CPOs

June 22nd, 2016 by James Goudie QC in Land, Goods and Services

The Court’s power, under Section 24(2) of the Acquisition of Land Act 1981, to quash a Compulsory Purchase Order relates to the whole of the Order, not only its confirmation by the Secretary of State: Grafton Group v SoS for Transport (2016) EWCA Civ 561.

 

 

Local authorities, procurement and not profit organisations

June 2nd, 2016 by Peter Oldham QC in Decision making and Contracts, Judicial Control, Liability and Litigation, Land, Goods and Services

Local authorities often procure contracts from non-profit organisations (NPOs). Assume an NPO brings a claim under the Public Contracts Regulations 2015 claiming that something went wrong in a procurement, such that there is an automatic suspension preventing the contract being entered into. Say the authority then applies to Court to set the suspension aside.  How does the American Cyanamid test apply where the claimant is an NPO?  In A v B TCC 27 May 2016, the Technology & Construction Court returned to this question.

Readers will recall that on an application to lift the suspension under the PCR, Cyanamid means that the Court will consider whether there is a serious issue to be tried; whether damages are an insufficient remedy; and whether the balance of convenience lies with maintaining the suspension. The modern trend is to see the adequacy of damages as one of the factors relevant to the balance of convenience, rather than as a separate stage.

In Bristol Missing Link Ltd v Bristol City Council [2015] PRST 1470, the claimant was an NPO providing domestic violence and abuse support services to the local authority. Its tender made no allowance for any profit, so that damages would be nominal at most. The suspension was not lifted. Coulson J said at [55]:-

 “In my view, a non-profit-making organisation, which has bid for a contract making no allowance for profit at all, and a minimal amount for overheads, is entitled to say that, in such circumstances, damages would not be an adequate remedy.”

In A v B, the claimant was an NHS trust, and so also an NPO.  The defendant was a procuring CCG. On the CCG’s application to set aside the suspension, Stuart-Smith J distinguished Bristol. He said that the mere fact that the Trust was an NPO did not mean that damages would be an inadequate remedy.  Moreover in Bristol, the claimant’s business stood to be wiped out if it lost the tender.  Here by contrast, the Trust stood to lose only 10% of its work.  After considering other factors relevant to the balance of convenience, the judge set the suspension aside.

So the first point to take away is that merely because the claimant is an NPO will not mean that it gets over the hurdle of showing that damages would be an insufficient remedy. As ever, it is a question of fact.

And as to that, the Courts have recently made it clear that, on an application to discharge the suspension, simple assertions, by either party, about where the balance of convenience lies will not be enough to make their case. Solid evidence is normally needed e.g. OpenView Ltd v Merton LBC [2015] BLR 735; Counted4 CIC v Sunderland CC 164 Con LR 230. And that’s the second point to take away.

Peter Oldham QC

 

 

Compulsory Purchase

February 12th, 2016 by James Goudie QC in Land, Goods and Services

In Phoenix Developments v Lancashire County Council [2016] UKUT 38(LC) it was held in the Upper Tribunal (Lands) that the Tribunal had jurisdiction under Section 1 of the Land Compensation Act 1961 to determine compensation for land in Accrington acquired by compulsory purchase from a property development company, notwithstanding that an expert had previously determined a price for the land, under an option agreement.  The Council had entered into an option agreement to purchase land at a price, to be determined by an expert as the market value of the land plus all other sums the landowner would be entitled to if the land was acquired compulsorily.  The Council sought to exercise the option and the expert determined a price.  However, the sale was not completed as the landowner was dissatisfied with the expert’s determination and sought to withdraw.  The Council then acquired the land through the use of its compulsory powers.  The Council submitted that (1) the Tribunal had no jurisdiction to determine the compensation payable for the land, as the expert’s binding determination of the contractual purchase price meant that there was no question of “disputed compensation” capable of being referred to the Tribunal; (2) there was an implied term of the option agreement that any price determination by the expert would remain binding between the parties in the event of compulsory purchase.  Martin Rodger QC, Deputy President, refused the application.  He held that the expert’s determination was irrelevant to the question whether the Tribunal had jurisdiction to entertain the reference.  The land was acquired by the exercise of compulsory powers and there had been no agreement between the parties on the compensation payable in respect of that acquisition.  The expert’s determination had been made for a different purpose.  Even if the price determined by the expert included a sum reflecting statutory compensation, there had been no agreement by the landowner to treat that determination as conclusive of the value of its entitlement. The Deputy President further held that there was no implied term. It was neither necessary nor obvious that the expert’s determination of the contractual purchase price would have been intended by reasonable people in the position of the parties to be determinative also of the claimant’s statutory entitlement in the event of the land being acquired by the exercise of compulsory powers.  It could not be said that the contract would lack commercial or practical coherence without such an implied term.

