Yorkshire Traction Co Ltd v Secretary of State for Transport and another

Compulsory purchase — Compulsory purchase order — Whether power to acquire compulsorily a business undertaking — Whether CPO inhibits competition — Whether executive had sufficient resources — Whether CPO properly confirmed On November 4 1994 the first respondent Secretary of State for Transport confirmed a compulsory purchase order sought by the second respondent passenger transport executive in respect of, inter alia, a bus station owned by the appellant company. The order was stated to be required to improve public transport and provided an interchange between buses and trains at the site of the bus station. The appellant sought to quash the decision of the Secretary of State confirming the CPO. That application was refused in the court below. On appeal, the appellant contended that: (1) there was no power to purchase compulsorily where the principal purpose is to take control of part of the owner’s undertaking; (2) the CPO has the effect of inhibiting competition between persons providing passenger transport services; and (3) the burden was not on the appellant to establish that the executive had insufficient resources to be able to implement the CPO. Held: The appeal was dismissed. (1) The Secretary of State was entitled to conclude that the wider public interest in regard to the establishment of modern integrated passenger facilities under the control of the executive should take precedence over the private interest. Provided that the executive were acting in good faith, the fact that the acquisition of the appellant’s land had an adverse effect upon the business or undertaking of the appellant does not render the purchase unlawful. (2) Section 9A(6) of the Transport Act 1968, which requires the executive to conduct themselves so as not to inhibit competition between persons providing or seeking to provide public passenger transport services in their area, does not require the executive to avoid acquiring land already used as a bus station. (3) In considering the adequacy of the executive’s resources, the Secretary of State was entitled to assume, having regard to the legal powers of the executive and the evidence before him, that the executive were able to finance the implementation of the CPO powers. The following cases are referred to in this report. Prest v Secretary of State for Wales (1982) 81 LGR 193; [1983] 1 EGLR 17; [1983] EGD 282; 266 EG 527, CA R v Secretary of State for Transport, ex parte de Rothschild [1989] 1 All ER 933, CA This was an appeal by the applicant, Yorkshire Traction Co Ltd, from a decision of Popplewell J who had dismissed the applicant’s application to quash the decision of the first respondent, the Secretary of State for Transport, to confirm a CPO sought by the second respondent, South Yorkshire Passenger Transport Executive. David Mole QC and Murziline Parchment (instructed by Oxley & Coward, of Rotherham) appeared for the appellant; David Elvin (instructed by the Treasury Solicitor) represented the first respondent, the Secretary of State for Transport; the second respondents, South Yorkshire Passenger Transport Executive, did not appear and were not represented. Giving the first judgment at the invitation of Leggatt LJ, PILL LJ said: This is an appeal by Yorkshire Traction Co Ltd (‘the company’) against a decision of Popplewell J on January 30 1996 whereby he refused the company’s application that a decision of the Secretary of State for Transport (‘the Secretary of State’) dated November 4 1994 by which he confirmed the South Yorkshire Passenger Transport Executive (Barnsley interchange) CPO No 2 1992 should be quashed. The powers and functions of the executive are set out in sections 9 and 10 of the Transport Act 1968 as amended. Section 9A(3) of the Act provides that: It shall be the duty of the Executive for any passenger transport area to secure the provision of such public passenger transport services as they consider it appropriate to secure for meeting any public transport requirements within their area in accordance with policies formulated by the Authority for their area under subsection (1) of this section. The authority referred to is the passenger transport authority whose duties are set out in the same sections of the Act. Under section 9A(5) the executive (putting it generally) shall take such measures as appear to them to be appropriate for carrying out policies of the passenger transport authority for the area, for the availability and operation of public passenger transport services and the convenience of the public in using all available public passenger transport services. By section 10(3) of the Act the Secretary of State may authorise a public transport executive to purchase compulsorily any land: … which the Executive or any wholly-owned subsidiary of theirs shall require for the purposes of their business, and the [Acquisition of Land Act 1981] shall apply to the compulsory purchase. The object of a CPO is, of course, to authorise purchase of land. In October 1992 the executive, in purported exercise of their powers, made a CPO with respect to about 5,500m2 of land in the centre of Barnsley owned and used by the company as a bus station. The executive issued a statement of reasons for the proposed scheme and described it as follows: The proposed scheme (1) During the 1980’s it became increasingly apparent that the arrangements for public service transport in Barnsley were inadequate and did not provide an acceptable level of service for the public. The only bus station facilities were those provided within the order lands (referred to for convenience as ‘the old bus station’) and there was no co-ordination between the old bus station and