Green and others v Secretaries of State for the Environment and Transport and another

Compulsory purchase — Application under section 23 of the Acquisition of Land Act 1981 to quash a compulsory purchase order — The applicants also sought to quash an associated order for the stopping up of highways, but as the two orders were interdependent the case was argued on the compulsory purchase order — Applicants were engaged in the retail furniture and furnishings trade and owned land in Eastleigh which was included in the order — The main issue was whether the Secretary of State for the Environment had erred in failing to have regard to a material consideration, namely, the question of ‘financial viability’, ie the balance between the cost of acquisition and the ground rent likely to be received by the local authority from the site — The scheme proposed was to provide on the 8-acre site a covered shopping centre and car park with rear pedestrian access — The applicants relied on such cases as Sovmots Investments Ltd v Secretary of State for the Environment and Prest v Secretary of State for Wales and submitted that there was an obligation on the local authority to call evidence to show the balance of cost and return — It was argued that as they had not done so the Secretary of State could not properly decide the issue in the absence of such evidence — Held, however, that the decision letter showed that the Secretary of State had not considered the financial viability of the scheme to be material and it was not therefore necessary for him to make a decision about it — He had accepted the inspector’s conclusion that the advantages of acquiring the site and proceeding with the scheme outweighed the necessity of extinguishing the applicants’ business (although the local authority did not admit such necessity, as they had offered relocation) and the consequential costs of acquisition — In these circumstances the Secretary of State was entitled to accept the inspector’s conclusion that the compulsory purchase order should be confirmed — Application dismissed The applicants were A T Green, the trustees of the Green settlement and Eastsleep Ltd, the respondents being the Secretaries of State for the Environment and Transport and Eastleigh Borough Council. The applicants’ interests and the land in question are described at the beginning of Glidewell J’s judgment. R Sears QC and A Dinkin (instructed by Slaughter & May) appeared on behalf of the applicants; M Spence QC and A Porten (instructed by R Read, Solicitor of Eastleigh Borough Council) represented the council. The Secretary of State for the Environment did not appear and was not represented. Giving judgment, GLIDEWELL J said: The applicants, Eastsleep Ltd, are the lessees of two shops with ancillary land and buildings at 114 to 122 Southampton Road, Eastleigh in the County of Hampshire. The first applicants own no 114, which has a total area of 3,200 square metres. The company trades in retail furniture and furnishings. It is one of the largest retail premises in Eastleigh. It trades under the style A T Green. There is an area of about 8 acres lying west of Southampton Road and between Factory Road and Blenheim Road in Eastleigh which is proposed in the town centre action area plan for redevelopment for shopping use. That plan was adopted in July 1979. On May 29 1980 the borough council made a compulsory purchase order on the whole of the 8-acre site to provide a covered shopping centre and car park with rear pedestrian access. The compulsory purchase order area included the applicants’ properties. It also included a modern building occupied as a grocery supermarket by Tesco, who agreed with the borough council a scheme for incorporation of their building into the redevelopment and their premises were then withdrawn from the compulsory purchase order. The applicants objected to the order and an inquiry was held before Mr L A Davies between June 8 and 18 1982; in other words, over some two weeks. In the event the applicants were the principal objectors, although not the sole objectors. A number of points, both of law and of planning merit, were advanced on the applicants’ behalf, but all failed to persuade the Secretary of State for the Environment, who confirmed the compulsory purchase order by letter dated September 6 1983. He also confirmed an associated order for the stopping up of highways. It is agreed that the two orders are interdependent. The applicants now move under section 23 of the Acquisition of Land Act 1981 to quash the compulsory purchase order and under section 244(3) of the Town and Country Planning Act 1971 to quash the road closure. The case has been argued, for the reason I have already given, on the compulsory purchase order. Section 23(1) of the 1981 Act provides: If any person aggrieved by a compulsory purchase order desires to question the validity thereof, or of any provision contained therein, on the ground that the authorisation of a compulsory purchase thereby granted is not empowered to be granted under this Act . . . he may make an application to the High Court. Subsection (2) deals with failure of the acquiring authority to comply with the relevant requirements. Section 24(2) gives the court power ‘if on the application the court is satisfied that — (a) the authorisation granted by the compulsory purchase order is not empowered to be granted under this Act . . .’ to quash the compulsory purchase order or any provision contained therein. Mr Sears, for the applicants, argues (to summarise first of all) that what is called ‘financial viability’, that is to say, the balance between the cost of acquisition and the likely ground rent to be received by the council from the site, was a material consideration in the Secretary of State’s decision on the objection to the compulsory purchase order. It was for the local authority, he says, if they so decided, to submit evidence on this issue, but they failed to do so. The Secretary of State therefore had no, or virtually no, evidence on which he could properly make a judgment on this issue and he therefore failed to have regard to a material consideration. Mr Sears referred me to the words of Lord Denning MR in Ashbridge Investments Ltd v Minister of Housing and Local Government [1965] 1 WLR 1320, the passage being at p 1326, where his lordship said: Seeing that that decision — that is to say, whether or not to confirm a compulsory purchase order — is entrusted to the Minister, we have to consider the power of the court to interfere with his decision. It is given in Schedule 4, para 2. The court can only interfere on the ground that the Minister has gone outside the powers of the Act or that any requirement of the Act has not been complied with. Under this section it seems to me that the court can interfere with the Minister’s decision if he has acted on no evidence; or if he has come to a conclusion to which on the evidence he could not reasonably come; or if he has given a wrong interpretation to the words of the statute; or if he has taken into consideration matters which he ought not to have taken into account, or vice versa; or has otherwise gone wrong in law. It is identical with the position when the court has power to interfere with the decision of a lower tribunal which has erred in point of law. I turn to the material which is before me, which includes the inspector’s report. The inspector had a large number of documents submitted to him, one of which was a letter antedating the inquiry dated February 9 1982 from the solicitors to the applicants to the town centre project manager of the borough council in which they set out and put on record their clients’ position with regard to the compulsory purchase order and state at para 6: However, there is a further important aspect on which we wish to make our clients’ position clear. As it now seems that an agreement enabling our clients to withdraw its objection is unlikely . . . and that there is currently no prospect of a suitable alternative site . . . it is clear as matters stand at present, that if the CPO is confirmed, compensation will have to be paid on a total extinguishment basis. On current information this is likely to be well in excess of £1,000,000. No doubt the borough has confirmed with the developers the likely compensation position and that the scheme could stand such a payment. (We assume that they have agreed to ‘stand behind’ the borough in respect of all compensation payments.) Para 7 reads: We need hardly remind the borough that financial considerations relating to local authorities are now regarded as relevant considerations in proposals of this kind and that a full investigation of the economic and financial issues will be a major issue at the inquiry. In usual form, towards the end of his report the inspector made a series of what he described (not always accurately, I say without disrespect to him) as findings of fact. No xiii of those begins with the words: ‘The council anticipate that the Cascade centre’–that being the name that was given to the proposed new centre–‘would achieve a turnover of £9.4m durable trading based on a catchment area of 174,000 (by 1991)’. What the inspector does not say, but what was in fact the evidence given to him, was that the £9.4m was in 1971 pounds and not in then current pounds. Para xv contains the following sentence: ‘They conceded that if the scheme could be made so attractive as to enlarge the catchment area as suggested by the council a turnover of the order of £9.4m as calculated by the council might be possible.’  So the issue there was the number of people in the catchment area rather than the amount of likely trade from a postulate catchment area. Paragraph xxi reads: ‘P Green estimate the cost of extinguishment of their business at around £1m’. The council called no other evidence of either cost or likely income to them, but they did have such evidence available. I deduce that from the fact that there was put before the inspector part of the action area plan, one paragraph of which contained the following words: Particular attention has also been directed at ensuring that the plan’s proposals are realistic and capable of implementation. This has involved examining carefully the financial viability of the proposals and in particular the cost and likely income to the Borough Council. Moreover, in para 30 of his report, which is part of the summary of the case for the borough council, the inspector, when discussing a suggestion by these applicants that they might have managed to make an agreement with other developers who might carry out a development instead of the developers whom the council had chosen, said this: The firm — that is to say the present applicants — had received a particularly favourable financial offer from the Rohan Group which the council, tied by statutory restrictions, could not match although clearly the additional costs inherent in the Rohan offer would be a charge on the scheme