Venrich Ltd v Secretary of State for the Environment and another

Compulsory purchase — Compulsory purchase order — Acquisition of Land Act 1981, section 23 — Application to quash order — Substantial prejudice to applicants alleged — Applicants not present or represented at first public local inquiry — Complaint that they did not receive notice of compulsory purchase order — Question as to ownership of subject property at material date — Inquiry reopened by Secretary of State for the Environment — Compulsory purchase order confirmed by Secretary of State — Present application to quash order dismissed — No substantial or indeed any prejudice suffered by applicants and no breach of natural justice After the first public local inquiry had taken place in this case and the inspector had recommended confirmation of the compulsory purchase order, the applicants complained that they had become owners of the subject property some years earlier but had not been served with the statutory notice of the making of the compulsory purchase order — The Secretary of State agreed to reopen the inquiry under a different inspector — At the rehearing the second inspector considered both the applicants’ challenge to the validity of the order and its merits — The applicants were given a hearing on the assumption that they were the beneficial owners — However, the inspector expressed the view that the applicants had not been owners of the property since 1984, as they claimed; their predecessors in title had appeared at the first inquiry and documentary evidence pointed to a transfer of title at a later date — In confirming the compulsory purchase order the Secretary of State decided that it was not necessary for him to reach a conclusion as to the date when the applicants became owners The applicants’ notice of motion complained of the Secretary of State’s decision not to determine the question of ownership, but the submissions to Otton J ranged more widely — It was submitted that it was prejudicial to the applicants for the Secretary of State to take account of any findings or conclusions before the first inspector — It was also submitted that the Secretary of State had not said to what extent he was influenced by each inspector’s findings — Among other arguments it was suggested that it was sufficient to show a risk or possibility that the Secretary of State had acted in a manner contrary to natural justice — It was emphasised in reply on behalf of the Secretary of State that the applicants were given a full opportunity to be heard at the reopened inquiry on the assumption that they were, in fact, the beneficial owners — It was also submitted that there was no obligation on the Secretary of State to ignore or put out of his mind what happened at the first inquiry — It was also mentioned, in connection with the applicants’ allegation of prejudice, that the documents appeared to show that a certain Mr Herskovic was probably a director of both the applicant company and their predecessors in title After stating that he had to be satisfied that the applicants’ interests had at some stage leading up to the confirmation been substantially prejudiced, Otton J said that he was satisfied that at no stage had they been prejudiced at all — As soon as the applicants had complained that they had not been served with the statutory notice the Secretary of State was at pains to ensure that they should have a fair opportunity both to challenge the validity of the order and to advance a case on the merits — No criticism could be made as to the conduct of the rehearing — Even after its conclusion the Secretary of State considered representations from the applicants — He did not think it necessary to make a positive finding on the ownership issue but the applicants had been given a full hearing on the assumption that they were the owners — There was no unfairness — The Secretary of State had not been in error in taking into account findings or conclusions at the first inquiry; if any of them appeared to be adverse to the applicants they had the opportunity to state their case at the rehearing — The Secretary of State’s conduct had been impeccable — Application dismissed No cases are referred to in this report. This was an application by Venrich Ltd under section 23 of the Acquisition of Land Act 1981 to quash the confirmation by the Secretary of State for the Environment of a compulsory purchase order made by the London Borough of Hackney which applied to the premises which were the subject of these proceedings. Alan Green (instructed by Ronald Fletcher Baker & Co) appeared on behalf of the applicants; David Pannick (instructed by the Treasury Solicitor) represented the first respondents, the Secretary of State for the Environment; the second respondents, the London Borough of Hackney, were not represented and took no part in the proceedings. Giving judgment, OTTON J said: This is an application under section 23 of the Acquisition of Land Act 1981 to quash the confirmation by the Secretary of State for the Environment of a compulsory purchase order. The history of this