As to (1), the position was the converse of that in BP Oil UK Ltd v Kent County Council [2003] EWCA Civ 798.  The question in that case was whether an agreement entered into after an acquiring authority had entered and taken possession of land had the effect that the landowner’s statutory entitlement to compensation had become a contractual right to a purchase price which, in default of agreement, was to be determined by the Lands Tribunal applying the statutory compensation code; the question was significant because the reference had been made to the Tribunal after the expiry of the limitation period for a statutory claim arising on the date of entry.  Carnwath LJ, as he then was, observed that the fact that the contractual method of calculating the consideration payable for the land would replicate the method that would apply under the statutory code, “did not deprive the clause of contractual effect” (as the acquiring authority had argued). The Court of Appeal was not dealing with a case such as the present, in which an enforceable contractual right to acquire land at a determined price had been put on one side by the acquiring authority in favour of the exercise of compulsory powers.

As to (2), the Deputy President applied the Supreme Court decision in Marks & Spencer v BNP Paribas Securities (2015) UKSC 72.  A term can be implied only if, without the term, the contract would lack “commercial or practical coherence”.

 

Minimum wage

November 18th, 2015 by James Goudie QC in Land, Goods and Services

EU law allows the exclusion of a tenderer who refuses to pay the minimum wage from the procedure for the award of a public services contract.  So ruled the ECJ on 17 November 2015 in Case C-115/14, Regis Post GmbH v Stadt Landau, a case concerned with postal services in the German municipality of Landau.  The public sector procurement Directive, 2004/18, does not prevent legislation that requires tenderers and their subcontractors to undertake, by means of a written declaration enclosed with their tender, to pay staff called upon to perform the services a predetermined minimum wage.  That obligation constitutes a special condition in principle acceptable under Article 26 of the Directive, since it relates to the performance of the contract and concerns social considerations.  That special condition was set out in the contract notice and in the specifications, so that the procedural condition as to transparency was satisfied.  Moreover, the special condition was neither directly, nor indirectly, discriminatory.  The minimum wage in question was part of the level of protection that must be guaranteed by undertakings established in other Member States to workers “posted” for the purposes of performing the public contract.  The Court distinguishes the case in Rüffert (C-346/06).

 

Land Transfer

November 6th, 2015 by James Goudie QC in Land, Goods and Services

In Dudley Muslim Association v Dudley Metropolitan Borough Council (2015) EWCA Civ 1123 the Court of Appeal held that a Chancery Master had not erred in striking out the Community Association’s defence of legitimate expectation in relation to a claim by the Council for the specific performance by the Association of a contractual obligation on the part of the Association to transfer land back to the Council.  This was for three reasons: first, the legitimate expectation could not avail against the contract; second, Section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 was applicable; and third, the defence failed on the facts.

