R v Lancashire County Council and another, ex parte Telegraph Service Stations Ltd
Sale of surplus land — Land adjoins applicant’s service station — Bids invited — Applicant and rival service station owner put in bids — Bid from rival owner accepted — Applicant made higher offer — Whether council bound to accept highest price — Whether council had acted reasonably
The Marshall’s branch library site, Burnley, has been unused since 1969; the buildings on it are unsafe. The applicant company own a service station on land adjoining the site and have been trying to acquire the site since early 1987 to expand their business. There is another service station some 300 yards away owned by the second respondents, D Kitchen Ltd; there is great rivalry between the two stations and a price war. The county council decided to sell the library site and in October 1987 it was put on the market with an asking price of around £7,000. Within 14 days the applicants had put in an offer of £7,500. In early November the second respondents put in an offer of £17,100 “open until November 20” as a spoiling tactic, as they knew the applicants wanted the site.
On December 2 1987 the parties were informed of the decision of the county council’s land and buildings subcommittee to accept the second respondents’ offer. The following day the applicants put in a further offer of £35,000. On January 6 1988 both parties were asked to provide sealed offers containing their highest bids. The applicants then sought judicial review of the county council’s actions, claiming they were in breach of section 123(2) of the Local Government Act 1972 as they must be regarded as trustees bound to obtain the best price on behalf of the ratepayers.
Sale of surplus land — Land adjoins applicant’s service station — Bids invited — Applicant and rival service station owner put in bids — Bid from rival owner accepted — Applicant made higher offer — Whether council bound to accept highest price — Whether council had acted reasonablyThe Marshall’s branch library site, Burnley, has been unused since 1969; the buildings on it are unsafe. The applicant company own a service station on land adjoining the site and have been trying to acquire the site since early 1987 to expand their business. There is another service station some 300 yards away owned by the second respondents, D Kitchen Ltd; there is great rivalry between the two stations and a price war. The county council decided to sell the library site and in October 1987 it was put on the market with an asking price of around £7,000. Within 14 days the applicants had put in an offer of £7,500. In early November the second respondents put in an offer of £17,100 “open until November 20” as a spoiling tactic, as they knew the applicants wanted the site.
On December 2 1987 the parties were informed of the decision of the county council’s land and buildings subcommittee to accept the second respondents’ offer. The following day the applicants put in a further offer of £35,000. On January 6 1988 both parties were asked to provide sealed offers containing their highest bids. The applicants then sought judicial review of the county council’s actions, claiming they were in breach of section 123(2) of the Local Government Act 1972 as they must be regarded as trustees bound to obtain the best price on behalf of the ratepayers.
Held The application succeeded and the decision of the land and buildings subcommittee was quashed. The county council were ordered to comply with the requirements of the relevant statutory provisions. The county council were not to be regarded as trustees for the ratepayers, but they owed similar duties in respect of the funds received by them. They had a duty to find out all relevant facts before selling land, but this probably did not amount to a duty to go to auction; where it was known that particular parties were interested, they should take reasonable steps to find out how far the parties were prepared to go.
In the circumstances the county council had not taken reasonable steps. The obligations imposed on them by section 123, to sell at a consideration no less than the best that can be reasonably obtained, did not require an authority to gazump a party who had made an offer, but it did require them to consider all factors. The subcommittee had not been given all the facts; that the land was being sold very much at the applicants’ insistence and that the second respondents’ bid was a spoiling tactic. The test was whether a reasonable committee which had the full picture put before it would have arrived at the conclusion that this committee had arrived at.
R v Essex County Council, ex parte Clarebrook (unreported 1981) considered.
Anthony Hidden QC and Stephen Hockman (instructed by Lee Bolton & Lee, for Bullivant & Co, of Liverpool) appeared for the applicants; Elizabeth Appleby QC and Richard McManus (instructed by the solicitor to Lancashire County Council) appeared for the first respondent; and Charles Cross (instructed by Southern Jobling & Ashworth, of Burnley) appeared for D Kitchen Ltd, the second respondents.