reflected in ground rents so that it would be the ratepayers and future customers who would have footed the bill. The council’s partnership scheme for overall comprehensive development would result in substantial reductions in the charge on public resources as the main capital costs would be borne by the private sector. Although the inspector did not refer to that, it was a piece of information which he did have in front of him in addition to that to which I have already referred. The inspector went into the case for these applicants in very considerable detail. It occupied 43 paragraphs in some 14 pages of his report and was by far the largest single section of the report. In para 78 he repeated the point about Messrs Green’s estimate that there was likely to be total extinguishment of their business if the scheme went ahead and that that would lead to compensation of about £1 million. At para 81, reporting the argument of Mr Sears at the inquiry, he said: In view of the resources available to the council it was submitted that the quality of the evidence they had presented was unacceptable. They had failed to call any witness from the elected developers or county council and had given no evidence as to the financial viability of the scheme contrasting remarkably with the detailed analysis presented at the Bexleyheath inquiry. of which he had some evidence . . . When challenged on this matter the council had needed to resort to statements made by the other prospective developers — statements made in the context of a publicity campaign and in relation to a scheme for a smaller floorspace. Then he set out legal submissions made both on behalf of these applicants and the council in response, and he recorded the submission of Mr Sears that the financial considerations were now accepted by the courts as being relevant to the consideration of the merits of a compulsory purchase order and recorded that Mr Sears referred him to certain authority. The inspector said: The importance of this was not in the evidence presented by the council but rather in the significant omission of any financial evidence as to the viability of the whole scheme . . . The lack of substantive evidence meant that the Secretary of State was not in a position to judge the viability of the scheme and should not confirm the compulsory purchase order unless he was satisfied that there was every prospect of the scheme going ahead. So there is no doubt (and indeed it was not suggested otherwise) that Mr Sears in his submission to the inspector did raise this matter and raised it with his usual clarity and vigour no doubt. In reply to that, Mr Spence for the council at para 91 is reported by the inspector as saying: Whilst it was accepted that financial considerations could be relevant the council were under no obligation to put forward detailed financial analysis to justify the scheme. The witnesses for the council had wide experience of compulsory purchase order inquiries having attended most of them — and it was explained to me that that meant most such inquiries relating to town centres — and they had never been required to produce costings for the scheme. The council were satisfied on the advice given by their experts that the scheme was viable. Having received that report the Secretary of State, getting on for a year later, gave his decision in a letter dated September 6 1983. He set out in detail in that letter the inspector’s conclusions, one of which included the following sentence: However I agree with the point made that it is for the council to produce cogent and compelling evidence to support their case and whilst there may be no legal obligation on the council’s part to produce evidence on the financial aspect regarding the cost of acquisition and funding of the scheme it seems to me that these are relevant matters which the Secretary of State may have wished (and may still wish) to examine in the light of current national investment policies. He also said: In assessing the merits of the scheme therefore it is necessary to take into account the possibility that the proposals may result in the extinguishment of the P Green business. Having regard to the primary aim of the scheme to encourage the larger type of store selling durable goods, it would seem incongruous to be contemplating the displacement of one of the town’s most successful retailers in this field whose trade may well then go to the large stores in Southampton. However, I have given careful consideration to the powerful arguments made for the retention of P Green in the town centre and I have concluded for the reasons I have referred to that the public need for the land in this instance outweighs the normal private rights of the individual firm. That is the Secretary of State repeating the inspector’s recommendation. When the Secretary of State came to consider these objections he said: ‘The objections by Peter Green (Limited) and the inspector’s conclusions concerning them may conveniently be dealt with under three headings — (i) planning procedures (ii) financial viability of the scheme and (iii) the scale of the proposed scheme’. I do not need to deal with anything except that part concerned with so-called financial viability, which I must read in full. Para 14 says: In para xiii of his findings of fact the inspector records the council’s estimated turnover for the proposed Cascade centre in para xxi records the estimate prepared by Peter Green Ltd of the cost of extinguishment of