As to the first reason, Levison LJ observed, at paragraph 22:-

“It is true that in a technical sense the Council is operating under statutory powers; but that is only because the Council can do nothing unless it is authorised by statute. The authorising statute in the present case is section 120 of the Local Government Act 1972, which empowers the Council to acquire land in its area. However, this case is not about the unilateral exercise by the Council of a statutory power; it is about the implementation of a commercial bargain. In substance, what we are dealing with is the enforcement of a contract willingly made by both parties with the aid of legal advice. The DMA’s defence is that the Council is not entitled to enforce the contract according to its terms. This important feature of the case gives rise to the question whether a public law defence based on legitimate expectation is, in principle, an available defence to a claim to enforce a contract. …”

The case will be governed by private law, absent bad faith or improper motive. At paragraph 30, Levison LJ concluded:-

“In my judgment, in the circumstances of this case, there is no public law defence available to the DMA based on legitimate expectation or a general appeal to abuse of power. If the DMA cannot assert a variation of the contract or a promissory estoppel, which they do not attempt to do, the contract is enforceable according to its terms.”

As to the 1989 Act, the Association’s obligation to transfer the land to the Council was in principle within the ambit of Section 2. Any variation that falls within the ambit of Section 2 must itself comply with the required formalities of that Section.  They cannot be outflanked by promissory estoppel.

As to the facts, the Court of Appeal acknowledged (paragraph 46) that a decision of a local authority can be impugned even if there has been no clear representation which created a legitimate expectation, if there is an abuse of power. However:-

“47.      … fairness and reasonableness are objective concepts, otherwise there would be no more than palm tree justice: … Abuse of power is not a freestanding ground on which a court can act in the absence of unlawful action on the part of the public authority in question: …the proper sphere of the court is illegality.”

“49       Where it is alleged that a public authority is abusing its powers it is necessary to inquire: what is the power that is being abused? In many cases what is in question is the exercise of a statutory power, and the question will be whether the power is being exercised for the purposes contemplated by the statute and proportionately on the facts of the individual case. A power of this nature is one conferred upon a public body and is capable of exercise without the consent of the citizens who are affected by its exercise. It is for that reason that the law will intervene to protect the citizen against the abuse of that unilateral power. But in this case we are dealing with contractual rights and obligations. I do not think that it can usually be an abuse of power to exercise contractual rights freely conferred, even if the result may appear to be a harsh one. By the same token what is “unfair” or “conspicuously unfair” will depend on the context. …”

“50.      Once again the context here is a commercial contract entered into by two parties with the benefit of legal advice. It is not usually unfair to hold parties to the terms of the contract that they have agreed. As I have said the law of contract has developed mechanisms, such as the principle of promissory estoppel, which preclude a person from relying on his strict legal rights where certain conditions are fulfilled. These mechanisms exist in private law; but they are not relied on in this case, and play no part in the pleaded defence. One of the hallmarks of a bilateral contract is its mutuality. Whatever rights the Council has, they are rights that the DMA have granted to it. In my judgment the defence of abuse of power, even if available, would also fail on the facts.”

 

Customer facing roles

September 18th, 2015 by James Goudie QC in Land, Goods and Services

Part 7 (Clauses 38-45 inclusive) of the Immigration Bill, introduced in the House of Commons on 17 September 2015, imposes fluent English language requirements for public sector workers, and makes provision for statutory guidance in Codes of Practice which are to be consulted upon and complaints procedures. The Bill will require authorities to comply with a statutory duty. Fluent English is defined as a command of spoken English that enables workers, employed when or after the duty comes into effect, to perform their role effectively. Someone working for authorities exercising functions in Wales in a customer facing role will have to speak fluent English or Welsh.

