England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
MR CHARLES GEORGE QC

		Royal Courts of Justice Strand, London, WC2A 2LL
		9th May 2012

Lord Justice Pitchford:

1. On 23 August 2011 Mr Charles George QC, sitting as a deputy judge of the High Court, granted permission to Bizzy B Management Limited ("Bizzy B") to challenge by way of judicial review the decision of Stockton on Tees Borough Council ("Stockton" or "the Council"), communicated by letters of 4 and 8 February 2011, to proceed with the demolition of Billingham House, Stockton on Tees, of which Bizzy B was the owner, but dismissed the claim. I pay tribute to the care and thoroughness with which the deputy judge addressed the factual complexity and the legal issues in his judgment at [2011] EWHC 2325 (Admin). There were other grounds of claim before the deputy judge in respect of which permission was refused. They are no longer pursued.
2. This appeal is brought on two grounds, namely that the decision made by the Council 1) was irrational in the Wednesbury sense, and 2) amounted to an unjustified interference with Bizzy B's rights of property in Billingham House contrary to Article 1 of the First Protocol ECHR.
3. Turning to the factual background, Billingham House, situated on Belasis Avenue, Stockton on Tees, was constructed in the late 1950s as the headquarters of the agricultural division of ICI. It is a very substantial building; it was occupied by ICI until 1995 when, following restructuring of the group, the building was vacated. Billingham House is situated alongside the Chilton Chemical industrial site on the opposite side of Belasis Avenue to the south. The freehold was acquired by Bizzy B (the appellant), a single purpose vehicle company, in 2000 with a view to redevelopment. The nine storey office building remained vacant after 1995 and, as a result, suffered severely from trespass, arson, neglect and dilapidation.
4. In 2004 Stockton gave planning permission for a garden centre on the site and in 2005 for five two-storey office units with partial demolition. Neither of those permissions was implemented. In 2006 an application for planning permission for 128 private dwellings to be constructed was refused. Also during 2006 Stockton, under pressure from its residents and members, encouraged Bizzy B to bring forward proposals for the refurbishment of the property. At first the proposal was that Python Properties, a development partnership and the interested party, should purchase the freehold, but that proposal came to nothing. On or about 10 October 2006 Stockton served an ineffective building notice of dilapidations on Bizzy B pursuant to Section 79(1) Building Act 1984. Stockton and Bizzy B entered into discussion as to the acceptable terms of such a notice. Terms were agreed and, on 30 August 2007, Bizzy B undertook in writing that, upon receipt of a second notice in the agreed terms, it 1) would withdraw its appeal against the first notice; 2) would not appeal against the second notice; and 3) would elect to demolish Billingham House, instead of restoring or repairing the building.
5. The second notice was served on or about 12 September 2007. It gave Bizzy B the option of either 1) carrying out itemised remedial work, including:

"5) The removal of all asbestos contained within the building, or its exterior, and the safe removal of all materials removed or debris resulting from its removal from the site."

Or 2):

"demolishing the building in accordance with a time programme."

In either event, the works were to be completed by 31 December 2008.

6. The full terms of the notice are set out at paragraph 10 of the judgment in the High Court. As I have noted, Bizzy B had given an advance undertaking to elect for demolition.
7. By 2009 demolition work had not commenced. Bizzy B did, however, supply Stockton with a certificate given by contractors that Billingham House was asbestos-free. In May 2009 Stockton issued summary proceedings under Section 99(2)(b) of the 1984 Act in respect of Bizzy B's failure to comply with the terms of the building notice relevant to the safety aspects of that notice, which resulted in a fine of £1,650 and an order that Bizzy B pay the Council's costs. At the same time Stockton continued to support Bizzy B's and Python Properties' efforts to find a viable project for development, even without demolition. The first proposal was that Billingham House should become the centrepiece of an island or campus development which would bring forward the urgent refurbishment, rather than demolition, of Billingham House and the creation of two floors of office space. This proposal required the closure of part of Belasis Avenue, since to do so would increase the attractiveness of the development for prospective tenants. There was, on the face of it, a funding shortfall of some £1.75 million which, it was hoped, would be assisted by grant funding from One North East. Unless, however, Python Properties could secure pre-lets for the two-storey office refurbishment, the necessary funding could not be "unlocked". By email of 11 June 2010 Mr Martin Johnson of Python Properties revealed that two potential tenants had withdrawn their expressions of interest and no further progress was made.
8. On 5 August 2010 the Council's cabinet reviewed progress and approved action 1) supporting "the refurbishment scheme" until 30 September 2010, by which time a development agreement between Bizzy B and Python Properties must be signed; 2) to apply to One North East in the meantime for a grant to the Council for the demolition of Billingham House; and 3) to approve the use of the Council's own funds for that purpose pending the receipt of a grant.

