England and Wales High Court (Administrative Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
THE ADMINISTRATIVE COURT

		Royal Courts of Justice Strand London WC2A 2LL
		19th February 2008

1. MR JUSTICE KING: I proceed to give judgment in this appeal.
2. Sections 226 and 227 of the Town and Country Planning Act 1990 ("the Act") provide wide powers to a local authority for the compulsory and voluntary acquisition of property for development and other planning purposes.
3. Section 226 deals with compulsory acquisition and provides so far as material as follows:

"(1) A local authority to whom this section applies shall, on being authorised by the Secretary of State, have power to acquire compulsorily any land in their area...

(a) if the authority think that the acquisition will facilitate the carrying out of development, re-development or improvement on or in relation to the land, or

(b) which is required for a purpose wich is necessary to achieve in the interests of the proper planning of the area in which the land is situated.

(1A) but a local authority must not exercise the power under paragraph (a) of subsection (1) unless they think that the development, re-development or improvement is likely to contribute to the achievement of any one or more of the following objects——

(a) the promotion or improvement of the economic well-being of their area;

(b) the promotion of improvement of the social well-being of their area;

(b) (?) the promotion or improvement of the environmental well-being of their area..."

4. Section 227 deals with voluntary acquisition, that is to say the acquisition of land by agreement. This provides as follows:

"(1) The council of any county, county borough, district or London borough may acquire by agreement any land which they require for any purpose for which a local authority may be authorised to acquire land under section 226.

(2) The provisions of Part 1 of the Compulsory Purchase Act 1965 (so far as applicable), other than section 4 to 8, section 10 and section 31, shall apply in relation to the acquisition of land under this section."

5. The background to this present appeal is the programme of the Sefton Borough Council ("the Council") of identifying areas in need of re-development in order to create viable and sustainable long-term housing. Parts of the Council area qualified for central government funding in recognition of the problems of housing market failure. This programme became known as the Housing Market Renewal Initiative ("HMRI"). It involved in part the acquisition of properties both by way of voluntary acquisition under section 227 and compulsory purchase under section 226 of the Act.
6. The appellant appears in person by video link. By a letter dated 30th October 2005 ("the October letter") she made an objection to the respondent District Auditor under sections 16(1)(a) and (b) of the Audit Commission Act 1998 ("the 1998 Act") relating to the expenditure incurred by the Borough Council in the accounting year 2004/2005 in the voluntary acquisition of properties under this programme, that is to say in the acquisition of properties by agreement. She did so on grounds spelt out in that letter and a subsequent letter of 16th December 2005 ("the December letter") to the effect that the acquisitions were not properly authorised in law by the Council and (I quote from her October letter) "may therefore be unlawful". Paragraph 1 of her October letter makes clear that her objection was specific to and limited to that part of the programme under which there were voluntary acquisitions. That paragraph reads as follows:

"I write to make this objection to Sefton MBC Audit of Accounts 2004/2005, specifically those items of accounts of the Housing Market Renewal Initiative (HMRI) relating to expenditure on the voluntary acquisitions programme 2004/2005, on the grounds that certain acquisitions were not properly authorised in law by the Council and may therefore be unlawful."

7. The appellant now appeals to the court under section 17(3) of the 1998 Act against the decision of the District Auditor, for reasons set out in his letter of 24th January 2006, not to uphold her objection.
8. I should make clear that this right of appeal under section 17(3) is in respect only of the respondent's decision not to apply to the court under section 17(1) of the 1998 Act for a declaration that the item of account in the Council's accounts for the material year relating to the expenditure upon these acquisitions, was contrary to law.
9. By her Notice of Appeal the appellant also seeks to challenge the respondent's decision not to issue a report under section 8 of the 1998 Act, and his further decision not to make an advisory report under section 19A of the 1998 Act. Section 8 provides that the district auditor shall consider whether in the public interest he should make a report on any matter in order for it to be considered by the body concerned or brought to the attention of the public. Section 19A deals with the issuing of an advisory notice where in essence the district auditor has reason to believe that unlawful expenditure is about to be incurred. There is however no provision for an appeal against such decision not to issue a section 8 report or a section 19A notice. Hence any appeal in relation to these decisions must be dismissed as a matter of principle.

