proceeded, existing tenants left, with the exception of one couple, the Gallaghers — From time to time the local authority intervened to protect the Gallaghers from the effects of the building works upon their living conditions; they were eventually rehoused The applicant’s challenge to the compulsory purchase order was on two grounds: first, that the order was made for the wrong reasons, for reasons other than those contemplated by the relevant part of the Housing Act 1985; second, that no clear and intelligible reasons were given for the confirmation of the order — It was submitted on behalf of the applicant that the real purpose in making the order was to protect the Gallaghers and to discipline the applicant for her past housing misdemeanours — Additional arguments were that the local authority were misusing section 17 of the 1985 Act for the kind of purpose for which section 239 and other sections in Part VIII of the Act were intended; and that in any case the order would not result in any net increase in housing accommodation — As regards reasons for the decision, the applicant submitted that there was no clear indication in the28 inspector’s report (which was merely confirmed by the Secretary of State) that the position of the Gallaghers was in fact irrelevant; and there was no clear indication that the purpose of the order was to improve the housing stock of the council Held, after examining the inspector’s report, that he had asked himself the right question, namely, had the applicant demonstrated the likelihood that she would complete the conversion works speedily so as to produce accommodation available for letting — There was nothing in the inspector’s findings or conclusions to suggest that the object of the order was to benefit the Gallaghers, still less to punish the applicant — The inspector’s conclusion was that the completion of the works and the availability for housing on the part of the applicant was uncertain within any reasonable time-scale — The judge found no evidence of ulterior motive and no fault in the clarity of the reasons given by the inspector — Application refused The following cases are referred to in this report. Andreiser v Minister of Housing and Local Government (1965) 63 LGR 483; [1965] EGD 198; 195 EG 121 de Rothschild v Secretary of State for Transport [1989] 1 EGLR 19; [1989] 06 EG 123 Varsani v Secretary of State for the Environment (1980) 40 P&CR 354; 255 EG 457, [1980] 2 EGLR 31; [1980] JPL 588 This was an application under section 23 of the Acquisition of Land Act 1981 by Miss Olivia Dorothy Bell with a view to quashing a compulsory purchase order confirmed by the Secretary of State for the Environment in relation to premises owned by Miss Bell at 16 Burton Road in the London Borough of Brent. B Payton (instructed by Barry Posner Pentol & Co) appeared on behalf of the applicant; M H Kent (instructed by the Treasury Solicitor) represented the first respondent, the Secretary of State; the second respondent, the London Borough of Brent, was not represented and took no part in the proceedings. Giving judgment, FARQUHARSON J said: This is an appeal under section 23 of the Acquisition of Land Act 1981 whereby the applicant, Miss Bell, seeks to challenge a confirmation by the Secretary of State of a compulsory purchase order, which he published on December 3 1987, in relation to premises owned by Miss Bell at 16 Burton Road in the London Borough of Brent. The applicant has owned that particular house — and indeed an adjoining house, no 14 — for some years. For a considerable period of time before 1986 no 16 was let out in separate rooms in multiple occupation. There has been a long history of conflict between the local housing authority — that is to say that of the London Borough of Brent — and the applicant. Mr Payton, appearing on her behalf, tells me that neither has liked the other very much. Over the period leading up to the year 1986 a large number of statutory notices, public health notices and the like, have been served upon the applicant by the second respondent (whom I will call ‘the council’ for convenience) requiring improvements in the general condition of the premises while the tenants were living there. Furthermore, a direction has been given to her with regard to the numbers that could be properly accommodated, both in those premises and in the adjoining ones at no 14. That direction, in the case of both houses, has been breached. At some stage — and I have not been told when — it appears that the applicant resolved to convert no 16 into three self-contained flats. She sought planning permission, which was refused by the planning committee of the council. However, she appealed against that decision; the appeal was allowed and planning permission was granted accordingly. Because of her lack of means, an improvement grant was awarded to her involving some 90% of the eligible expenses. Progress in the conversion work, however, was very slow and there was a sequence of different builders employed upon the work who, for differing reasons, abandoned it, so that she had to make frequent changes of contractor. Gradually the other tenants were persuaded to leave by the offer of alternative accommodation. Some left of their own accord, until only one couple remained: their name was Gallagher. They occupied a room on the middle floor of no 16. The difficulty of carrying out works of renovation and alteration of the type contemplated, while somebody was living in the middle of the house, is too obvious to need dwelling upon. From time to time the council intervened to protect the Gallaghers from the effect of these works upon their living conditions. Naturally, if building work was going on it was very difficult to keep the house in an appropriate state of cleanliness for someone who was living in it. At this stage it appears to me that the applicant was on the horns of a dilemma. If she got on with the work quickly, as she was enjoined to do by the council, she risked imposing conditions on the Gallaghers which were unacceptable under other public health legislation. If, however, she did nothing or only little, then she was going to be in difficulty with her improvement grant, and indeed in her relationships with the council, having