London Welsh Association v Secretary of State for the Environment

Compulsory purchase order–Appeal from decision of Forbes J, who quashed Secretary of State’s confirmation of a compulsory purchase order made by Camden Borough Council–Council wanted properties for housing while London Welsh Association proposed to redevelop these properties together with others as a charitable headquarters–Association had also an alternative minor scheme to provide a hostel for people connected with the association–Secretary of State accepted inspector’s recommendations and confirmed council’s order–Forbes J quashed the confirmation on the ground that the Secretary of State’s decision letter did not show that he had had regard to a material consideration, namely, the association’s alternative minor scheme–Held by Court of Appeal that the decision letter, in accepting in toto the inspector’s findings, conclusions and recommendations, which included reference to the minor scheme, was not open to the judge’s criticism–The proper inference was that the Secretary of State had had regard to all material considerations–Appeal allowed This was an appeal by the Secretary of State for the Environment from a decision of Forbes J (1979) 252 EG 378, quashing a compulsory purchase order made by Camden Borough Council under Part V of the Housing Act 1957. The order related to three houses in Doughty Street in the borough which were part of a larger block held on behalf of the London Welsh Association, including houses in Mecklenburgh Square and Gray’s Inn Road. Bernard Marder QC and Simon Brown (instructed by the Treasury Solicitor) appeared on behalf of the Secretary of State; Sir Derek Walker-Smith QC and C Lockhart-Mummery (instructed by T J James & Co) represented the respondent association. Giving the first judgment at the invitation of Lawton LJ, BRIDGE LJ said: This is an appeal from a judgment of Forbes J given on February 23 last year, whereby he quashed the confirmation by the Secretary of State for the Environment of a compulsory purchase order which had been made by the London Borough of Camden under Part V of the Housing Act 1957, that being the part of the Act which authorises the acquisition, compulsorily if necessary, of property of any description to enable a local housing authority to fulfil its obligations to house persons on its housing list. The subject-matter of the compulsory purchase order was three houses in Doughty Street, Camden, nos 29, 30 and 31. Those three properties are part of a larger block of property, including no 11 Mecklenburgh Square, and nos 157 to 163 Gray’s Inn Road which, as is now established, although it was not established at the time when the compulsory purchase order was made, is held in trust by a Mr Williams and others on behalf of the London Welsh Association Ltd. I need not go into the detailed history, but there had for many years been a doubt as to the validity as a charitable trust–and which could only be valid if it was to be valid at all as a charitable trust–of the trust under which this property was held, and that doubt was eventually only resolved in favour of the trust being a valid trust between the date when the public inquiry into objections to the making of this compulsory purchase order was held, which was August 9 1977 and the date when the Secretary of State’s decision was promulgated, which was December 9 1977. The background to the matter was that the uncertainties attendant upon the title to the entire property which had flowed from the lack of any authoritative decision as to the validity of the charitable trust had caused considerable difficulties in the past for the owners as to how the property should be dealt with, and had led to a situation in which the subject properties, as I shall shortly recount, had fallen into the deplorable state in which they were at the time when the compulsory purchase order was made. Now Doughty Street is a terrace of 18th-century houses which runs into the south side of Mecklenburgh Square; it runs west of and parallel to Gray’s Inn Road and the three properties with which we are concerned, namely nos 29, 30 and 31, back on to the London Welsh Association’s properties in Gray’s Inn Road, nos 157 to 163. The case for the acquiring authority, which is clearly summarised in the report of the inspector who held the public inquiry into objections to this compulsory purchase order on behalf of the London Welsh Association and the trustees, was, first, that they had a very large and unsatisfied housing need in the borough and this was never in dispute; secondly, that these three five-storey 18th-century houses could make a very substantial contribution to that housing need if acquired for housing purposes and redeveloped in the manner proposed by the housing authority. 18 It was asserted for the housing authority and found as a fact by the inspector, that two of the houses, nos 29 and 30, had been empty for many years–one of them, I think, for eight years and another for as long as 18 years–and both of those had fallen, through lack of repair, into an utterly derelict condition. No 31, although in far from perfect condition, was not so bad, and was in part occupied by three tenants holding different portions of the premises, whom the local housing authority proposed to rehouse during redevelopment and then to return to the property after the redevelopment had taken place. The council’s proposal was, as it is recorded in paragraph 31 of the inspector’s report, to ‘. . . rehabilitate the buildings and convert into self-contained units with full amenities for each flat. The most suitable proposals would be six one-person units in the basement and ground floors, and three five-person maisonettes on the first, second and third floors’ giving an aggregate residential accommodation in the properties, as rehabilitated for 21 persons, and since there were only three persons living in the properties at the time of the making of the order, thus achieving a net housing