The deadline was formally notified to Bizzy B and Python Properties by letter of 19 August 2010 in the following terms:

"The Council welcomed the refurbishment proposals and we have been keen to assist to this end wherever possible, however, whilst we appreciate such schemes take time to develop and finance, Billingham House continues to pose a blight on the local community and the Council continues to receive complaints from the local business and residential community.

On the 5^th August the Council's Cabinet approved further steps to be taken towards undertaking the demolition of the building in default of the outstanding Section 79 notice unless confirmation is received that the development agreement incorporating a fixed programme for the signing of the ground lease and for the refurbishment of the building is signed by 30^th September 2010. We feel that this is a reasonable deadline given the length of time already incurred in preparation of the scheme and drafting of the legal agreements."

9. Bizzy B responded on 20 September 2010 that it could not, "despite strenuous efforts", conclude the development contract within "your suggested timeframe". Mr Peter Broom of Python Properties responded on 29 September that a development agreement could be completed within two weeks. On 1 October 2010 Stockton wrote to Bizzy B that demolition works would commence on 4 October. The Council first arranged for water samples taken from the flooded basement to be analysed. Analysis revealed the presence of asbestos. At a site visit, asbestos was found on the floor of the ground floor and in the first floor of the building and an urgent asbestos survey was commissioned by the Council. On 18 October 2010 the Council submitted an application for demolition funding to One North East. On 21 October 2010 Python Properties sent an email claiming that Bizzy B were ready to sign a development agreement; however, the viability of the project depended upon One North East's willingness to divert the demolition grant of £400,000, approved in favour of the Council on 1 November, to refurbishment of Billingham House.
10. On 22 October 2010 Mr Richard Poundford on behalf of the Council wrote to Python Properties an email in the following terms:

"I think when we met on 20^th August this year, we were clear about the council's intention to proceed with the demolition of Billingham House in line with enforcing the court judgment we received some time ago. Indeed we would have been pursuing this course of action two years ago had Python not at that time been in serious negotiation with Bizzy Bee to acquire the property. We worked with yourselves and local businesses supporting the potential redevelopment of the existing building on the basis that it would fill an expansion need for those businesses in the near future and secure tenancies for Python which were required for your financing package. We took this supportive approach then, despite the local member and community demands for demolition, because it was seen as an immediate opportunity for job creation and in support of local growing businesses needing urgent expansion room. We have now moved well beyond that situation and have begun the process of assessing further contamination and procurement of demolition contractors to fulfil what has been the desires of local people for well over 6 years. There is no local demand to see the building refurbished – indeed quite the opposite, the pressure from local communities and the media to sort out this problem cannot be delayed any further and credibility around refurbishment with immediate jobs will be unachievable and therefore unacceptable to the Council."

Nevertheless, on 9 November 2010 the Council met with Sager Management Limited on behalf of Bizzy B and with Python Properties. The Council repeated that, in the absence of a development agreement a detailed scheme and evidence of funding and viability, demolition would proceed.

11. In an email written on 10 November 2010 to Mr Poundford, Mr Johnson of Python Properties said:

"As stated we simply cannot understand these incessant delays by Bizzy Bee and have tried very hard to overcome them.

I myself in addition to numerous phone calls have sent some 15 emails within the last 8 weeks to Bizzy Bee trying to get this matter resolved.

We will keep you fully informed as to progress, or lack of it.