their business. This was the only evidence put before the Secretary as to the financial viability of the proposed scheme. Para 15 says: The Secretary of State accepts that the cost of any proposed scheme may be a relevant factor in considering a compulsory purchase order submitted to him for confirmation. Whilst there is no obligation on an acquiring authority requiring them to put forward a detailed financial analysis of any proposed development, he takes the view that it would be wrong for him to disregard28 clear evidence that an acquiring authority’s scheme was financially unsound or extravagant. Notwithstanding the objectors’ doubts as to whether the council have included in their written estimates a sum for the possible extinguishment of their business, the Secretary of State does not accept that there is any evidence before him in this case which could lead him to the view that the proposed scheme was financially unsound or extravagant. Para 16 continues: It was argued on behalf of Peter Green (Limited) that the government had advised that local authorities contemplating town centre redevelopment should be aware of the financial implications and that architectural and financial arguments should be considered together. The 1963 Ministry of Housing and Local Government publication referred to (‘Town Centres: Costs and Control of Redevelopment’) certainly gives guidance concerning the prudent preparation of comprehensive redevelopment schemes but it is not considered to be an instruction about the presentation of evidence at a public local inquiry. The Secretary of State considers the merits of an order on the basis of the facts and submissions before him and he is satisfied that he has sufficient evidence to enable him to come to a decision on this order. The actual decision in relation to the matter is contained in paras 19 and 20: The Secretary of State is content with the inspector’s reasoning, and agrees with his conclusion, on these objections. For the reason set out above the Secretary of State for the Environment accepts the recommendation of the inspector that the Eastleigh Town Centre Action Area Plan Compulsory Purchase Order (No 1) be confirmed subject to a modification to exclude the premises of Tesco Ltd (identified hatched green on the order map). This letter constitutes his decision to that effect. I have already summarised Mr Sears’ submissions, but I must deal with them now in a little more detail. What he submitted to me is this. A local authority which seeks to acquire land compulsorily is obliged at an inquiry into objections to the compulsory purchase order to call such evidence as is necessary to show that the acquisition of the land is necessary in the public interest. See the judgment of Forbes J in Sovmots Investments Ltd v Secretary of State for the Environment [1977] QB 411, the passages being at pp 423 and 424. At p 423 he says: The second point on which Mr Goodfellow maintains the inspector misdirected himself is the question of the cost of acquisition. At the inquiry Camden argued that cost was a wholly irrelevant consideration or at least not a primary consideration, but nevertheless prudently armed itself with figures concerned with cost, and cost was very much an argument at the inquiry. At p 424, having considered a decision of Ackner J in relation to a planning matter where he decided that cost was not relevant, Forbes J said: I think the position is a fortiori with compulsory purchase orders made by local authorities under Part V of the Housing Act 1957. It seems to me that the Secretary of State has a duty to consider cost in these cases, or at any rate in suitable cases may well have such a duty. The provision of housing accommodation after all involves the proper deployment not only of the ratepayers’ but also the taxpayers’ money and it seems to me that the Secretary of State is entitled to take these matters into account in suitable cases and that therefore cost can be relevant. That I think is the extent to which the court can give a ruling: cost may or may not be a relevant consideration depending on the circumstances of the case; all that the court can do is to say that cost can be a relevant consideration and leave it to the Minister to decide whether in any circumstances it is or is not. Of course it follows that the weight to be given to cost, if it is a relevant factor, is also a matter for the Minister and not one in respect of which any court is entitled to substitute its opinion. That case went on via the Court of Appeal to the House of Lords, but the point about costs was not relevant on the appeal and therefore there is nothing in the decisions of either of those bodies which deals with the matter. As far as Forbes J’s dictum is concerned, I respectfully accept and agree with every word of it. The other authority to which I have been referred, which is of course binding on me, is the decision of the Court of Appeal in Prest v Secretary of State for Wales [1982] 81 LGR 193.