 

Appropriation

September 15th, 2015 by James Goudie QC in Land, Goods and Services

There is no doctrine of implied or inferred appropriation. So held Dove J in R (Goodman) v SoS for DEFRA (2015) EWHC 2576 (Admin). Section 122(1) of the Local Government Act 1972 contains no prescribed formula for the procedure to be adopted when a council appropriates land from one purpose to another. It does however need the council to determine that it no longer requires the land for the purpose for which it was holding it up to the point of that appropriation. Appropriation cannot be inferred from conduct alone. As regards the suggestion to the contrary, the Judge said, at paragraph 26:-

“The difficulty with that suggestion is the need for the authority, when exercising the power under Section 122 of the 1972 Act, to be satisfied that the land “is no longer required” for the purpose for which it is held. That requires some conscious deliberative process so as to ensure that the statutory powers under which the land is held is clear and appropriation from one use to another cannot, in my view, be simply inferred from how the council manages or treats the land.”

 

Disposal of Playing Fields

July 21st, 2015 by James Goudie QC in Land, Goods and Services

Section 1 of the Playing Fields (Community Involvement in Disposal Decisions) (Wales) Measure 2010 enables the Welsh Ministers, by Regulations, to make provision for the involvement of communities in the disposal of land consisting, or forming part of, a playing field by a local authority.

The Playing Fields (Community Involvement in Disposal Decisions) (Wales) Regulations 2015, SI 2015/1403 (W.139) (“the Regulations”) apply to the decision by a local authority to dispose of playing fields that meet the definition set out in Regulation 2, fall within Regulation 3 and do not fall within any of the exceptions in Regulation 4.

Regulation 3 provides that the requirements in Regulations 5 to 10 apply where a local authority is considering making a decision to dispose, or to make a decision to enter into an agreement to dispose, of a playing field or any part of a playing field. The requirements would only apply where the playing field in question has been used as a sports or recreational facility by the public at any time in the 5 years before disposal. However, Regulation 3(c) provides that the requirements in Regulations 5 to 10 do not apply where any of the exceptions in Regulation 4(1) apply.

If the disposal in question is a grant of an interest in the playing field which does not have an adverse impact on the use of the playing field, the requirements for consultation, notification and decision making provided for in the Regulations at Regulations 5 to 10 do not apply. Similarly, these requirements do not apply where the playing field is disposed to another local authority or sporting or recreational body and the playing field will be retained for sporting or recreational use.

The requirements at Regulations 5 to 10 of the Regulations do not apply where consultation has been undertaken in respect of particular proposals relating to school organisation under Part 3 of the School Standards and Organisation (Wales) Act 2013. Similarly, they do not apply to any disposals which are pending at the time that these Regulations come into force.

The requirements in Regulation 5 relate to the notice and consultation arrangements which must be followed prior to any decision to dispose, or enter into an agreement to dispose, of a playing field or any part of a playing field. Regulation 5 includes a duty on local authorities to send details of the proposed disposal to specified bodies.

Regulation 6 requires a local authority to ensure that these details include information about the effect that the local authority considers the disposal would have on a number of strategies, plans and assessments. This may include information regarding the effect the disposal would have on the successful implementation or delivery of any relevant strategy, plan or assessment.

Regulation 7 requires a local authority to have regard to all representations received during the consultation period. It also enables the local authority to have regard to any representations received after the end of the consultation period.

Regulation 8 applies where a local authority has decided to proceed with a decision to dispose of a playing field or any part of a playing field. The requirements in Regulation 8 must be complied with before a local authority disposes, or enters into an agreement to dispose, of playing fields or any part of a playing field. Regulation 8(9) imposes requirements on a local authority where it has decided not to proceed with a disposal.

Regulation 9 provides that communications under the Regulations may take an electronic form. Any such electronic communication that is received outside a recipient’s normal office hours will be taken to have been received on the next working day.

Regulation 10 requires local authorities to have regard to any guidance given by the Welsh Ministers when exercising their functions under the Regulations.