Lastly, we would just like to say that we believe that the stance taken by yourself was entirely reasonable under the circumstances and would like to thank you for your assistance on the project."

Mr Johnson wrote to Sager acting for Bizzy B on the same day in the following terms:

"We are as stated ready to attend any meeting arranged with political leaders as discussed. However, for us to attend in a useful capacity the development agreement must be signed beforehand.

We do have some influence based on our track record, but we are completely unable to use this until the development agreement is signed.

To be frank we are at a loss to understand the continuing delays in getting this document signed and as can be seen from yesterday's meeting these delays have put Bizzy Bee/Sager in a very poor position.

If we are to stand any chance of salvaging this situation this document needs to be signed immediately, not 'within two weeks'."

12. On 23 November 2010 Bizzy B and Python Properties signed a development agreement. Bizzy B would grant Python Properties a lease for 127 years with an option to purchase the freehold for just over £1 million. In return, Python Properties agreed to carry out the work of refurbishment in two stages: the first involved primarily external regeneration, the fitting out of one floor for offices and the connection of utilities; the second stage involved the floor-by-floor progression of office installation. The details of the works were set out by the deputy judge at paragraph 19 of his judgment. In an email of the same date Mr Martin Johnson of Python Properties wrote to the Chief Executive of the Council:

"We are now ready to move forward with the next step, which is a fully worked out and funded scheme, by 24 January 2011. We are progressing this now and will be forwarding to you the details and drawings of the specification as they become available … We fully understand the position of the Council regarding the demolition process. As you can see from the above, our timetables to work up, commit to and indeed start the restoration fall within your timescales. As discussed then, we are not requesting that you alter this stance in any way at the moment. We are requesting that when we present you with all that is detailed above the Council acts in a flexible and positive way that will assist us in delivering a superb regeneration scheme for Billingham…"

13. On the following day, 24 November 2010, the Council received a report from their experts, Lucion Environmental, confirming, despite assurances from Bizzy B that the building was asbestos-free, that significant quantities of asbestos debris had been located in Billingham House. The cost of removal was later estimated at £130,000. A further meeting took place between the Council and Python Properties on 29 November 2010. The full scheme for redevelopment had not been prepared and there was no confirmation of funding. By this time the Council had incurred costs of £111,000 in securing the property in preparation for demolition. A further £230,000 would be expended by 24 January 2011. An estimated £350,000 would be sought from Bizzy B if the work was halted on 24 January, the date by which Python Properties said its full scheme would be written up.
14. On 10 December 2010 solicitors for Bizzy B wrote objecting to the Council's decision to proceed with demolition and challenged its assertion that asbestos debris remained in the building. On 31 December 2010 Bizzy B issued its judicial review claim form. On 11 January 2011 the Council responded in a letter, in which it wrote:

"Please therefore provide the Council with evidence that the scheme is now deliverable including evidence that funding in full has been obtained and is immediately available, that all planning permissions, building regulation approvals and other consents that may be necessary have been obtained, please provide the programme of works for the completion of the refurbishment of the building and evidence that contractors are now in a position to sign contracts and commence works without which the Council will not be in a position to consider reviewing its decision to demolish the building in default of the s79 notice."

15. On 21 January 2011 Python Properties made a presentation to the Council -- that is, to Mr Poundford and other Council officers, including the Leader and the Council's lead member, of its proposals for redevelopment. At the close of the meeting the Council agreed to give consideration to the presentation and its supporting documents. Minutes of the meeting were taken by Sager Management. It is apparent that there had been little or no movement on the question of whether asbestos debris was present in the building and, if so, what arrangements were being made for its removal. No prospective tenants had committed themselves to the project; funding was in significant part dependent upon support from One North East; Bizzy B and Python Properties were unable to present to the Council the guarantees that they had sought and which Mr Clarke accepted in argument had been reasonably required.
16. On 4 February 2011 the Council's chief executive, Mr Neil Schneider, wrote to Python Properties, and four days later in identical terms to Bizzy B, explaining the Council's decision to proceed with demolition:

"On behalf of Councillors Lupton and Cook can I thank you for the obvious preparation and work you have put into your presentation and documents supporting your case for the redevelopment of Billingham House at our meeting on Friday 21 January.