regard to the need for accommodation. It seems also, from the evidence before the inspector, which he accepted, that the applicant was occasionally rather difficult to deal with. In due course, in the month of August 1986, the improvement grant was withdrawn. The date had been exceeded for the work to be completed and no accounts had been presented to justify further payment. However, the council gave her until December of 1986 to complete the works. The applicant’s difficulties remained: the Gallaghers were still in residence. It was in December 1986 that the council made a compulsory purchase order in respect of the premises. In February 1987 the Gallaghers were rehoused, as the lady was about to have a child. At this stage the applicant put in a notice of appeal against the compulsory purchase order which, under the Act, meant that an inquiry had to be held under the aegis of the Secretary of State. Whether it was due to the making of the compulsory purchase order or the departure of the Gallaghers, it is undoubtedly the case that work proceeded apace with regard to the conversion of no 16. By the time of the inspector’s inquiry (which was held on May 27 1987) a considerable amount of work had been done. The inspector himself made a visit to the site prior to the holding of the inquiry, and he said: Works had been virtually completed to the exterior of the house. The second floor flat was 95 per cent completed internally. Outstanding works included fixing kitchen units and making good, tiling and decoration. The first floor flat although it appears he has put this in error for the ground-floor flat was about 75 per cent complete, with bathroom and kitchen facilities, plasterwork, electrical units and redecoration outstanding. About 60 per cent of works had been done to the ground floor flat and, as he said, it was work of good quality. Notwithstanding the improved state of the premises and the progress of those works, having heard the evidence put in front of him, the inspector recommended that the compulsory purchase order should be confirmed. As I have already indicated, in due course it was. The applicant now comes before this court inviting it to quash the order of confirmation made by the Secretary of State. She attacks it upon two grounds. First, she says that the order was made for reasons other than those contemplated by the relevant part of the Act. Second, she says there were no clear and intelligible reasons given to support the decision. Mr Payton, on her behalf, makes a preliminary factual assertion. He points out that by the time of the inquiry, work done at the premises amounted to some £30,000. Therefore, he said, when the inspector addressed his mind to the desirability of the order being confirmed and had regard to the likelihood that the work would be completed, it was an inevitable inference for him to draw that the remaining work (to the value of some £10,000) would be put in hand by the applicant. He asserts this on the basis that somebody in the applicant’s financial situation is hardly likely to sink some £30,000 worth of capital into the premises unless she could speedily recover the benefit of it by completing the work and getting the commercial revenue from letting the flats. Mr Payton submits that the real purpose of the council in making the compulsory purchase order was to protect the Gallaghers in their position in the house and, furthermore, to discipline the applicant for her past housing misdemeanours. He points out that whichever body carried out the work, be it the applicant or the council, precisely the same accommodation was going to be available. Bearing in mind the need not to impose compulsory purchase orders which affect the rights and property of citizens unless it is necessary, he says there was no case at all for the compulsory purchase order to be made, let alone confirmed. He supports his contentions by reference to the relevant legislation. The acquisition was sought to be made under section 1729 of the Housing Act 1985. He points out that that section appears in Part II of the statute, which bears the general heading: ‘Provision of Housing Accommodation’. Section 17(1) provides: A local housing authority may for the purposes of — Part II of the Act — . . . (b)  acquire houses, or buildings which may be made suitable as houses, together with any land occupied with the houses or buildings. Therefore, argues Mr Payton, when you look at this compulsory purchase order you have to be satisfied that the purpose of making it was within the terms of Part II of the Act: that is to say, to provide housing accommodation. If, in fact, as he claims, that accommodation is to be provided anyway, there can be no justification in law for the compulsory purchase order to be made. He detects the truth in the provisions, later in the Act, of section 239. That appears in Part VIII, which deals with housing action areas. It is best explained by looking at the terms of section 239(1), which says: where a report with respect to an area within their district consisting primarily of housing accommodation is submited to the local housing authority by a person appearing to the authority to be suitably qualified (who may be an officer of the authority), and the authority, upon consideration of the report and of any other information in their possession, are satisfied, having regard to — (a)  the physical state of the housing accommodation in the area as a whole, and (b)  social conditions in the area, that the requirement mentioned in subsection (2)  is fulfilled with respect to the area, they may cause the area to be defined on a map and by resolution declare it to be a housing action area. That obviously applies to a district which, from a housing point of view, has been run down and requires extra effort and drive to bring it up to the necessary standard. But, and this is the subsection to which Mr Payton points, subsection (2) states: The requirement is that the living conditions in the area are unsatisfactory and can most effectively be dealt with within a period of five years so as to secure — (a)  the improvement of the housing accommodation in the area as a whole, (b)  the well-being of the persons for the time being resident in the area, and (c)  the proper and effective management and use of that accommodation, by declaring the area to be a housing action area. Mr Payton says that, looking at that legislation in Part VIII, it is apparent that this is a highly formalised procedure, having regard to the effect it is going to have on the neighbourhood, and it is necessary to go through the steps strictly before making such a declaration. He points out that one of the requirements is that the unsatisfactory living conditions in the area can be dealt with so as to secure ‘the well-being of the persons for the time being resident in the area’ — that is para (b). He said that is the justification for declaring a housing action area. What he claims has happened here is that that particular purpose has been imported by the council from Part VIII of the Act and used through the medium of Part II, specifically section 17, to acquire this property. Put in other words, he said that the council are trying to look after the Gallaghers, to preserve their position and to assist them, and in so doing they are not fulfilling their obligations under section 17, which is that they should not have regard to such matters, but only to the improvement of housing accommodation. Apparently it is the case that the area in which the two houses (no 14 and no 16) are situated was previously the subject of a declaration of housing action area, although the five years had expired in 1984. Mr Payton further supports his allegation with regard to the council’s approach and the misuse of this compulsory purchase order, by reference to the evidence presented on behalf of the council at the inquiry. I do not propose to go through it in detail, but it is contended by Mr Payton that the council must have been obsessed by the Gallaghers; reference to them appears continually throughout the inspector’s account of the evidence presented to him by the council. Furthermore, he detects the use of terminology by the council, in their evidence, which is plainly lifted from section 239, when it talks about ‘effective management’ and when the council submit in their evidence to the inspector that the management of the applicant is not to be relied upon. It follows that in his submission, the inspector, and indeed the Secretary of State (who simply confirmed the inspector’s findings), fell into the same error. In dealing with the second ground of his criticism of the Secretary of State’s decision, he goes on by pointing out that having regard to these matters there was no clear indication in the reasons or findings of the inspector that the position of the Gallaghers was in fact irrelevant. Nor indeed, he claims, is there any clear indication that the purpose of the order was to improve the housing stock of the council. He argues that nobody reading that report could possibly conclude that, in the main, the work of conversion had been carried out and that in due course the same accommodation would be available as the council could provide, if they themselves were able to purchase the house compulsorily and put the work in hand on their own account. Neither is there any reference to the fact that the personal position of the tenants — that is to say the Gallaghers — was irrelevant to the question which the inspector had to consider. With that, I shall turn to the inspector’s report. As is the usual format, he deals with the evidence of the applicant and the objectors, and the reply. Finally, he makes his findings of facts. He points out the serious need for housing in the borough, an observation that I imagine appears in most reports up and down the country. He refers to the fact that the area where the house is was formerly a housing action area, although I reject Mr Payton’s submission that that shows he was making his decision on any factual basis that it was such an area. He recites the fact that there has been a long history of action by the council to secure repairs and improve conditions at the house and that the action has included the service of various statutory notices, as well as the direction to which I have already referred. He observes that the applicant has failed to comply with those notices or, indeed, with the direction. He recites how planning permission for the conversion had previously been obtained and an improvement grant of 90% of eligible expenses had been granted. That, he points out, was approved in August 1983 — some four years before the date of this inquiry. The grant was intended for, as indeed the planning permission provided, the agreed conversion of the premises into three flats. The grant was cancelled on August 11 1986 because of the applicant’s failure to complete the works within time, which had already been extended. He points out that the period was once more extended, although the grant had been cancelled, to the end of the year, observing that the owner (the applicant) had had problems with the builders. As previously noted, he agrees that a substantial amount of work had been done at the house, although the rehabilitation and conversion was not then completed. The house, therefore, was vacant: the flats were not yet ready for occupation. Next, he refers to certain statements made by the applicant, which can hardly constitute findings of facts, as Mr Payton has pointed out. Then he says this, which seems to me not without importance. The adjoining house (14 Burton Road) in the same ownership was also the subject of works of improvement which were completed in November 1986; nevertheless, six months later the house remained vacant. Miss Bell (the applicant) had in fact indicated she was going to occupy a flat in that house. Finally, as a matter of fact, he said that the council’s intention was to complete the conversion. His conclusions were that there was an urgent need to make the fullest possible use of accommodation. That, again, is hardly the subject of any dispute. He states the applicant had failed, since the housing action area was declared and subsequently since the grant was approved in August 1983, to demonstrate her ability to complete the works needed at the house. He goes on to say: ‘If the order is rejected, completion of the works in a reasonable time scale is uncertain’ — as it would be left on the applicant’s shoulders — ‘and the willingness of the owner to let the dwellings as agreed for grant purposes remains in doubt.’  