*  That was a case of a compulsory purchase order of some land for a new sewage works. The landowner conceded that a new sewage disposal works was required (and I think he went further and said it was highly desirable), but he wanted some other part of his land to be taken for the purpose. He was perfectly willing for some of his land to be taken. There was evidence at the inquiry that the construction of the new works on, to be precise, either of two alternative sites would be quite appreciably more expensive than on the compulsory purchase order site. That was a principal matter at the inquiry and the inspector regarded it obviously in the end as the compelling factor. But before the decision was made (although after the completion of the inquiry) the objector or his solicitors wrote to the Secretary of State making the point that if the compulsory purchase site were not used it would be a suitable site for industrial development, whereas the alternative site would be agricultural only and thus the cost of acquisition of the compulsory purchase order site with the benefit of, I suppose, a deemed planning permission for industrial development would be very considerably greater than that of either of the alternative sites and this would outweigh the additional cost of construction on the alternative sites. *Editor’s note: Also reported at (1982) 266 EG 527, [1983] 1 EGLR 17. The matter referred to in the letter was not referred to at all in the decision of the Secretary of State. For that reason the confirmation of the compulsory purchase order by the Secretary of State was challenged. At first instance the challenge failed, but on appeal it succeeded. Lord Denning MR said at the bottom of p 200, quoting Lord Greene MR in Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223 at p 229: ‘He’, that is to say the minister, ‘must call his own attention to the matters which he is bound to consider.’  Lord Denning went on: This was put a little more fully by Lord Diplock in Secretary of State for Education and Science v Tameside Metropolitan Borough Council [1977] AC 1014 at p 1065 that: ‘Or, put more compendiously, the question for the court is, did the Secretary of State ask himself the right question and take reasonable steps to acquaint himself with the relevant information to enable him to answer it correctly?’ As I have said, Lord Denning answered that question: ‘No, he did not.’ Watkins LJ put it a little more fully. There are two passages from his judgment to which I propose to refer. At p 207 he said: What he that is, the Secretary of State, may not do is to proceed to exercise his discretion and allow it to be swayed by a factor which is inadequately presented to him. It matters not, so it seems to me, that he could reasonably have expected an objector or a supporter of his ultimate decision to have fully exposed for him that factor in all its facets at public inquiry or in some other way. He conducts a process of administrative decision which is quite unlike that conducted by courts and some, if not all, tribunals. Nevertheless, it is a process which is governed by disciplines vital to the public interest. At p 211 he said: In the sphere of compulsory land acquisition, the onus of showing that a compulsory purchase order has been properly confirmed rests squarely on the acquiring authority and, if he seeks to support his own decision, on the Secretary of State. The taking of a person’s land against his will is a serious invasion of his proprietary rights. The use of statutory authority for the destruction of those rights requires to be most carefully scrutinised. The courts must be vigilant to see to it that that authority is not abused. It must not be used unless it is clear that the Secretary of State has allowed those rights to be violated by a decision based upon the right legal principles, adequate evidence and proper consideration of the factor which sways his mind into confirmation of the order sought. Mr Sears’ submissions go on that in this case the Secretary of State accepted that the financial cost return balance was a relevant matter for his consideration and he refers me in this respect to para 15 of the decision letter which I have read. Thus, Mr Sears argues, there was an obligation on the local authority to call the evidence necessary to show what the cost return balance was. They failed to do so. The Secretary of State could thus not decide the issue without such evidence and he was wrong to say that it was for the objector to establish that the scheme was financially undesirable. In reply, Mr Spence, for the local authority, accepted that Mr Sears’ submissions as to the legal position were entirely correct. However, he did not accept that the Secretary of State had said in his decision letter that the financial viability (the balance between costs and likely return to the council) was a relevant matter in this case. Properly understood, said Mr Spence, what the Secretary of State was saying in para 15 of his letter may be paraphrased as follows. Firstly, it might be — and it would have been the case if the objector had led some evidence that the scheme was financially unsound — that financial viability was a relevant consideration. But, secondly, such evidence was not led and thus it did not become a relevant consideration and the Secretary of State did not need evidence about it. Thirdly, since he had sufficient evidence about the other compelling matters which justified the compulsory acquisition, which were all relevant, he could properly make a decision. That last point, says Mr Spence, is what the Secretary of State was saying at the end of para 16 of his letter. In this sense, said Mr Spence, this present case is very much to be contrasted with Sovmots where, as I have already recorded, Forbes J29 was saying that evidence of financial matters was important and cost was very much an argument at the inquiry, and with Prest where cost was the fundamental feature upon which the decision