the adjacent British Rail train station. There was and is sufficient space in the old bus station for all services currently in operation. The old bus station does not lend itself to safe and efficient operation because of its shape and size, and its location and physical limitations have been a major factor in causing traffic congestion in the town centre which has been exacerbated by the proximity of Jamble Lane Level Crossing. (2) In consequence the Executive, in co-operation with Barnsley Metropolitan Borough Council and in consultation with interested parties including Yorkshire Traction Company Limited, determined to seek to provide a passenger transport interchange under its own operational control, within which access to bus and rail facilities would be provided on an integrated basis to modern standards. The land identified as necessary for incorporation within the interchange included the old bus station, the land to its north between Eldon Street and the railway line, the site of the old railway station, and additional land to the east of the railway. There would be a bridge over the railway, a central concourse building, and facilities for buses on both sides of the railway. (3) The proposed scheme for the interchange will greatly enlarge the area available for bus and passenger use, will enable bus and rail services to be fully integrated, and will significantly reduce the number of bus journeys over the level crossing. The accident potential both within the interchange and on the adjoining roads will be greatly reduced and passenger and bus movements will be reduced and simplified. (4) The interchange scheme has been partially implemented in that, since May, 1992 some new bus facilities have been provided on both sides of the railway and the train station has been partly renewed. The Executive committed itself initially to these works in the belief that Yorkshire Traction 29 Company Limited were willing to relinquish to the Executive land for new buildings and new access arrangements to Eldon Street, and to relinquish operational control over the remainder of the old bus station so that it could be managed by the Executive as part of the new interchange. (5) In the event it has not proved possible to secure by agreement the requisite interests in or over the order lands and in consequence the completion of the interchange and its management thereafter as an integrated passenger transport facility, depends on the acquisition of the order lands through the exercise of compulsory purchase powers. (6) The acquisition of the order lands will enable the Executive (i) to construct the main concourse building for the interchange; (ii) to lay out new vehicular and pedestrian accesses between the interchange and Eldon Street; (iii) to close the existing vehicular access between the Yorkshire Traction bus station and Kendray Street; (iv) to redevelop bus facilities on the old bus station to modern standards uniform with the interchange as a whole and (v) to achieve unified operational control over the interchange (including the order lands) so as to ensure the efficient and safe operation of the interchange as a whole in the public interest. The company objected to the order and a public local inquiry was held in March and April 1993 by an inspector appointed by the Secretary of State. The company put forward their own scheme for the development of the bus station which would have enabled them to maintain their position as owner with operational control over the bus station. They disputed the need for the executive to have operational control. The inspector recommended confirmation of the order. In his decision letter, the Secretary of State summarised the inspector’s views upon the merits of the two proposals: 12. Having considered the written and oral evidence presented by the parties and having visited the site, the Inspector concludes that the YTC scheme compares unfavourably with the [Executive] concept of an interchange. In particular, he considers that the [Company] scheme is essentially a refurbishment of its existing bus station, with improvements necessarily limited by the restricted nature of the site. In his view, retaining the design and layout of the [Company] bus station would perpetuate current operational disadvantages, including a system of a series of ‘pens’, which would do nothing to improve passenger comfort or to attract potential customers to sue the facility. 13. By contrast, the [Executive] scheme is, in the Inspector’s judgment, an objective attempt to create, on a difficult site, an integrated interchange facility out of three bus stations, a railway station and facilities for coaches, taxis and private cars. It would provide for equality in the use of bus station space with a consistent linear bus stand arrangement throughout the interchange which, so far as practicable, would eliminate the need for buses to reverse when manoeuvring. Bus stands would be able to serve geographical areas of Barnsley and district. The consequential closure of the Kendray Street access to the bus station would remove one of the worst traffic congestion points. The Inspector considers that the [Executive] scheme, involving the provision of a concourse building, enables the interchange to offer a comprehensive information service to passengers and centralise overall control, management and security. He judges that these features are essential for the interchange to function successfully and to attract people to use public transport. 