The Appeal under section 17(3)

10. I turn to the appeal under section 17(3). The grounds put forward in the Notice of Appeal for challenging the lawfulness of the expenditure in question, and hence the decision of the District Auditor under appeal, are procedural only. They relate to the terms of the material reports to, and resolutions of, the relevant committees and cabinet of the Borough Council which purported to authorise the expenditure. The fundamental point taken is that the reports and/or resolutions do not expressly refer to the specific statutory power and function being exercised by the Council in order to acquire the properties for the purposes of the HMRI scheme. In paragraph 20 of her October letter the appellant stated that in this case a proper resolution authorising the acquisitions would have specified the Council's powers and functions under section 227 of the 1990 Act. Both the appellant and the District Auditor agree that this was the relevant statutory provision granting the Council the power in this case to acquire these properties voluntarily.
11. As an example of the terms of the material resolutions complained of, I refer to the resolution of 17th March 2004 (bundle page 125) which reads:

"Resolved: That, subject to the approval of the Cabinet:

(i) The acquisition by agreement of residential property across the south Sefton HMRI area for strategic purposes, linked to market renewal activity, be approved;

(ii) The appropriate officers be authorised to enter into negotiation with the owners of dwellings identified for acquisition with a view to facilitating acquisition by agreement."

12. It is however not quite correct to say that none of the material resolutions specified the relevant statutory powers. My attention was drawn for example to a Cabinet resolution of November 2004 (at bundle page 133-134) minuted as follows, namely "that the appropriate officers be authorised to enter into negotiations to acquire the sites which have been identified for acquisition as Phase 1 of the Housing Market Renewal Activity... by agreement and in default of agreement to exercise statutory powers pursuant to the Town and Country Planning act 1990 and the acquisition of Land Act 1981, to acquire compulsorily the sites..."
13. I set out in full paragraph 20 of the appellant's October letter since this reflects the essence of the fundamental procedural point taken on this appeal:

"It is a basic principle of public law that a [local authority] can only properly act in law under the statutory provisions governing a particular activity. In this case, therefore, for proper authorisation in law, such a programme of voluntary acquisition under the HMRI scheme for redevelopment, it is necessary in law to call down those discretionary powers and that statutory function contained in the appropriate primary legislation, and to express that function and those powers clearly and precisely in an appropriately formulated resolution. In this case a proper resolution authorising such acquisitions would specify the powers and functions under S227/TCPA 1990."

14. There has however been no challenge on substantive grounds to the District Auditor's decision on the legality of the Council's material expenditure, procedural considerations apart. Indeed in my judgment, on the evidence before me, there could be none. In his decision letter (ie that of 24th January 2006, referred to hereafter as the "decision letter"), the auditor expressly stated that he had no reason to doubt the legality of the expenditure in question. He considered that the Council clearly had the powers to acquire the properties voluntarily under section 227 of the 1990 Act and as I have already indicated the appellant herself concedes this to be the case.
15. The process by which the District Auditor had satisfied himself as to the legality of the expenditure was explained in the following paragraphs of the decision letter:

"Work carried out:

In the course of my investigation into the matters raised in your objection I have considered the information set out in your letters, examined relevant Committee, Cabinet and Council reports. As part of our routine audit processes, we have reviewed the expenditure on HMRI transactions, as set out in the Council's statement of accounts for 2004/2005 and supporting records, and tested, on a sample basis, that expenditure was eligible for HMRI funding. We have also satisfied ourselves that the Council's legal department have been closely involved in ensuring the legality of these transactions, including securing specialist legal advice where necessary. We have also discussed your concerns with the Council's legal director and our in-house legal advice team."

Findings:

I agree that the Council has acquired a number of properties in connection with the HMRI initiative without using CPO powers, and that in these cases the power on which the Council has relied has not been set out in the reports containing the recommendations to proceed with these acquisitions. However, the Council clearly has the powers to acquire properties voluntarily. You acknowledge this within your objection and refer to the powers within section 227 of the Town and Country Planning Act 1990. From our review and testing of the HMRI transactions, we have confirmed, on a test basis, that the expenditure was eligible for HMRI funding. I have no reason to doubt the legality of this expenditure."