turned. In Prest the cost of the works was the vital feature that persuaded the Secretary of State to confirm the compulsory purchase order, and his omission of the cost of the acquisition of the land was the vital feature that flawed his decision. Mr Spence also reminds me of the practical difficulty of a local authority which is seeking to acquire land, particularly where it is seeking to acquire a number of buildings in a town centre from different landowners or owners of different interests, going into detail at a public inquiry about either acquisition costs or its estimated acquisition costs or likely future return. I do not think Mr Spence’s point relates to construction costs. That of course might be a matter for the developer who is going to bear the costs of it, not for the local authority. The point is that if the compulsory purchase order is going to be confirmed these matters are going to be in dispute between the individual landowners and the authority and if necessary the dispute is one which will have to be referred to and determined by the Lands Tribunal. Obviously, says Mr Spence, the local authority cannot be put in a position where it has to reveal its hand at an early stage, thus giving the landowner a potential weapon in negotiations which will not come about unless and until a compulsory purchase order is confirmed but which will be absolutely vital if a compulsory purchase order is confirmed. That same point was not relevant in the Sovmots case. What was in issue there was not costs of acquisition, but the likely cost of works needed to the various flats which were the subject of acquisition and the likely rent to be charged by the council for those flats. Of course, it was in issue in Prest, but it was absolutely fundamental that the figures in Prest were those given on the one hand as far as construction is concerned by the council and on the other hand as far as acquisition is concerned by the objectors. On the question of whether the Secretary of State did say in his decision letter that financial viability was a material consideration, not without some hesitation I agree with Mr Spence. While the Secretary of State did not say in terms, ‘I do not consider this in the end a relevant consideration’, he did refer to the only findings of fact as to the financial viability of the scheme. It is quite clear to me, and must have been quite clear to him and his advisers, that those two facts were insufficient to enable him to make a judgment as to whether or not the scheme would be financially viable. It would be inconceivable therefore, in my view, that if he had considered that this was a relevant factor he would have gone on and said: ‘It is relevant, it is therefore necessary for me to decide this issue, but I cannot do so, because I do not have the necessary evidence.’  He must be understood, in my view, as saying, in a passage that has its difficulties in interpretation, that in the circumstances it was not necessary for him to make a decision about financial viability. The local authority’s case at the inquiry, including its evidence, can in my view be summarised in this way. Firstly, they submitted, it is agreed that redevelopment in this area generally is desirable. The issue, so far as these objectors are concerned, is whether it is necessary to acquire their premises in order to carry out the development satisfactorily. Secondly, the council’s case was that the scheme which they were proposing which was the basis of the compulsory purchase had many advantages about which the council called considerable and detailed evidence. I have already said that they called evidence to the effect that the proposed centre should attract a volume of trade estimated at £9.4 million durable trading in 1971 pounds. The council went on that a smaller development omitting the objectors’ properties and then necessarily omitting some adjoining properties would not have such advantages and because it would not have those advantages it might well not proceed at all, thus losing the advantage of this development completely to the town. As far as the possibility of alternative development was concerned, as proposed by these developers, that would place a greater financial burden on the rates. Finally the council said: We are willing to relocate these objectors in the area and we thus do not accept that their business would be extinguished, but even if it is, the other advantages of acquiring the site and going ahead with the scheme outweigh the necessity to extinguish the Green business and the resultant costs of acquisition that would arise from that (although I do not think the council ever accepted the £1 million figure). The inspector concluded that even taking the risk of extinguishment into account the public need for the land outweighed the private rights of the objectors. In my judgment, the Secretary of State was acting within his powers when he said, on such limited evidence as the inspector had as to financial cost, that that evidence was not sufficient to displace the inspector’s opinion as to the advantages of the scheme in the public interest. Thus, in my judgment, the Secretary of State was entitled to accept the inspector’s conclusions that the compulsory purchase order should be confirmed. For these reasons the application for an order to quash the compulsory purchase order fails and it is dismissed. The application was dismissed with costs, the applicants to pay half the costs of each respondent.