On the other hand if he confirmed the order, there was a certain prospect that the works would be properly completed and the dwellings speedily returned to housing use. It would provide a quantitative housing gain. One has to look at counsel’s criticism in the light of those findings and of those recommendations. What does the Secretary of State have to say in his argument?  Approaching the law, he says that Part II of the Housing Act contains provisions of long standing, as in substance some of that Part (and particularly section 17) is re-enacting the provisions of the 1957 Housing Act. One must bear in mind that the housing action area concept appeared for the first time in the Act of 1974. An Act passed subsequently, he submits, cannot cut down the ambit of the operation of the earlier legislation: that is to say section 17. That section, he argues, always includes the power to acquire houses for30 the purpose of putting them into proper repair with a view to the improvement of the housing stock. It has been held that a compulsory purchase order was a permissible vehicle to achieve that end. In support of that submission he cites the decision of Russell LJ in Andreiser v Minister of Housing and Local Government (1965) 109 SJ 594*. He says, in the present case, section 17 was exercised exactly for that purpose, namely, for putting into proper repair housing accommodation which was in need of it. *Editor’s note: See also [1965] EGD 198 sub nom Andresier v Minister of Housing and Local Government. Furthermore, he contends that the making of a compulsory purchase order can properly be used to accelerate the provision of housing accommodation by bringing pressure upon the owner to execute the necessary repairs. He cites, as indeed both counsel do, the decision of Sir Douglas Frank QC in Varsani v Secretary of State for the Environment (1980) 40 P&CR 354† . † Editor’s note: See also (1980) 255 EG 457, [1980] 2 EGLR 31. So we come back to the real question, which is whether there was an ulterior purpose on the part of the council in making this compulsory purchase order, namely, to protect or assist the Gallaghers and punish the applicant, which was not open to them under Part II of the Act. The respondent claims that it is correct to look at the whole history of what had gone on with regard to the premises and the owner’s conduct of it, and that was why that evidence was properly before the inspector. One must look at what Mr Kent, appearing on behalf of the Secretary of State, calls ‘the track record’ of the applicant. One can therefore gauge the extent of her broken promises (as he claims they are); one can review her reliability and consider the expectation that one might properly have — that she would complete the works — and then, as soon as possible, make the accommodation available for letting. In my view, that is the proper question which the inspector had to consider, and he addressed his mind to that question. There was nothing in his statement of facts, or indeed in his conclusions, to suggest that the compulsory purchase order was to benefit the Gallaghers; still less that it was to punish the applicant. He properly recounts the earlier difficulties in the development work at the house, the applicant’s problems, and her failure to heed the various notices which were imposed upon her. I think in fairness one ought to say, as the second respondent (the council) are not present, that of course they had a duty through their public health department to protect people living in that accommodation. It was unfortunate, to say the least, that there were these conflicting pressures, namely, the welfare of the Gallaghers and the need to carry out the works of conversion concurrently. The inspector went on to note the work which had actually been done by the applicant, while reviewing her failure to complete it any earlier. He therefore finds and concludes that he has no confidence in her assurances that the work would not only be completed but that the accommodation would be available for housing because of: (a) her past record in relation to the premises, and (b) the non-occupation of no 14 which, I repeat, had been empty for six months. He therefore concluded that completion of the works and availability for housing on the part of the applicant was uncertain within any reasonable time-scale. One has to be careful, of course, in approaching compulsory purchase orders and to have regard to the care with which the Secretary of State has to approach his task. There have been some conflicting criteria laid down by the courts. The latest judgment is that of the Court of Appeal in R v Secretary of State for Transport, ex parte de Rothschild reported in The Times of July 23 1988‡ , which includes this citation from Slade LJ’s judgment: However, given the draconian nature of a compulsory purchase order, the secretary of state must be satisfied that the order was justified on its merits before he could properly confirm it. He must not exercise his powers capriciously. ‡ Editor’s note: Now reported at [1989] 06 EG 123 sub nom de Rothschild and Eranda Herds Ltd v Secretary of State for Transport. I will observe only that one would suppose that approach must apply to virtually every decision the Secretary of State makes, but at the same time one has to emphasise, as indeed did the learned lord justice, the draconian nature of a compulsory purchase order. Equally, it is not my task here to decide whether the order should have been made or not on the merits of the case. As Mr Payton has forcefully represented, there are many merits on the side of the applicant. My task is to find out if there was such an ulterior motive as Mr Payton alleges as to negate the validity of the compulsory purchase order. On reviewing the inspector’s report and the Secretary of State’s endorsement, for the reasons I have already explained I find no such ulterior motive, nor do I find any difficulty in the clarity of the words with which the inspector made his decision. For those reasons, this application is refused. The application was dismissed with costs in favour of the Secretary of State.