We are confident in your history, credibility and track record in improving historic and heritage buildings in the Tees Valley, and indeed we have demonstrated this faith in confirming Python Properties as preferred developer for Thornaby Town Hall, which we continue to actively pursue together.

Regrettably, there is no such reassuring history and relationship with the building's owners, Bizzy B, who will remain the freehold owner of Billingham House and who are still pursuing legal actions against Stockton Borough Council.

We have considered and deliberated on the proposals you presented and have consulted widely with elected members, Town Council, Area Partnership and the local community on the option you have prepared as an alternative to the demolition of the irritation represented by what is now a derelict structure.

We have considered in particular the risks associated with your alternative proposals which ultimately offer no guarantees. In particular, we have explored:

• Public opinion; despite a suggestion that public opinion had moved, we have been presented with a validated petition, with continuing additions approaching 1000 signatures of local people who are forcibly voicing their wish to see the remaining fabric of the building removed. This is confirmed by locally elected members of the Borough Council, Billingham Town Council, and the partnership body for the area.

• The ONE funding you are seeking. As you identified, this is a key factor in your plans and would require a substitution of the redevelopment business case for that of demolition which is already approved. This we consider to be a high risk as we have already commenced the process of demolition since our final deadline of 30 September 2010 confirmed in the Council decision. In addition, we already have claims against a major proportion of the funds for work already undertaken in line with the approved project.

• Prospective Tenants -- Whilst we accept the list of enquiries you have identified in general, the two major local businesses on whom your earlier and original proposals were based are not current enquiries with no immediate or guaranteed future requirements. The other enquiries you identify are of a general nature with no guaranteed commitment to this building of which we are aware. This leaves no certainty in the near future of occupation.

• The significant issue of asbestos appears to still be a matter of contention; despite a thorough, detailed and independent survey commissioned by Stockton Council as to the extent of the contamination, Bizzy B and yourselves appear unwilling to accept these findings. Fundamentally, our specialist's report raises questions about the success of the original asbestos clearance work conducted by Bizzy B.

• The matter of costs already incurred by Stockton Council in meeting our obligations and process to carry out the agreed fulfilment of the section 79 notice confirmed by full legal process. As you are aware, we have sunk a large amount of funds already into progressing the demolition of the building in line with the stated legal confirmed objective. The cost plans you submitted make no reference to reimbursement in full of the Council's costs incurred to date.

Billingham House is a unique situation, having been the subject of major public dissatisfaction for many years, a long and protracted process in securing the power to demolish interspersed with several suggestions of refurbishment or development in between, all of which have resulted in no satisfactory confirmed and viable solution.

Taking all of these factors carefully into account, we feel we must re-confirm our commitment to proceed with the demolition of Billingham House."

17. I turn to the appellant's submissions in support of the case that the Council acted irrationally in reaching the decision it did. Bizzy B contends that the only reasonable cause of action for Stockton on 4 February 2011 was to suspend or cancel the exercise of its power under Section 99(2)(a) of the Building Act 1984 to execute the work of demolition and to approve the proposal for refurbishment. It was, it is submitted, the only course by which the public interest could be secured in the circumstances. In fact, the Council had turned its face against the proposal and obstinately failed to identify the merits of the proposal, which, only a comparatively short time before, it had identified.
18. Mr Clarke submits that the Council allowed itself to make judgments as to the commercial viability of the development when its sole interest should have been whether the statutory purpose of Section 79 would be fulfilled. The proposal, as eventually realized, was a realistic scheme for the regeneration of the building, but the Council took account of irrelevant or insignificant matters in the circumstances: 1) the underlying delay in completing the proposal for refurbishment (in other words, the Council simply lost its patience); 2) the costs already incurred in work preparatory to demolition, all of which, if properly incurred, would have been recoverable from the appellant; 3) the fact that the opportunity to obtain funding for demolition from One North East was likely to be short-lived; and 4) the dispute as to the presence of significant quantities of asbestos in the building.
19. The appellant places heavy emphasis upon the support of the Council when it drafted an application to One North East as proposer on behalf of the developers for granting funding of the refurbishment scheme which, it is argued, contradicts the Council's later preference for demolition. In the draft business case prepared during the early summer of 2010 for submission to One North East, but in fact never submitted, at paragraph 3.1 it was said:

"A key element of business productivity is the availability of sites and premises which are fit for purpose, efficient and in the right location at the right time. Billingham House can address the property provision 'mismatch' between the accommodation and business location that exists at the adjacent Chemical Complex, where the supply of land for office accommodation within the existing complex restricted, resulting in the historic use of temporary office accommodation, so that offices and research and development functions can maintain a close proximity to the manufacturing activity. Meanwhile there has also historically been little demand for the Billingham House site to be reused for office accommodation, as the 8-storey office accommodation has been too large for one organisation. There has been no interest in the subdivision of piecemeal take up of the building as this is not possible without major capital spend on the whole building shell to bring the building back to a usable condition.

Billingham House has also suffered from market failure whereby there is a 'gap' between the costs of refurbishing the business accommodation and its end rental value, which has prevented previous attempts to bring the building back into use.

Python Properties' refurbishment proposals address both of these issues, pulling together a scheme that, with the support of Tees Valley Industrial Programme funds, will bridge the gap between refurbishment costs and rental values, as well as providing modular office accommodation that can be leased on a demand-focused basis, rather than the building as a whole. There are no guarantees that the whole or indeed further floors of the building will be brought back into use, however if Phase 1 is implemented and let, the costs for further refurbishment will be more cost effective as the whole building refurbishment costs are included in Phase 1. Python Properties have already identified and are in early negotiations with potential tenants for Phase 2, and it is likely that adjacent businesses will continue to require additional accommodation if their growth plans come to fruition."

20. At paragraph 4.2 option (d) the Council provided its written case for and against the option of demolition. It said:

"This option involves the Council using its legal powers to demolish the building and recoup its costs from owners and register a charge against the land registry title. If the owners default on repayment the Council can then force the sale of the site. The Council would then work with a developer or joint venture partner to purchase and redevelop the site to provide new office accommodation.

The main advantage of this option is that the £1.12million acquisition costs are not included amongst the development costs as there would be no transfer of ownership.

This option provides the opportunity to redesign the office accommodation to be provided without being constrained by the design of the existing building, and would also allow for more sustainable building designs in terms of use of more efficient building materials and energy supplies.

The main disadvantages of this option are as follows:

• The planning and HSE restrictions over the site mean that new development is likely to be less dense and therefore less office accommodation than a re-use of the existing building;

• Redevelopment of the site would result in the loss of a local landmark;

• Demolition and redevelopment of the site will be less sustainable than refurbishment of the existing building will utilise considerably more materials; and

• A lost opportunity to work with local developer, as Python Properties work mainly on refurbishment rather than new build schemes."

21. The Council gave as its reasons for rejecting the demolition option:

"…the high risk associated with finding a developer or joint venture partner in the current economic climate. The option also offers no value for money, with higher costs for less deliverables."