14. In recommending that the CPO is confirmed, the Inspector states firmly that the provision of a successful and attractive interchange as proposed by the [Executive] is in the public interest and, moreover, is essential in order to improve public transport. The Secretary of State also considered other points at issue, including legal submissions which had been made to him in writing. His decision letter concluded: 21. The Secretary of State has carefully considered the Inspector’s report, the conclusions he has drawn from the evidence presented to him and his firm recommendation. He agrees with the Inspector’s findings of fact and conclusions. 22. He is satisfied that the [Executive’s] scheme for an integrated transport interchange would make the best use of a restricted site from a planning, operational and transportation perspective and that the [Executive’s] proposals offer the best prospect of securing an attractive and user-friendly facility for public transport users in Barnsley. 23. Given this judgment the Secretary of State is satisfied that there is a sufficiently compelling public interest to justify the overriding of private rights and interests. He recognised that the [Company] may suffer some detriment to its own commercial interests but he agrees with the Inspector that the wider public interest in regard to the establishment of modern, integrated, passenger facilities under the control of the [Executive] should take precedence, particularly where, as in this case, such facilities should stimulate rather than stifle competition amongst bus operators. The Secretary of State does not accept that confirmation of the CPO would be counter to the Government’s policies in regard to privatisation of bus services. Under extant statutory provisions, [Executives] continue to have responsibility for the provision of bus stations and passenger transport interchanges. 24. Accordingly, the Secretary of State agrees with the Inspector’s recommendation and has decided that the CPO should be confirmed. Upon the hearing of this appeal the company take three points. Other points taken before the Secretary of State and before Popplewell J have been abandoned. I have set out the nature of the scheme so that the specific points can be considered in the light of the scheme as a whole. The company’s first submission is that there is no power to purchase compulsorily where the principal purpose is to take control of part of the owner’s undertaking. Operational control of the company’s undertaking as a bus operator was one of the main objects of the order. The effect of the order was to allow the executive to take control of the undertaking, it is submitted. Reference is made to section 10(1)(xvii) of the Act which confers powers upon the executive both: to acquire by agreement any undertaking or part of an undertaking if the assets comprised in that undertaking or part are wholly or mainly assets which the Executive require for the purpose of their business. It is submitted that section 10 expressly gives an executive power to acquire land by agreement or compulsorily (section 10(3)) and the power to acquire an undertaking by agreement (section 10(1)(xvii)). There is no provision to acquire an undertaking compulsorily. The Act makes clear, it is submitted, that the acquisition of an undertaking is something different from the acquisition of land. The Secretary of State dealt with this point in a sentence. He stated at para 7: The Secretary of State does not accept that the power to acquire part of an undertaking by agreement in section 10(1)(xvii) in any way limits the generality of the power in section 10(3) to acquire land compulsorily for the purpose of [an Executive’s] business. It may be noted that section 10(1) of the Act also expressly confers the following powers on the executive: (x) in places where persons using the services and facilities provided by the Executive may require them, to provide both for those and other persons facilities for the purchase and consumption of food and drink, places of refreshment and such other amenities or facilities as it may appear to the Executive requisite or expedient to provide … (xii) to provide interchange facilities for the purpose of enabling passengers travelling by one means of transport to continue their journey by another. The order may undoubtedly have a considerable effect upon the company’s business, and an adverse one. Without the land they cannot operate from the bus station, save by agreement with the executive. The power to purchase land compulsorily is, however, expressed generally. The purchase of the land is necessary to achieve the objects which the executive have set themselves, including unified operational control over the interchange. The Secretary of State has accepted that ‘the wider public interest in regard to the establishment of modern integrated passenger facilities under the control of the executive’ should take precedence over the private interest. The Secretary of State was, in my judgment, entitled to come to the conclusion he did. What the executive required to achieve their legitimate objective was control of the company’s land. Provided the executive are acting in good faith, the fact that the acquisition of that land has an adverse effect upon the business or undertaking of the company, does not render the purchase unlawful. 