gain for 18 persons. Details were given of the cost of the scheme, and it was also said on behalf of the acquiring authority that the local authority’s proposed redevelopment could be commenced within six months of the confirmation of the compulsory purchase order. The main ground on which the trustees and the London Welsh Association opposed the making of the compulsory purchase order was that they had a scheme of their own with which they hoped to proceed as and when doubts as to the validity of the charitable trust were resolved whereby they would redevelop the entire block of property which they owned–that is to say, not only the three houses the subject of the compulsory purchase order, but also 11 Mecklenburgh Square and the properties fronting on to Gray’s Inn Road. This scheme is referred to in the inspector’s report in the following terms: The scheme proposed was that the whole site would become a charitable headquarters for all the smaller charities in London who were in danger due to rising costs. The order properties would provide accommodation for people working in the new development. The rest of the site would be built to a higher level [meaning thereby a higher level than the existing state of the property] and have more offices meeting and conference rooms, better theatre restaurant bar/lounge, reception area and a car park below. No planning permission had been applied for as without a clear title it was unwise to incur costs and the chance of getting permission increased with the delay. The Rowntree Trust were still interested and the Elgin Trust were also interested. It seemed pointless to spend a lot of money on 29 and 30 Doughty Street to make them habitable for a limited time as it was hoped that the 1937 Trust [that is the charitable trust] would be validated by the end of the year. Plans for the development of the whole site would be spoilt by acquisition of the order land. The best method of dealing with the order properties was for nos 29 and 30 to be reconstructed for residential use behind the existing facade as part of a redevelopment of the association’s premises behind. This would provide a much better environment at the rear than would be possible with the existing hall and premises remaining, which would be the case if the council acquired the order land properties. Complete redevelopment would be a large scheme costing £3 1/2 to £4 million and probably take four to five years and also be subject to planning consideration. Pausing there, although it is not perhaps spelt out in terms in the passages I have read from the report, it is implicit, and has not really been disputed, that there were a great many imponderables as to whether and when it would be practicable for the London Welsh Association and the trustees to carry out the major redevelopment scheme of the entirety of their property which was their primary ambition. First, the status of the trust as a charitable trust had to be established; next planning permission would have to be obtained for the entire redevelopment; thirdly, it is implicit in what is said about the endeavours of the London Welsh Association to interest other trusts that outside finance was going to be required to enable the scheme to be carried out as intended, and that other charitable organisations would have to concur in the details of the scheme and agree to make contributions to its financing. After all those matters have been resolved, no doubt then agreement would have had to have been reached by all the participating parties on the precise detail and form of the redevelopment which was to be carried out. Reverting to the inspector’s report of the proposals advanced by the objectors, the London Welsh Association and the trustees, as to the manner in which they proposed that the property could be dealt with rather than being acquired by the London Borough of Camden, paragraph 50 of the inspector’s report records: ‘If the major redevelopment did not proceed a good title would enable finance to be obtained from the Midland Bank to convert the order properties into a good hostel for people connected with the London Welsh Association.’  So here was an alternative proposal for dealing with the properties the subject of the compulsory purchase order, on which the owners of the land were proposing to fall back, if for any reason their preferred proposal for major redevelopment of their entire holding should fall through. I ought perhaps to read in addition to those passages, a passage which I take to be a summary of the concluding submissions at the public inquiry with regard to the London Welsh Association’s plans, which is incorporated in the inspector’s statement of the case for the objectors. It is part of paragraph 54, which says: ‘The whole site had been purchased as one and should function as one . . . redevelopment of the major scheme would provide a unique opportunity for a charitable headquarters and a hostel at the rear and the latter would meet the council’s aims. The minor scheme’–that is a reference to the possible alternative of redeveloping the order properties in isolation if the major redevelopment scheme should fall through–‘was more realistic, practicable although costly to retain the facade but the council’s witnesses had accepted that the justification for the order went if physical rehabilitation and hostel use went ahead.’  Then followed this sentence: ‘This minor scheme could be started in 18 months.’ These matters are reproduced in two paragraphs in the inspector’s findings of fact at paragraph 70 of the report, which I think I ought also to read, although they are repetitive of what has already been said by the inspector in setting out the case for the objectors. They are subparagraphs 16 and 17 of paragraph 70 of the report. Subparagraph 16 is as follows: Mr Michael Williams has been president of the London Welsh Association since 1970. His plans for the whole property consist of a major redevelopment as a charitable headquarters with the order properties providing accommodation for those who work there. No planning permission, plans or details are available, but it is anticipated that this would be a £4 million development. The Rowntree Trust and the Elgin Trust have shown interest in the scheme. Then subparagraph 17 says: If this project does not proceed the order land houses would be used as a hostel for people connected with the London Welsh Association and subject to the decision on the trust being available by the end of this year this project could start in 18 months’ time. Some emphasis has been laid by Sir Derek Walker-Smith for the respondents in this court on the two statements to which I have drawn attention, both in recording the objectors’ case at the inquiry, and in the inspector’s findings of fact, that the minor scheme of redevelopment, which was being canvassed as an alternative to the overall scheme of development, was a scheme which could start within 18 months. I have felt, and I think the other members of the court have felt, some difficulty in interpreting exactly what that meant: on its face, it could have meant, as is submitted by Sir Derek Walker-Smith it did mean, that the minor scheme was one which was capable of being implemented or started at all events within 18 months of the date of the inquiry, August 1977, on19 the hypothesis, as turned out in the event to be the fact, that before the end of the year 1977 there would be a decision of the charitable commissioners validating the charitable trust. But I am afraid, for my part, I am quite unable to accept that interpretation of this somewhat cryptic statement of fact in the inspector’s report, because it seems to me that it is inherent in the whole tenor of the report in the manner in which it deals with the two alternative proposals being canvassed on behalf of the London Welsh Association, the major redevelopment of the entire property and the minor and separate redevelopment of the order properties, that what was referred to as the ‘minor scheme’ was entirely contingent on the failure of the major scheme, and it seems to me it was totally impossible, given that the major scheme was that which had the preference of the landowners and that which they were going to pursue as a matter of priority so long as they were able, to predict with any certainty at what point in the future the minor scheme might be implemented, because it was essentially contingent on the prior abandonment of the major scheme, and the major scheme was not going to be abandoned, that is the theme of the objectors’ case, unless and until it turned out to be impracticable or impossible for one reason or another. I turn now to a vital part of the inspector’s report, in which the inspector, Miss Naish, records her conclusions. They are set out in three relevant paragraphs and I will read them in their entirety, namely paragraphs 71, 72 and 73: 71. Bearing in mind the above facts I accept all the difficulties brought about by the trust situation but what I find hard to accept is the delay which has occurred in this matter resulting in the complete dereliction of 29 and 30 Doughty Street and their loss as housing accommodation in one case for eight years and the other for 18 years. 72. If the trust situation is resolved by the end of this year plans would have to be prepared for the major scheme, planning permission applied for and as things stand at the moment negotiations conducted with a third party such as the Rowntree Trust. This is bound to take a long time and if for any reason this major project does not go ahead there would be further delay in bringing the order land into use. 73. I have no doubt about Mr Michael Williams’ sincerity in his plans for the London Welsh Association, but having regard to the housing needs of the council, their ability to proceed with the work, their assurance regarding the tenants, the housing gain of accommodation for 18 persons and the fact that any delay can only mean further deterioration of the properties. I am of the opinion that acquisition by the council is justified. It was on the basis of those conclusions, subject to a minor matter affecting a small strip of land which is irrelevant for present purposes, that the inspector recommended to the Secretary of State that the compulsory purchase order should be confirmed. It will be seen that the factor of delay played a critical part in bringing the inspector to the conclusion that the council’s proposals for the use of the three houses in Doughty Street were to be preferred to those of the owners, notwithstanding it had been accepted that a hostel use of the three houses, which on either of the owners’ schemes was intended, would be acceptable in itself. The critical factor was that whereas the local authority’s project could go ahead within months of the confirmation of the compulsory purchase order and provide valuable housing accommodation to meet the council’s housing needs, a very large question mark hung over the programme which must govern the carrying out of either the major or the minor schemes proposed by the landowners. I now turn from the inspector’s report to the decision of the Secretary of State. It starts at paragraph 1 by saying that the report of the inspector has been considered, and then in paragraph 3 there is this summary of the case for the objectors. The objections to the order were mainly on the grounds that acquisition by the council was not justified because once certain problems relating to ownership of the houses had been resolved satisfactorily, the owners wished to restore the properties themselves as part of a larger scheme of development involving adjoining buildings owned by the London Welsh Association. Paragraph 5 began with the words: ‘The inspector’s findings of fact are given at paragraph 70 of her report and include the following’–and then the letter sets out the inspector’s findings of fact from 3 to 16, omitting 4, 8, 14 and 15, and there is no embodiment in paragraph 5 of the