22. Since these were the views of the Council in the summer of 2010 and the requisite funding was in place by January 2011 there was, Mr Clarke submits, no rational basis for a change of mind. It is however, in my view, relevant to note that when the Council submitted its own business case to One North East in October 2010 for demolition funding it continued to recognise, at paragraph 4.2 Option (d), the same disadvantages of demolition as had been listed in the draft proposal for the refurbishment grant in May 2010. Contrary to Mr Clarke's submission, it seems to me that the Council always recognised the disadvantages of demolition against the advantages of a fully functioning refurbished building.
23. Mr Clarke emphasised that stage 1 of the proposal, which he submits required no public funding, would result in the regeneration of the external fabric of the building and would meet most of the requirements of the building notice.
24. Turning to the submissions made by Mr Tabachnik on the issue of rationality on behalf of the Council, first it is submitted that the Council was entitled to take into consideration the underlying history of delay and breach of the building notice. The appellants had been aware since August of 2010 of the need to take remedial action urgently, in the absence of which the Council would use its statutory power to demolish. No criticism was made on behalf of the appellant that the deadline was set or the reasons it was set. Secondly, the Council was advised that asbestos clearance work, for which no provision had been made in the funding proposal, would undoubtedly be required upon the expert advice it had received. There was at least the possibility that Python Properties would exercise its right to terminate its contract under Clause 17.3 of the development agreement upon the discovery of asbestos within the building. Thirdly, Python Properties' provisional costings tabled at the meeting of the 21 January 2011 suggested that £800,000 was required for the stage 1 refurbishment, including £175,000 for utilities connection. Stage 2 was costed at an additional £4 million odd.
25. It is obvious, it is submitted, that Python Properties required either grant funding or a substantial loan for stage 1 refurbishment or both. Since the Council had already expended over £100,000 in work preparatory to demolition and the demolition grant was already approved, the suggestion that One North East could be persuaded to divert the residue of the budget to refurbishment was rightly viewed by council as "high risk".
26. In an email written by Mr Johnson to Mr Rabinovitch of Sager Management Limited by way of complaint about the Council's decision to demolish, he wrote:

"…the money that [the Council] are receiving from One NE [£400 K] would have to be repaid to them before One NE could consider making a grant to Python for regeneration works… "

27. It follows that the appellant was, at the relevant time, well aware that the emerging proposal would have to accommodate the previous expenditure of One North East's grant with a view to demolition. It is clear that the proposal never did grasp that nettle. Python Properties' bankers, Santander, had indicated, in a letter of 19 January 2011, their support by way of a loan and the size of the loan reflected "the likely grant aid available from One North East of £250,000". Python Properties provided no evidence either that Santander's requirement of "due diligence and credit approval" was or could be met, or that Santander would continue to support the project if the application to One North East was not successful. Clause 17.1 of the development agreement entitled Python Properties to terminate without consequences should it be unable to secure "acceptable" funding, the judgment of which was entirely in its discretion. In the Council's view, should there be such a hiatus in the development, it would be left with a building which would continue to deteriorate. As proposed, the completion of the refurbishment was dependent upon the successful letting of office accommodation to major local businesses. Inquiries by the Council revealed no current commitment of local businesses to the development, confirmed by later email communication from those businesses. It followed that this too cast doubt upon the financial viability of the project. Finally, the development agreement and costs proposals said nothing about the reimbursement to the Council for its expenditure upon pre-demolition security if the demolition did not go ahead. It was at the least a reasonable concern that, even if the Council agreed to shelve its intention to demolish, the parties to the development agreement had no proposal for the reimbursement of the expense incurred.
28. Mr Tabachnik submitted that in the performance of its duty to its constituents to bring an end to the years of neglect and dilapidation the Council was justified in bringing these considerations to the commercial viability of the alternative to demolition, and to conclude that the uncertainties remaining failed to provide a reasonable guarantee of the necessary outcome. In the judge's view the scheme of January 2011 was the most realistic to have emerged during the decades since Billingham House had been vacated; he recognised that the decision to demolish was a significant step which should not be taken lightly, and such a decision must be fairly and reasonably reached. While the judge had instinctive sympathy for the proposal, he was not persuaded that it was the only right answer. He said at paragraphs 47 to 49 of his judgment:

"47. On the other hand, I agree with Mr Tabachnik that the claimant too readily brushes aside the fact of an unappealed Building Notice, and, even more importantly, a building still dilapidated and an eyesore four years later. Mr Tabachnik is able to point to Python's e-mail to the Council of 2 December 2010. Two months later, the funding and contracts were still not in place. A choice had to be made. There was no necessarily right answer. I do not consider that Bizzy B or Python were acting unreasonably in seeking a further opportunity to resolve remaining concerns, though it is a pity they did not make a detailed offer, such as that made on 15 March 2011 for a contractual agreement between the Council and Bizzy B and Python, with proper step-in rights for the Council, way before 15 March 2011, and well in advance of the meeting in January 2011, though even if it had, some further time would have been needed for the legal implications to be explored and the Council's position fully secured.