matter can be briefly stated. On February 26 1986 the local authority, the London Borough of Hackney, issued the London Borough of Hackney (178 Lower Clapton Road E5) Compulsory Purchase Order 1986. On March 11 1986 the local authority issued a control order in respect of the premises. On July 29 1986 a public inquiry was held in connection with the local authority’s application for confirmation of the order. By a letter dated August 29 the inspector, Mr Bromley, advised the Secretary of State that acquisition of the property for the purposes of providing housing accommodation was justified and recommended that the compulsory purchase order be confirmed. However, at the request of the applicants, Venrich Ltd, the Secretary of State agreed to reopen the inquiry. The ground for doing so was that the applicants claimed that they had become the beneficial owners of the property on March 1 1984, and that they should have been served with a statutory notice of the making of the compulsory purchase order and it was thus a nullity contrary to246 section 12(1) of the Acquisition of Land Act 1981. On January 5 and 6 1988 the inquiry was reopened before a different inspector, Mr Nightingale. It took the form of a complete rehearing. After the hearing the Secretary of State received a letter dated February 2 1988 from Venrich Ltd, making submissions regarding their ownership of the land and objections to the confirmation of the compulsory purchase order. In his letter dated March 25 the learned inspector set out his conclusions in nine numbered paragraphs, the important parts of which state: 7  The facts militate against Venrich Ltd’s claim to ownership on March 1 1984 8  There are two parties to a sale or transfer of property. The purchaser, Venrich Ltd, has contended that the property was bought in March 1984, but, despite pre-inquiry requests, has not been able to support that contention. Indeed all the documentary information points to a transfer at the end of 1986. The vendor, Tollmere Ltd, appeared at the inquiry in July 1986. It is inconceivable that that company would have wasted time at that inquiry, especially since a principal plank of their case was that they were willing to sell to a prospective purchaser. 9  I conclude that there are strong grounds for concluding that Venrich Ltd’s claim to ownership on 1st March 1984 has not been substantiated. On June 7 1988 the Secretary of State in his decision letter rejected the submission that the order was a nullity and proceeded to determine it on its merits. At para 12 he wrote: The Secretary of State accepts Mr Bromley’s findings of fact as at July 29 1986 and his conclusions with the qualifications that the Secretary of State regards the findings in para 32.11-15 of the Report which relate to a proposal of Ms Helen R Soffa to purchase the order property and the conclusions reached on those findings are no longer relevant. The Secretary of State has therefore disregarded them. The Secretary of State accepts Mr Nightingale’s findings of fact as at January 5-6 1988 and agrees with the conclusions in para 41.1-6 of his Report. The Secretary of State has also considered the further representations mentioned in para 10 above but he sees no reason to disagree with the above conclusions. The Secretary of State has not in the circumstances thought it necessary to reach a conclusion as to the ownership of the order property as at March 1 1984. For these reasons the Secretary of State has decided to accept the Inspectors’ recommendations and to confirm the London Borough of Hackney (178 Lower Clapton Road E5) Compulsory Purchase Order 1986. In the notice of motion dated July 14 on behalf of the applicants it is stated: . . . that the grounds of this application are: 1  That the interests of the applicant have been substantially prejudiced by the decision of the Secretary of State that it was not necessary to determine the ownership of the order property as at March 1 1984, in his confirmation of the said Compulsory Purchase Order on June 7 1988. (Para 12). 2  The said decision was contrary to the rule of natural justice that a conclusion upon which a Minister acts must be supported by evidence, that is to say a finding of fact. 3  In his conclusion the Inspector, Mr Nightingale, (Para 41.4) rejecting the proposals of the applicant for rehabilitation of the order property, stated his lack of confidence in the applicant’s proposals which he inferred from the long period in which the applicant took no action to assert ownership and ascertain conditions at the property. Mr Green, who appeared on behalf of the applicants, was instructed late in the day. He lodged a well-presented skeleton argument for the court and at the start of the proceedings he made it clear — I use his precise words — that it was not right to put forward arguments on grounds 4 to 10 in the notice of motion. He sought leave to amend the notice by the addition of a further passage. This was opposed by Mr David Pannick on behalf of the respondents. Having heard full argument, I refused that application. After a short adjournment, the