30 The second submission is that the CPO has the effect of inhibiting competition between persons providing passenger transport services. Section 9A(6) of the Act provides (in so far as is material): It shall be the duty — … (b) of the Executive for any passenger transport area, in carrying out any such policies: so to conduct themselves as not to inhibit competition between persons providing or seeking to provide public passenger transport services in their area. The policies referred to are those set out in section 9A(5). The Secretary of State dealt with this point at para 9 of the decision letter: The fifth point made by the [Company] was that the CPO would contravene the [Executive’s] duty under section 9A of the 1968 Act not to inhibit competition between operators. The Secretary of State does not agree. Whilst the confirming of the CPO might place the [Company] in a less favourable position vis-à-vis its competitors than at the present time, the provision of a facility for use by all operators should create a more level playing field and, if operated in a non-discriminatory way, would not inhibit competition. In para 8 of his letter the Secretary of State dealt with a different point not now taken, but his finding upon it does bear upon the submission of the company: … In seeking to further its objective of constructing an interchange for the perceived general benefit of the travelling public, the [Executive] has not been faced with a choice of operators from whom to acquire the necessary land and singled out one operator for unfavourable treatment. The only land on which the proposed interchange can be provided happens to be owned by the [Company]. In the absence of an agreement to purchase that land, the Secretary of State considers that it is not discriminatory for the [Executive] to seek to use their CPO powers in this case. I find the reasoning of the Secretary of State compelling. A case is now put under this heading which was not put either to him or to the judge; it is that the executive must not inhibit competition in services which they themselves provide, including the provision of bus stations and interchanges. The effect of the CPO, it is submitted, is to remove a company, its main competitor, from this important position in Barnsley. I do not begin to be persuaded that section 9A(6) requires the executive to refrain, when exercising their powers with the object of creating an integrated transport facility, to avoid land already used as a bus station. The third ground of appeal is a criticism of the Secretary of State’s approach to whether the executive had sufficient resources to be able to implement the CPO. This question was the subject of post-inquiry written representations by the executive and the company. In a letter to the executive dated January 31 1994 from the Department of Transport, it was stated: The Secretary of State is of the view that the [Executive’s] ability to implement the CPO, if he were to confirm it, is a material consideration to his decision. He considers that authorisation of compulsory acquisition of [the Company’s] land should not be granted unless he were satisfied that it was necessary in the public interest and that the acquiring authority will be able to fund the acquisition of that land before the expiry of the CPO powers and to implement its proposals. The letter then sets out the sum of money likely to be required for the project. It continues: Before the Secretary of State determines whether or not to confirm this CPO he will want to be convinced that the [Executive] does indeed have sufficient reserves for this purpose. I would be grateful therefore if you would furnish the Secretary of State with such financial documentation, including a current statement of Accounts and forward projection of income and expenditure, as you judge necessary to support your case. The proposed sources of funds to finance the scheme were set out by the executive in a letter of February 14 1994 which was the subject of detailed comment by the company’s solicitor in a letter dated March 17 1994. In his decision letter at para 19, the Secretary of State stated: Whilst accepting that questions of compensation were not relevant, the Secretary of State agreed that the ability of the [Executive] to finance the implementation of the CPO powers was a material consideration. Accordingly, the [Executive] was invited to produce evidence, including a current statement of accounts, to show its ability to implement the CPO (if confirmed). On receipt of this information, the [Company] was invited to make written representations on it. Having carefully considered all of this new material, the Secretary of State is satisfied that no evidence has been presented which substantiates the claim that the [Executive] has insufficient resources of its own, and potential funds from other sources, to be able to finance the implementation of the CPO. Mr David Mole QC for the company submits that the words used by the Secretary of State put the burden of defeating a CPO upon objectors, whereas the burden is upon the acquiring authority to justify the order. Further, the Secretary of State has not applied the test which he himself set in his January letter, and that in itself is a ground for quashing the decision. Mr Mole accepts that, when considering whether to confirm a CPO, the Secretary of State need not have set himself the test of requiring to be satisfied that the acquiring authority will be able to fund the project. Mr Mole also accepts that, upon the evidence, a finding by the Secretary of State that he was satisfied upon the test stated in his letter that resources were available could not have been challenged in the courts. Mr Mole’s submission is that, having stated the test he did in the January letter, the Secretary of State should have applied it and not the lesser test he appeared to apply in his decision letter by apparently shifting the burden of proof. There is also an apparent relaxation in that the decision letter accepts only that ability to finance was a material consideration, the Secretary of State on that basis being able to give it such weight as he thought fit. The test in the letter, it is submitted, required him to be satisfied and convinced that the executive could finance the project. In Prest v Secretary of State for Wales (1982) 81 LGR 193*, Lord