48. Absent such contractual agreement, it is difficult to say that the Council acted in a way no sensible and responsible authority could have done in exercising its discretion to enforce demolition pursuant to the Building Notice.

49. Reverting to the matters identified in the Council's letter to Python of 4 February 2011, none of these can be said to be irrelevant to the decision which had to be made. Local people (affected by the dilapidated building not merely visually but in terms of the undesirable uses attracted to a vacant building), locally elected members and the partnership body for the area were all pressing for demolition, which was after all an outcome contemplated by the Council and Bizzy B from the outset in 2007. By February 2011 the Council contractors were on site, the fencing had been erected and demolition had commenced. Far from suggestion that ONE funding was not needed, Python had made it clear at meetings that it was needed, and this would have required, as the Council's letter said, a substitution of the redevelopment business case for that of demolition which had already been approved. There could be no certainty this would have been approved. There undoubtedly was no certainty in the near future of occupation by tenants, which went not merely to funding (whether of Stage 1 or beyond), but also left open the prospect of a building falling back into disrepair, even if the Stage 1 works went ahead; although that risk would have existed if Bizzy B had simply carried out the repair works in the Building Notice. The asbestos issue remained a live one, and the development agreement was undoubtedly worded in such a way that the whole project could fall apart on this issue. It could (to return to Mr Clarke's phrase) be a deal breaker. Finally, even though the Council had recovery rights under section 99(2)(b) of the 1984 Act, it was reasonable to expect reference to reimbursement in full of its costs to be included in the cost plans being pressed on it by Bizzy B and Python."

29. The parties were agreed that the test the judge was required to adopt was identified by Lord Diplock in Secretary of State for Education and Science v Tameside Borough Council [1977] AC 1014 at 1064:

"My Lords, in public law 'unreasonable' is descriptive of the way in which a public authority has purported to exercise a discretion vested in it by statute has become a term of legal art. To fall within this expression it must be conduct which no sensible authority acting with due appreciation of its responsibilities would have decided to adopt."

30. As the judge noted at paragraph 50 of his judgment, Lord Diplock went on at page 1064 to say:

"The very concept of administrative discretion involves the right to choose between more than one possible cause of action upon which there is room for reasonable people to hold differing opinions as to what is to be preferred."

31. Mr Clarke did not criticise the judge's identification of the legal test. He argued only that the judge was wrong to hold that the council made a rational decision. It seems to me that Mr Clarke's argument that the Council acted irrationally is founded upon two discrete assertions. The first is that the passage of time and events, and the Council's experience of those events and the parties involved, were incapable of having a rational impact upon its judgment whether demolition unfortunately should continue. The second is that the Council's consideration of commercial issues had no bearing upon its proper function of achieving the statutory purpose behind Section 79 of the 1984 Act.
32. In my judgment, the first assertion is bound to fail. The Council had been dealing with Bizzy B and Python Properties in relation to Billingham House since 2006; it had always made its present state of mind clear to those parties and had been thanked for doing so. It had given time and lent its support, while notifying the owners that, if demolition was to be avoided, real progress must be made towards an alternative solution. Having extended its deadline, it found weaknesses in the proposal eventually advanced on 21 January 2011 which did not provide it with the guarantees which it had in advance sought from the parties. It seems to me a perfectly rational exercise of judgment to conclude that, while refurbishment was the preferred option, the Council could no longer defer to hope over expectation.
33. This brings me to the second assertion. Section 79(1) and (2) of the Building Act 1984 provides:

"Ruinous and dilapidated buildings and neglected sites

(1) If it appears to a local authority that a building or structure is by reason of its ruinous or dilapidated condition seriously detrimental to the amenities of the neighbourhood, the local authority may by notice require the owner thereof --

(a) to execute such works of repair or restoration, or

(b) if he so elects, to take such steps for demolishing the building or structure, or any part thereof, and removing any rubbish or other material resulting from or exposed by the demolition,

as may be necessary in the interests of amenity.