 

Assets of Community Value

July 21st, 2015 by James Goudie QC in Land, Goods and Services

In CR/2015/0002, Trouth v Shropshire Council and Caynham Village Hall Committee, the First-Tier Tribunal (General Regulatory Chamber) summarised the position in relation to the Community Right to Bid as follows:-

“The Localism Act 2011 requires local authorities to keep a list of assets (meaning buildings or other land) which are of community value.  Once an asset is placed on the list, it will usually remain there for five years.  The effect of listing is that, generally speaking, an owner intending to sell the asset must give notice to the local authority.  A community interest group then has six weeks in which to ask to be treated as a potential bidder.  If it does so, the sale cannot take place for six months.  The theory is that this period, known as “the moratorium”, will allow the community group to come up with an alternative proposal – although, at the end of the moratorium, it is entirely up to the owner whether a sale goes through, to whom and for how much.  There are arrangements for the local authority to pay compensation to an owner who loses money in consequence of the asset being listed.”

 The Caynham Village Hall Community nominated as land of community value under Section 88 of the 2011 Act (i) a playing field adjacent to the former Caynham Primary School and (ii) a car park, adjacent to the same site. Both pieces of land are situated in the village of Caynham, near Ludlow, within Shropshire Council’s area. The playing field and car park are owned by C, S & D Trouth (“Trouth”).

The Council listed both the playing field and the car park. Trouth sought a review. The result of the review was to maintain both the playing field and the car park on the statutory list. That was the decision appealed to the FTT.

So far as the playing field is concerned, the FTT found as a fact that the requirement of Section 88(2)(a) of the 2011 Act was satisfied.  Plainly, there was a time in the recent past when an actual use of the playing field, that was not ancillary, furthered the social wellbeing or interests of the local community.  For many years, the lease had made it plain that use of the playing field was permitted for local children, quite apart from use of the playing field for the purposes of school recreation.  Trouth had put forward no evidence to show that there was, in reality, no use made by local children or that use by local children was, on the facts, merely ancillary.  The terms of the lease permitted such use both inside and outside school hours, with the result that, in terms of time at least, local use would far outweigh school use.  Furthermore and in any event, significant use has been made of the playing field, with permission, as a result of the holding of village fetes, up to 2011. 

So far as future use is concerned, the stated intentions of Trouth are to continue to pursue their aim of development and to exclude the community from the playing field.  Their case was that “it is more realistic to think” that the playing field will not be used for relevant social purposes in the next five years.  This, however, is not the correct legal approach.  The answer to the question of what is “realistic” may admit of a number of possibilities.   In order to be “realistic”, one possibility does not need to be more likely than all of the others.  A possibility will not be “realistic” if it is merely fanciful.

The issue, therefore, was whether it could be said, looking at the present position, that future relevant community use of the playing field is merely fanciful or, in other words, unrealistic.  Trouth had not shown this to be the case. 

The stated intentions of Trouth regarding community use could not be determinative of the question to be answered in Section 88(2)(b) of the 2011 Act; since, otherwise, listing would be possible, in effect, only with the  consent of the landowner.  One possibility, which could not be dismissed as unrealistic in the circumstances, was that Trouth concluded that redevelopment of the playing field is not going to occur within any commercially viable timescale.  In such circumstances, a sale of the site would be a distinct possibility.  Another realistic scenario is that Trouth decide to permit relevant community use, without giving up on their long-term development plans.  

Therefore, the playing field met the requirements of Section 88 of the 2011 Act. 

As regards the car park, it was common ground that the relevant use of this land is as a car park. It was also common ground that the car park provided parking for those attending activities in the Village Hall.  Those events included meetings of the Women’s Institute, Gardening Society, Shropshire Village Hall Quiz, Yoga classes, Book Exchange, Children’s Film Shows, other social gatherings and civic functions. The car park had served a useful purpose providing unrestricted off road parking for the school and the village hall.  The car park has been closed and objections have been made to the loss of this facility.

The case for Trouth was that the use of the car park was “ancillary” to the use of the village hall and, accordingly, the requirements of Section 88 cannot be satisfied. 