16. This process has been further amplified in the District Auditor's witness statement before this court in which Mr Watkinson explains how he had satisfied himself that the Council's legal department had been involved in ensuring the legality of the transactions concerned, and how a sample test done as part of the annual audit of the material 2004/2005 accounts had shown that the sampled properties were eligible for HMRI funding and had given rise to no concerns as to the lawfulness of the individual expenditures. I accept the contents of his evidence from Mr Watkinson which in itself has not been the subject of any challenge.
17. I should add that although not strictly relevant to the determination of his appeal, some of the properties in question were ultimately acquired by compulsory purchase in circumstances where acquisition by agreement, ie voluntary acquisition, had not proved possible, and a challenge to the lawfulness of the material compulsory purchase orders was dismissed by Sullivan J on 22nd August 2007 in a case reported as R (on the application of Powell and Others) v Secretary of State for Communities and Local Government [2007] EWHC 2051. I understand that the appellant herself made oral submissions in the course of that particular case.
18. I turn then to the appellant's grounds of appeal based on what I have described as the procedural point. The appeal is in effect based upon the proposition set out in ground 3 of the Notice of Appeal that it is a "principle of public law" that when a council intervenes in property rights by voluntary acquisition pursuant to a scheme of housing development and "subject to and under the threat of compulsory acquisition" then the Council must by its authorising resolution specify the particular statutory function and statutory powers to be used, and "where a council fails to do so the expenditure incurred in such acquisition is not properly authorised in law and is therefore unlawful".
19. The respondent District Auditor in his decision letter rejected this proposition. He accepted that the supporting evidence produced to him by the appellant did show that the minutes and resolutions did not always refer to the specific legislation upon which the Council was relying but he considered that "whilst it would be good practice" for reports to set out the powers and functions being carried out, it "is not required by law and does not affect the validity of the decision". He agreed that "in some instances the description of the purpose of the acquisition is a little vague and could be more clearly put" but he remained of the view that "the Council is not required by law to set out the statutory powers and function exercised". His stance is summarised in the following statement within the letter, namely:

"In my view there is no legal requirement for a council to include in its reports and minutes specific reference to the statutory power and function in respect of the matters set out in that report or matter."

20. In his explanation for taking this stance, the respondent in his decision letter contrasted the position between a voluntary acquisition as in the present case where there was a willing vendor and a willing purchaser (a section 227 acquisition), and a compulsory purchase order ("CPO") (a section 226 acquisition) which might result in an individual's home being acquired against his wishes in respect of which there was a far more rigorous and prescribed process. In the case of a CPO there were clear guidelines setting out a formal legal process to be followed to safeguard the concerns of those affected and under which the Council was required to specify in the CPO itself and therefore in the resolution authorising the making of the CPO, which legislative powers were being relied upon. In the case however of a voluntary acquisition where there was a willing vendor and purchaser with no concerns from the parties and where there were no doubts about the Council's powers to undertake such transactions, the respondent was unable to see any requirement to refer to specific powers within the Cabinet resolutions authorising such transactions.
21. I should add that the respondent did also say in the decision letter that in his view it was quite legitimate for the Council to advise residents what was likely to happen under a CPO and to give them the option to sell before such action were taken, but that if the appellant had any evidence of intimidation by officers in order to secure a voluntary acquisition then the individuals concerned should make complaint in specific cases. No such complaint however forms any part of this appeal.
22. The appellant submits that the District Auditor has erred in law in rejecting her objections. She has put forward three grounds of appeal although in essence they amount only to one as encapsulated in ground 3 to which I have already referred. Grounds 1 and 2 say in effect that the auditor erred in law in concluding there was no legal requirement for a local authority to include specific references to the statutory powers and functions set out and that failure to do so did not affect the validity of the decisions.
23. In developing her argument before me, which she did both courteously and cogently, Miss Joyce, the appellant, placed emphasis upon the rule of law and the need in the public interest for good governance. The essence of her submissions is that there are a number of potential sources of power, quite apart from section 227 of the 1990 Act, under which a Council might be purporting to act in authorising expenditure upon a voluntary acquisition. She gave as examples voluntary acquisitions under section 17(3) of the Housing Act 1985 or under general improvement powers under Part VIII of the 1985 Act, replaced by powers provided for under the Local Government and Housing Act 1989 sections 98-100, referable to neighbourhoods. She also referred me to clearance orders under the 1985 Act. Her basic point is that each source of power would have its own set of conditions and criteria which would have to be satisfied if it were to be exercised lawfully. Miss Joyce was anxious to stress that the expenditure material to this case, under the HMRI, was itself subject to specific defined conditions set out in agreements with the Secretary of State. In this regard I was referred to the documentation within the court bundle (page 91 onwards) under the heading Merseyside Housing Market Renewal Pathfinder October 2003 Prospectus. Absent a specific reference in the material authorising resolution to the specific statutory power being exercised and relied upon, it would -- so her argument ran -- be quite impossible to test or challenge the legality of any particular expenditure, because it would not be known by which set of criteria the action being purportedly authorised was to be judged. This she said would be a charter for uncontrollable and arbitrary actions by local government. She encapsulates her argument in paragraph 5 of her December letter to the District Auditor. This reads:

"Your response implies there is no requirement to relate actions of a [local authority] to its specified statutory functions and purposes, that a [local authority] can do anything so long as there is something somewhere that indicates such action is possible. Another way of putting it is how does the [Audit Commission] know whether the funding and expenditure is lawful if resolutions do not refer to the precise statutory provision which permits and authorises such expenditure on and for a specific statutory function. How are accounts justified in practice without such reference back to statutory powers. Is it all just an unallocated slush fund and spend what you like."

The court's conclusions

24. I have considered the appellant's submissions with care but ultimately I have found no substance in them. I agree with the District Auditor in his decision letter and with the submission made today by Mr Lewis QC on his behalf, that there is no statutory or other common law requirement that a report or resolution of a local authority must identify the specific power under which the proposed action is to be taken. Nor is there in my judgment any statutory or other principle of law that automatically renders invalid any decision of a local authority which does not specify in the resolution the statutory power being used. No authority has been cited to me for either proposition. It obviously may be and in most cases must be good practice to specify the statutory power being exercised in any authorising resolution. Such practice would obviously assist in dealing with challenges as to whether the local authority applied the correct test or criteria or acted irrationally but I accept the proposition put forward on behalf of the District Auditor that the absence of a reference to the specific statutory power relied upon cannot in itself and alone invalidate the resolution or any action taken or expenditure incurred as a result of it. When a challenge is made to the lawfulness of expenditure on any particular course of action by a local authority, the fundamental issue is always whether the local authority had the power to act as it has done and whether it has exercised that power lawfully, irrespective of whether it has made specific reference in its authorising resolution to the statutory power upon which it in fact relies. So for example a fundamental issue in the case of property acquired by a local authority by voluntary agreement, for whose acquisition it relies upon its powers under section 227 of the 1998 Act, would be whether the property had been acquired for any purpose set out in section 226, not whether the authorising resolution specified section 227.
25. When I asked Mr Lewis when responding to the appellant's more general submission relating to good governance, to identify how a district auditor could investigate the legality of any expenditure under challenge, absent any express reference to the power relied upon in any authorising resolution, he specified the following courses open to the auditor which on his evidence were in fact adopted by Mr Watkinson in this case.
26. First, the district auditor can have regard to his corpus of knowledge of the potential powers available to the local authority. Second, he can look at the relevant reports and minutes of the Council to seek to identify the reasons put forward for any particular proposal as well as seeking to see whether any reference is made to the statutory powers being exercised. As I have already identified in this particular case, there were certain resolutions within the minutes which did refer to the statutory powers under the 1990 Act. Thirdly, the auditor can exercise his investigative powers, which Mr Watkinson did in this case, to question officers of the Council in order to ascertain on what basis the acquisitions in general were, and any transaction in particular was, carried out. In this case, for example, I have accepted the evidence of Mr Watkinson that he satisfied himself that the Council's legal department had been involved in ensuring the legality of the transactions. Fourthly, the district auditor can look at a sample of the transfer documents. The sample looked at in this case exhibited at page 8 of exhibit TW1 to Mr Watkinson's statement, expressly referred to an acquisition pursuant to section 227 of the 1990 Act. Paragraph 11 of that Transfer states "the transferee acquires the properties in exercise of its powers pursuant to the provisions of section 227 of the Town and Country Planning Act 1990". Finally, the district auditor can, and did on the evidence in this case, carry out routine sampling of various transactions referable to the HMRI, in order to satisfy himself that the expenditure has been lawfully incurred within the terms of the particular programme.