(2) If it appears to a local authority that --

(a) rubbish or other material resulting from, or exposed by, the demolition or collapse of a building or structure is lying on the site or on any adjoining land, and

(b) by reason thereof the site or land is in such a condition as to be seriously detrimental to the amenities of the neighbourhood, the local authority may by notice require the owner of the site or land to take such steps for removing the rubbish or material as may be necessary in the interests of amenity."

34. By Section 99(2)(a) of the Act:

"(2) Subject to any right of appeal conferred by section 102 below, if the person required by such a notice to execute works fails to execute them within the time limited by the notice --

(a) the local authority may themselves execute the works and recover from that person the expenses reasonably incurred by them in doing so…"

35. It is, in my judgment, plain from the contents of the Council's letter of the 4 February 2011, giving its reasons, that its principal concern was the proper management of the detriment to public amenity. Since that detriment had been accumulating over a substantial period of time, it seems to me, as it did to the judge, that the Council was entitled to examine with some care the latest and very late proposals to rescue the proposal for refurbishment. It was hardly auspicious that the first reaction by Bizzy B to news that specialist investigators had found unacceptable quantities of asbestos debris in the building was to deny it. While the Council was making a critical examination of the commercial viability of the project, that does not, in my view, signify that it was making its decision on commercial rather than statutory grounds. It is not demonstrated to me that the Council either took into account an irrelevant consideration or allowed itself to stray from the statutory purpose. In order to advance the statutory purpose of removing the detriment to public amenity, it was necessary for the Council to give consideration to the commercial viability of the alternative to demolition.
36. Finally, I do not accept the thrust of the appellant's case that the Council was inconsistent in its approach. On the contrary, it seems to me that at all relevant times, although the Council was under pressure from its constituents to demolish the building, the Council was prepared to consider the more desirable alternative of refurbishment provided that the project offered the certainty of resolution of the detriment to which I have referred. The judge was in my view entitled to conclude that there were on the evidence two possible solutions available to the Council, either of which was rationally and reasonably supportable; one of them remained to a significant extent open-ended; the other provided an immediate solution.
37. I turn finally to the secondary issue of Article 1 of the First Protocol. Article 1 of the First Protocol states:

"(1) Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law. (2) The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties."

38. Mr Clarke argues that the Council's decision to demolish Billingham House amounted to a deprivation of property; alternatively demolition would constitute a control over the use of property. In his written submissions Mr Tabachnik relied by way of analogy, upon the decision of the House of Lords in Aston Cantlow &
    Wilmcote with Billesley Parochial Church Council v Wallbank [2004] 1 AC 546. The owners had taken the property, subject to a pre-existing private law liability enforceable under Section 2 of the Chancel Repairs Act 1932 by the Parochial Church Council, to contribute towards repairs necessary to the chancel. Enforcement of the liability did not constitute a deprivation of property or a control of possession of that property for the purposes of Article 1 of the First Protocol. The liability was simply an incidence of ownership which the owners were required to defray from their personal funds (per Lord Hope at page 72, Lord Hophouse at paragraph 91 and Lord Scott at paragraphs 133-134).
39. The learned judge was attracted by the analogy. He considered, at paragraph 51 of his judgment, that the Council was probably right to assert that enforcement of an unappealed building notice cannot be regarded as an interference with property rights. I am not sure, for myself, that the analogy is an accurate one. The decision of the Council involved the demolition of the property, not a levy on private funds incurred by virtue of a restrictive covenant binding the owner of the property. True it is that the obligations under the notice were not appealed on Article 1 First Protocol or any other grounds; but that does not in my view operate to defeat the owner's property interest, particularly when the public authority forbears to enforce the notice pending a negotiated solution.
40. For present purposes, I am prepared to assume that Bizzy B was not precluded from raising its Article 1 rights at the enforcement stage; however, the test is whether the Council was exercising its powers legitimately in the public interest and proportionately. Having concluded that the Council made a rational judgment in pursuit of the public interest identified in Section 79 of the 1984 Act, it seems to me clear that the interference was justified and proportionate for the purposes of Article 1.
41. For these reasons I would dismiss the appeal on both grounds.

Lord Justice Hooper:

42. I agree.

Lord Justice Mummery:

43. I agree.

Order: Appeal dismissed