decision letter of subparagraph 17 of paragraph 70 of the inspector’s report which I read earlier and which, it will be remembered, was the paragraph in the inspector’s findings of fact making reference to the landowners’ minor scheme for separate development of the three order properties if the major scheme, for any reason, could not be implemented. Paragraph 6 of the decision letter embodies what I understand to be a summary by the Secretary of State, or the official in the ministry writing this letter on behalf of the Secretary of State, of the paragraphs which again I read in full setting out the inspector’s conclusions. The principal part of this paragraph reads: Even if the trust problems were resolved in the near future, further delays in the preparation of detailed development proposals by the owners and necessary consultations with interested parties would be inevitable. The sincerity of the owners’ plans for the London Welsh Association was not doubted, but having regard to the housing needs of the council, and the fact that further delays would only result in the further deterioration of the houses, acquisition by the council was justified. It will be observed that neither in the summary of the findings of facts included in the inspector’s report, which the decision letter sets out at paragraph 5, nor in express terms at all events in the summary of the inspector’s conclusions, is there any reference to the objectors’ proposals for what was referred to as the ‘minor scheme.’ But, finally, one comes to the paragraph which indicates the Secretary of State’s decision, and that is paragraph 7 and it reads as follows: The arguments put forward by the objectors and the council have been considered together with the inspector’s report. The representations made at the inquiry have also been considered, together with information received after the inquiry that the Charity Commissioners had decided that the trust is valid within the appropriate legislation and that consequently, the problems relating to the ownership etc of the order properties has been resolved. The inspector’s findings of fact, conclusions and recommendation have been accepted and the Secretary of State has therefore decided to confirm the order. . . . Now when this matter came before Forbes J he concluded that the confirmation of the order would have to be quashed because the Secretary of State had failed to comply with the well-known principle derived from the judgment of Lord Greene MR in Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223 that in exercising the kind of statutory discretion, which the Secretary of State was exercising in this case, it is incumbent on the party exercising the discretion to have regard to material considerations. Forbes J drew the inference, from the form in which the decision letter is expressed, that the Secretary of State had not had regard to what must be treated as a material consideration, namely, the landowners’ alternative and minor scheme for the proposed redevelopment of 29 to 31 Doughty Street. He described the concluding sentence, which I read from the decision letter: ‘The inspector’s findings of fact, conclusions and recommendation have been accepted and the Secretary of State has therefore decided to confirm the order . . .’ as an ‘incantation’ and he said that reference to a material consideration by such an incantation was insufficient–he said it was not sufficient merely to refer to any matter of any substantiality in that general way. Again, further on in his judgment one finds this sentence: ‘In my view this’–meaning the objectors’ minor scheme for alternative redevelopment–‘was a matter of sufficient importance to require the Secretary of State to have dealt with it and to have dealt with it otherwise than by some oblique reference in what has been called the incantation to the conclusions of the inspector.’ In this court, Sir Derek Walker-Smith for the respondent20 landowners does not feel able to go all the way with the learned judge’s reasoning in taking the view that a general reference, such as was made in this decision letter, cannot be a sufficient indication that the Secretary of State has had regard to material matters; provided, Sir Derek Walker-Smith says, such general reference stands on its own. If the Secretary of State is content to confine himself in his decision letter to saying, simpliciter, ‘I have read the inspector’s report. I accept all that she says as findings of fact, her conclusions and her recommendations and I therefore act in conformity with her recommendation and confirm the order, or fail to confirm the order,’ or whatever the decision may be, that, runs Sir Derek Walker-Smith’s argument, is a perfectly acceptable way in which the Secretary of State can indicate the reasons for his decision. But it is otherwise, so runs the submission, if as it is submitted here, the Secretary of State makes what Sir Derek Walker-Smith in the course of his argument repeatedly described as a ‘speaking order.’  If the Secretary of State sets out his own reasons in his own words, then those reasons must be complete and it is submitted that any omission from those reasons of an express reference to any matter of sufficient substantiality to have warranted express consideration by the decision-making authority, namely the Secretary of State for the Environment, is sufficient to warrant the inference that no consideration has been given to that matter and thus to vitiate the decision. In my judgment, that argument fails for a very simple reason, namely, that paragraphs 3 to 6 of this decision letter do not constitute a speaking order at all. The order which the decision letter conveys, and the reasons for the making of the order to confirm the compulsory purchase order of the local authority, is not made and are not expressed until we get to paragraph 7. All that paragraphs 3 to 6 are doing, and doing overtly, expressly and avowedly, is to summarise in abbreviated form the principal