The history of the land comprising the car park and of the village hall, was such that the FTT found as a fact the car park fell to be regarded as its own land unit for the purposes of the 2011 Act.  Although the car park has a close geographic and functional connection with the village hall, this connection was not such as to compel the conclusion that the land unit is the village hall and the car park.  The history of different ownerships and of different objectives of the different owners meant that it was not appropriate to treat the car park in that way.  Accordingly, for the purposes of the 2011 Act, the car park had its own main use, namely, land for the parking of cars.  There is no ancillary use.

It was plain on the facts that the car park satisfied the requirement of Section 88(2)(a).  The issue was whether it is realistic to think there is a time in the next five years when there could be a return to the use of the car park, as a car park.  The FTT found that it was not realistic so to think.  The planning position regarding the car park was currently such that it could not be said that redevelopment was the only realistic scenario within the next five years.  Use as a car park furthered the social wellbeing and social interests by providing convenient means of access (particularly for those with mobility issues) to the wide range of social activities taking place in the village hall.  It was realistic to think that that use might resume within the statutory timescale, either because Trouth conclude that redevelopment within a commercially viable timeframe is unlikely to be achieved, and so decide to dispose of the land, or because they decide that there is utility in letting car parking resume, whilst they continue to press for planning permission.

 

Land Sale

July 17th, 2015 by James Goudie QC in Land, Goods and Services

In Case C39/14, BVVG v Erbs, Judgment on 16 July 2015, the ECJ has again considered when land disposals by public bodies amount to State Aid within TFEU Article 107(1), in accordance with which save as otherwise provided in the Treaties, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings is, in so far as it affects trade between Member States, incompatible with the internal market. 

The ECJ reiterated that in order for a measure to be categorised as ‘aid’ for the purposes of Article 107(1) TFEU, all the conditions set out in that provision must be fulfilled.  For a measure to be classified as State Aid for the purposes of Article 107(1) TFEU, first, there must be an intervention by the State or through State resources; second, the intervention must be liable to affect trade between Member States; third, it must confer an advantage on the recipient; and fourth, it must distort or threaten to distort competition. The concept of aid may include not only positive benefits such as subsidies, loans or direct investment in the capital of undertakings, but also interventions which, in various forms, mitigate the charges which are normally included in the budget of an undertaking and which therefore, without being subsidies in the strict sense of the word, are of the same character and have the same effect. To that end, for the purposes of establishing the existence of State Aid, a sufficiently direct link must be established between, on the one hand, the advantage given to the recipient and, on the other, a reduction of the State budget or a sufficiently concrete economic risk of burdens on that budget.

It cannot therefore, as a rule, be precluded that a sale of public land at a price lower than the market value might constitute State Aid.  Such a sale may confer on the purchaser, as a recipient, an advantage which, in essence, leads to a reduction of the State budget consisting in the State forgoing the difference between the market value of the land and the lower price paid by that purchaser.

In particular, in relation to the sale by public authorities of land or buildings to an undertaking or to an individual involved in an economic activity, such a sale may include elements of State Aid, in particular where it is not made at market value, that is to say, where it is not sold at the price which a private investor, operating in normal competitive conditions, would have been able to fix.

It follows that the application of rules must, in order to comply with Article 107 TFEU, result in all cases in a price as close as possible to the market value.  A number of methods are capable of providing prices corresponding to the market value. Those methods include sales to the highest bidder or an expert report. Likewise, it cannot be ruled out that other methods may also achieve the same result.

In a case concerning the sale by a public authority of an undertaking belonging to it, that, where that authority undertakes an open, transparent and unconditional bidding procedure, it can be presumed that the market price corresponds to the highest offer, provided that it is established, first, that that offer is binding and credible and, secondly, that the consideration of economic factors other than the price is not justified.  In such circumstances, it is not necessary to resort to other methods in order to check the market price, such as independent expert reports.