application proceeded on the unamended notice of motion. However, in the course of argument it was clear that the submissions advanced were ranging more widely than the terms of the original notice of motion and I allowed, without objection from Mr Pannick, Mr Green to include and rely upon paras 6 to 11 in the affidavit of Mr Roberts [a solicitor with Fletcher Baker & Co]. In reality this was an extension of his ‘natural justice’ argument. Mr Green submitted, first, that the Secretary of State in confirming the compulsory purchase order started by accepting the findings of fact and conclusions of each of the inspectors. In doing so, he contends, the Secretary of State was acting contrary to natural justice. Venrich Ltd were not represented at the first hearing, and the only representations were by their predecessors in title, Tollmere. Thus, he submits, it is inherently prejudicial to the applicants for the Secretary of State to accept, rely on, or act upon any of the findings and conclusions of the first inspector. The Secretary of State should have had no regard whatsoever to any of the findings or conclusions of Mr Bromley in the first report. In particular, he should have disregarded the conclusion that the compulsory purchase order should be confirmed. This was bound, he submits, to be in the Secretary of State’s mind when he was considering the same conclusion in the second inquiry letter and whether to accept the recommendation to do so. Second, Mr Green complains that the Secretary of State does not state to what extent he was influenced by each inspector’s findings and, in particular, the inspector’s findings in the first inquiry; or, by implication, the second inspector’s findings in the second inquiry. Thus, to be influenced at all by the findings in the first inquiry is contrary to the rules of natural justice. Third, Mr Green mounted an argument designed to show that there was inconsistency between the findings of fact and conclusions in the two inspector’s reports, but he did not develop this argument with much particularity. Mr Green also pointed to a number of additional findings in the first inquiry compared with the additional findings in the second inquiry, and submitted that the qualification of these may have had some influence on the Secretary of State in his decision-making process. He also relied upon the fact that between the two inquiries a fundamental change occurred in the local authority’s proposal. At the first inquiry the local authority proposed to acquire the premises and redevelop them themselves. In the second inquiry the local authority proposed to dispose of the premises to a property developer or a housing association. He complains that the Secretary of State makes no distinction or allowance for this discrepancy or change in approach of the local authority in arriving at his decision. Finally, he suggests that it is sufficient for the applicant in a situation such as this to show that there was a danger, or risk, or a possibility that the Secretary of State acted in such a way which was contrary to natural justice and risk of substantial prejudice as a result of considering these immaterial and inconsistent matters. Mr Pannick, on behalf of the Secretary of State, submits that the applicants’ interests were not substantially prejudiced. They were given a full opportunity to be heard at the second inquiry. They took the opportunity and advanced arguments on the validity of the compulsory purchase order and its merits. They were heard on the assumption that they were the beneficial owners. The second inspector was not impressed by their case and in the event they were found not to have been the beneficial owners at the time they alleged, but only from December 1986. He submits that any minor inconsistencies or additional findings or omissions fall short of substantial prejudice. There was no obligation upon the Secretary of State to ignore or put out of his mind what was said, or the findings and conclusions of the first inspector. Those proceedings were not a nullity and the reopening and the rehearing de novo did not mean that the Secretary of State was obliged automatically to put all those matters out of his mind. He submitted that it is unlikely that there would have been a substantial prejudice because of the close relationship to be inferred from the documents which indicated, he submits, that a Mr Herskovic was probably a director of both companies. Finally, he submitted that the Secretary of State had done everything which could be expected of him. In reaching my conclusions I take as my starting point the provisions in section 24(2)(b) of the Acquisition of Land Act 1981. Section 24 provides: (1)  On an application under section 23 above the court may by interim order suspend the operation of the compulsory purchase order or any provision contained therein, or of the certificate, either generally or in so far as it affects any property of the applicant, until the final determination of the proceedings. (2)  If on the application the court is satisfied that — (a)  . . . (b)  