features of the inspector’s report. Paragraph 3 contains the word ‘mainly’ in setting out the main ground on which objection to confirmation of the compulsory purchase order had been advanced. Paragraph 5 is introduced by the phrase ‘The inspector’s finding of fact include the following’–and does not purport to set out all the findings. Paragraph 6 is, on its face, manifestly not a complete recital but merely an abbreviated summary of the inspector’s conclusions. But it does not in the least follow from that, in my judgment, that when in paragraph 7 the decision letter states in terms that all the arguments put forward have been considered, all the representations have been considered and that the inspector’s findings of fact, conclusions and recommendations are accepted and that those are the reasons why the Secretary of State has decided to confirm the order, the Secretary of State is there confining his attention to the matters which he has summarised in the previous paragraphs which are no more than a preface to his decision. As was pointed out in the course of the arguments, what we are really asked to do is to treat paragraph 7 as meaning something less than it says, and for my part I can see no reason why we should do so. I can see no reason why a perfectly straightforward statement that the inspector’s findings of fact, conclusions and recommendations have been accepted, and that is why the Secretary of State has decided to confirm the compulsory purchase order, should not be accepted at their face value. I can see no reason whatever why one should interpret paragraph 7 as an indication that in considering the inspector’s report and the findings and conclusions and recommendations contained in it, the Secretary of State confined his attention to the matters which he has briefly summarised in the preceding paragraphs. Of course, an entirely different situation would arise if the reasoning leading the Secretary of State to his decision was a reasoning differing from that in the inspector’s report, but that was not the case here. In this case, the Secretary of State was, if I may use the phrase, adopting the inspector’s reasoning lock, stock and barrel. From start to finish, no criticism of the inspector’s reasoning in her admirable report has at any time been advanced either before Forbes J or before this court, and for those reasons it seems to me that Forbes J came to an unwarranted conclusion when he decided that he could properly infer that the Secretary of State had failed to have regard to a material consideration. In my judgment, the proper inference from paragraph 7 is that he had regard to all the material considerations. I would allow the appeal, set aside the order of the learned judge and reinstate the confirmation by the Secretary of State of the local authority’s compulsory purchase order. Agreeing, SHAW LJ said: The conclusion reached by the inspector was expressed in concise terms in paragraph 73 of her report, where she said ‘I have no doubt about Mr Michael Williams’ sincerity in his plans for the London Welsh Association but having regard to the housing needs of the council, their ability to proceed with the work, their assurance regarding the tenants, the housing gain of accommodation for 18 persons and the fact that any delay can only mean further deterioration of the properties, I am of the opinion that acquisition by the council is justified.’  That was the conclusion which the Secretary of State considered it right to act upon, and the decision letter, as I read it, makes that plain in what are, in the circumstances of this case, perfectly adequate terms. I feel, however, a good deal of sympathy with the objectors, the more so since the result of the confirmation by the Secretary of State of the compulsory purchase order has frustrated a major reason for his decision, namely, the prospective delay in the rehabilitation and use of the premises if the order were not confirmed. In the event, the delay has been extended far beyond that which the objectors’ proposals would have occasioned. That, however, is fortuitous, and cannot affect the validity or the propriety of the Secretary of State’s decision. For the reasons which have been fully stated by Bridge LJ, I, too, would allow this appeal and make the order proposed. Agreeing with both judgments, LAWTON LJ said: In the course of his submissions on behalf of the Secretary of State, Mr Marder told the court that the minister and his advisers were concerned about those passages in Forbes J’s judgment in which he referred to ‘incantation.’  Bridge LJ has dealt specifically with those passages. Mr Marder went on to invite the court to indicate guidelines as to the form in which decision letters in cases of this kind should take. We have all rejected that invitation. I should explain my reason for doing so. The object of a decision letter is to indicate what the Secretary of State has decided and why he has decided as he has. How the letter should be framed must depend upon the subject-matter. If the subject-matter is of a fairly straightforward kind, and the Secretary of State is not differing from his inspector, I can see no reason why he should not deal with it as he did in this case. There was no question of incantation here, no use of a meaningless formula. All the Secretary of State was doing was to say, as Bridge LJ has pointed out, that he was accepting the reasoning and the conclusion of his inspector. If, however, there is any reason for him to depart from the reasoning of the inspector, it is for him to decide how he should indicate his reasoning. It follows in my judgment that guidelines from this court would be inappropriate and, perhaps, somewhat impertinent. I, too, agree that the appeal should be allowed. The appeal was allowed. The order of Forbes J was set aside and the Secretary of State’s confirmation of the compulsory purchase order reinstated. The appellant (the Secretary of State) was awarded costs in the Court of Appeal and below.