Denning MR stated at p198, under the heading ‘The use of compulsory powers’: *Editor’s note: Also reported at [1983] 1 EGLR 17 The first is fundamental. To what extent is the Secretary of State entitled to use compulsory powers to acquire the land of a private individual? It is clear that no Minister or public authority can acquire any land compulsorily except the power to do so be given by Parliament: and Parliament only grants it, or should only grant it, when it is necessary in the public interest. In any case, therefore, where the scales are evenly balanced — for or against compulsory acquisition — the decision — by whomsoever it is made — should come down against compulsory acquisition. I regard it as a principle of our constitutional law that no citizen is to be deprived of his land by any public authority against his will, unless it is expressly authorised by Parliament and the public interest decisively so demands: and then only on the condition that proper compensation is paid … The basis for the decision of this court in Prest quashing the CPO was that the Secretary of State should have, and did not, make sufficient inquiry before confirming the CPO upon the relative costs of purchase in a situation where the owners offered an alternative site to that subject to the CPO. Mr Mole accepts that the effect of Prest was not to create special rules or requirements for the confirmation of CPOs; his submission is that the test applied by the Secretary of State in his decision letter wrongly placed a burden on the objector to adduce evidence affirmatively that the acquiring body had insufficient resources. As to burden of proof, Slade LJ, having considered Prest, stated in R v Secretary of State for Transport, ex parte de Rothschild [1989] 1 All ER 933: In making his decision there are a multitude of different factors which the Secretary of State has to take into account. To mention only a few: questions of landscape and other amenities, feasibility, cost and delay. To talk of questions of onus of proof when so many competing factors have to be taken 31 into the balance seems to me not only inappropriate but a somewhat difficult concept. In the present case no complaint is or can be made as to the adequacy of the Secretary of State’s comparison between the executive’s scheme and that of the company. The Secretary of State’s reasons for preferring the executive’s scheme are substantial and are not, and could not, be challenged in this court. There are the plainest findings upon the merits of the proposed scheme in the public interest, and the case of Prest does not bear upon the point taken by the appellant in the present case. The different wording used by the Secretary of State in the decision letter from that in the January letter, is, on the face of it, puzzling. Mr David Elvin for the Secretary of State did not put forward a positive explanation for the change. It may have its origins in the Secretary of State’s continuing functions with respect to the executive and passenger transport issues. In their letter of February 14 1994, the executive refer to their financial resources. They refer to their capital reserve and to credit approvals for the following year. They refer to a preliminary forecast of their revenue budget for the following year and to the possibility of a further ERDF grant. The letter also states: The credit approvals for 1995/96 and 1996/97 will not be issued until December 1994 and December 1995 respectively. However, the capital reserve is sufficient to complete the scheme. Enclosed with their letter was a statement of their accounts and the preliminary forecast of their revenue budget for 1994–1995. The executive, under section 12 of the 1968 Act, have borrowing powers. The credit approvals referred to are given by the Secretary of State, and it is easy to understand why the Secretary of State may not want to use a form of words in decision letters such as this one from which it could be assumed that any subsequent decisions of his, for example upon credit approvals, will be in favour of the party subject to the decision letter. While that is a possible explanation for the wording of the decision letter, it does not in itself answer Mr Mole’s submission based upon the change of test said to be applied. In this context, however, the Secretary of State is, in my judgment, entitled to make assumptions. He is considering whether to confirm a CPO involving a £5.5m project promoted by a public body with substantial resources and broad powers, and, on any view, a substantial income. Assuming in this case that the Secretary of State needed to satisfy himself of the adequacy of their resources to implement the project, he gave both the executive and the company an opportunity to make written submissions on the point. In considering the question he was, in my judgment, entitled to make an assumption as to the resources of the executive. He was entitled to assume, having regard to the legal powers of the executive, and having regard to the evidence provided to him by them, that, in the absence of cogent evidence to the contrary, the executive were able to finance the ‘implementation of the CPO powers’. Provided he can make that assumption, as in my judgment he can, he was entitled to find that the burden which he had imposed upon himself was satisfied. The Secretary of State was plainly satisfied that there was a compelling public interest to justify the CPO. He was entitled to find himself satisfied of the adequacy of the executive’s resources, and the manner in which he expressed that satisfaction was, in my judgment, sufficient in the circumstances. I would dismiss this appeal. WARD and LEGGATT LJJ agreed and did not add anything. Appeal dismissed with costs.