the interests of the applicant have been substantially prejudiced by any relevant requirement (as defined in section 23(3) above) not having been complied with, the court may quash the compulsory purchase order or any provision contained therein, or the certificate, either generally or in so far as it affects any property of the applicant. I have quoted from Halsbury’s Statutes, vol9, and the footnote to that subsection reads as follows: Substantially prejudiced. The interests of applicants will be substantially 247 prejudiced if, eg they are deprived of the opportunity of making representations and objections, or if they are deprived of the chance of other objectors making representations which would have been in the interests of the applicants; see Wilson v Secretary of State for the Environment [1974] 1 All ER 428. Similarly where there has been a failure to serve notice on a joint owner of the property; see George v Secretary of State for the Environment (1979) [38 P&CR 609]. I have been referred to the latter authority and I need only refer to part of the headnote, para 3, p 611: That an order was ‘not empowered to be granted’, within paragraph 15(1)(b) of Schedule 1 to the Act of 1946, if the steps that had been taken had resulted in a breach of natural justice that resulted in unfairness (which was similar in meaning to ‘substantial prejudice’) to the applicant; but that there had, on the facts, been no substantial prejudice, or any prejudice, and equally no unfairness, to the applicant as a result of the error of the acquiring authority in not serving her with the compulsory purchase order. Authorities are cited, and then: Per curiam. There is no such concept known to the law as a technical breach of natural justice, ‘A breach of natural justice’ means that, because of what has happened — something that has been done or has failed to be done — either somebody has actually suffered injustice or there is a real risk that somebody has suffered injustice. Finally, I refer to para 3 of the propositions of law set out in the skeleton argument: Fairmount Investments Ltd v Secretary of State for the Environment [1976] 2 All ER 865 shows that the requirements of section 24(2)(a) are satisfied in a case where there has been a breach of the principles of natural justice in the process leading up to the confirmation of a compulsory purchase order. Thus, I have to be satisfied that the interests of the applicants have been substantially prejudiced at some stage leading up to the confirmation of the compulsory purchase order. I am not satisfied that the applicants’ interests have at any stage been substantially prejudiced by any such requirements. On the contrary, I am satisfied that at no stage have their interests been prejudiced substantially or at all. They were not present at the first inquiry, nor were they represented. However, after the submission of the first inspector’s report, which was in favour of the local authority and adverse to the owners, whoever they might be, the applicants made representations to the Secretary of State that Venrich had become beneficial owners of the order property on March 1 1984; they should have been served with a statutory notice; and they should have had the opportunity of making representations. It is recorded in the Secretary of State’s letter: ‘The Secretary of State thought it right in the circumstances to reopen the inquiry’. Thus, as soon as the matter was raised, the Secretary of State was at pains to ensure that a fair opportunity was given to the applicants to dispute the validity of the order and to advance a case on its merits. This they duly did at the second inquiry, which took the form of a renewed hearing. A different inspector was appointed and he conducted a rehearing. Thus, at this stage the Secretary of State had addressed his mind to the question of prejudice and had acted accordingly. No criticism can be levelled at the Secretary of State or his inspector as to the conduct of the rehearing. In para 7 of the decision letter the Secretary of State states as follows: At the reopened local inquiry Venrich Ltd have objected to the compulsory purchase order on grounds including the ground that they intend to either retain the order property in the company’s ownership and convert it, or to sell the property to a company which had done work at adjoining properties. Venrich Ltd have also submitted that the compulsory purchase order is a nullity because they were not served the notice relating to the order. This description is not disputed. I can find no prejudice at that stage. The Secretary of State did not leave the matter there. It is clear that after receiving the second inspector’s letter, he again applied his mind to two questions: (1) the applicants’ claim to ownership and (2) the question of the possibility of prejudice. At para 10 of the decision letter he states: Following the local inquiry the Secretary of State has received an unsigned letter dated February 2 1988 from Venrich Ltd and enclosures making further submissions regarding the ownership of the property and their objections to the compulsory purchase order. A copy of this letter and enclosures is enclosed. At para 11 he states: The Secretary of State has considered the submission referred to in paragraph 7 above that the compulsory purchase order is a nullity. Questions remain as to whether Venrich Ltd were an owner of the order property for the purposes of the Acquisition of Land Act 1981 at the time the notices under section 12 of that Act were required to be served. At this stage it must be remembered that the second inspector at para 41 had set out his conclusions under nine numbered paragraphs. Paras 7, 8 and 9 dealt with the Venrich position. In 7 and 8 the inspector set out the facts which militated against Venrich’s claim to ownership on March 1 1984, and at 9 the inspector had said in terms that he concluded that there are strong grounds for concluding that Venrich Ltd’s claim to ownership on March 1 1984 has not been substantiated. The Secretary of State dealt with the issue in this manner at para 12: The Secretary of State accepts Mr Bromley’s findings of fact as at July 29 . . . The Secretary of State accepts Mr Nightingale’s findings of fact as at January 5-6 1988 and agrees with the conclusions in para 41.1-6 of his Report. The Secretary of State has also considered the further representations mentioned in para 10 above but he sees no reason to disagree with the above conclusions. The Secretary of State has not in the circumstances thought it necessary to reach a conclusion as to the ownership of the order property as at March 1 1984 . . . Thus, the Secretary of State has expressly agreed with the conclusions 1 to 6, but has declined to do so for those numbered 7, 8 and 9. He has also considered the further representations made after the second inspector’s letter. He has then declined to make a positive finding, that is reach a conclusion, as to the ownership of the order property as at March 1 1984. It was open to him to approach the issue in this way. Neither his method nor his decision, as expressed, can be faulted. He then proceeded to reconsider the prejudice aspect. At para 11 he stated: In the Secretary of State’s view the primary purpose of the requirement to serve notice of an order on an owner is to enable him to object to it and, if the objection is not withdrawn, to be heard on it before a decision on confirmation of the order is made. On the assumption (my emphasis) that Venrich were an owner at the relevant time, the Secretary of State considers that they have been given a full opportunity to state their objection to the order both in correspondence and, in particular, at the reopened inquiry and that they have not been substantially prejudiced by any failure of the local authority to serve notice under section 12 on them and that there has been no breach of natural justice or unfairness arising from any such failure. I consider Mr Pannick’s use of the epithet ‘impeccable’ is apt. The Secretary of State has deliberately assumed, contrary to the adverse conclusion of his second inspector, that Venrich Ltd were an owner at the relevant time and then went on to consider whether they have been given a full opportunity to state their case and whether there has been a breach of natural justice and unfairness. In my judgment, he correctly decided that they had and there was no unfairness. I would go further. There is no rule in law or in principle that the Secretary of State, having ordered a reopening of an inquiry which took place before a different inspector, should ignore or not take into account any findings of fact or conclusions already recorded in the first inspector’s letter. If I were so to hold, it would have the undesirable consequence that if there were findings and conclusions which were favourable to the applicants in a similar situation, he would have to ignore them and he could not take them into account. This would be unfair. I see no reason why the Secretary of State should not take the earlier findings and conclusions into account, provided that if they are adverse to the applicants, or appear to the applicants to be adverse, they are given a full opportunity to state their case at the rehearing. Finally, I am satisfied that any inconsistencies or omissions of findings or additional findings in the two reports or changes in the local authority’s proposals are so minor and insignificant that they do not establish any substantial or indeed any prejudice. Even if there were any findings in the first report which the applicants did not accept, they had a full opportunity to deal with them at the second inquiry. It is unnecessary in these circumstances to make a finding on Mr Pannick’s submission that in reality there could have been no prejudice because of the close relationship between Tollmere and Venrich. In summary, I conclude, that there has been no substantial or any prejudice, no breach of natural justice that resulted in any unfairness nor is there any real risk that the applicants have suffered injustice. Accordingly, I dismiss this application. The application was dismissed with costs.