27. As far as the lay person is concerned, such as a council taxpayer in the position of this appellant, he or she can always refer any objection to, or suspicion of, illegality in respect of a particular item of expenditure to the district auditor so he can investigate the legality in the ways described. This is of course exactly what happened in this case.
28. In other words, I do not accept that the rejection of the appellant's propositions amounts to acceptance of a charter for arbitrary or uncontrollable actions by local government. As I have indicated, the respondent District Auditor following his investigations found no reason to doubt the legality of the expenditure incurred on the acquisitions to which the appellant has taken objection and I repeat that the appellant has raised no substantive challenge to this conclusion. No basis, other than the absence of express reference to the specific power being exercised in the authorising resolution and supporting reports, has been put forward to raise a doubt as to the lawfulness of this expenditure. Again, as I have already indicated a challenge to the lawfulness of the compulsory purchases made under HMRI programme has already been dismissed in the Administrative Court.
29. I should also add that as a matter of fact in this case -- if it be relevant, which I doubt, to the issue of law raised on this appeal -- I am satisfied that on the relevant Council documentation, taken as a whole, it was made clear that the proposals for achievement of the regeneration of the area would be by way of voluntary acquisition and if that failed by compulsory acquisition, pursuant to the material provisions of the 1990 Act. I have already referred in this regard to the Cabinet minutes of November 2004 (at bundle pages 133-4). My attention was also drawn to the contents of the report from the Housing Market Renewal Director to the Cabinet dated 7th April 2005, at the start of the financial year following that to which objection was made, which report makes specific reference to acquisitions "either by agreement pursuant to section 227 of the Town and Country planning (sic) Act 1990 or compulsorily..." (bundle page 156). It is noteworthy that the Appellant herself does not appear to have been under any misapprehension as to the relevant statutory power. During the year 2004/2005 she herself with others petitioned the Council on the basis that the resolutions should have specified section 227 of the 1990 Act.
30. In all these circumstances, even if, contrary to my primary finding, there were a procedural requirement in law upon the Council requiring a specific reference to section 227 of the 1990 Act in the resolution authorising officials to acquire property by voluntary agreement, I would not as a matter of my discretion under section 17 of the 1998 Act make a declaration that any particular item of expenditure was contrary to law. I repeat: no substantive illegality has been asserted in this appeal and the District Auditor himself had no reason to doubt the legality of the expenditure.
31. For all these reasons I dismiss this appeal.
32. MR LEWIS: I am very much obliged, my Lord. That then leaves the question of costs. There are two matters: Firstly the general principle; and, secondly, the summary assessment. On the general principle, the basic position is that the successful party gets the costs from the unsuccessful party. Secondly, on the facts of this case we did remind Miss Joyce of that. We gave her the opportunity of discontinuing with no order for costs or carrying on, and she chose to carry on. She has previously been involved in litigation where the courts have spelt it out, so the general principle is known to her. She was actually invited to avoid those costs, but she chose to fight on and, in my submission, the general principle applies. Your Lordship should then have a schedule of costs which --
33. MR JUSTICE KING: Has this schedule been --
34. MR LEWIS: It has been sent to her, yes. It is £18,283. A couple of points there: Some part of that, something like £7,000, arises from the delay and the need to deal with the court and Miss Joyce before that.
35. THE CLAIMANT: Sorry, sir, I can't hear.
36. MR LEWIS: The second point --
37. MR JUSTICE KING: Do you want repeat the first point?
38. MR LEWIS: The first point was that the amount £18,283.47 includes roughly £7,000, I think, which relates to the delay in dealing with court and Miss Joyce before the proceedings in February onwards this year. The second point to make is that these costs do not actually include the time and costs of the District Auditor himself -- those will still have to be borne out of the public fund. These are the legal costs that the District Auditor has had to incur by having in-house solicitors and counsel to deal with the challenge that Miss Joyce chose to bring and chose to pursue. So those are the amounts we are seeking, plus VAT, my Lord.
39. MR JUSTICE KING: I do have the power to order a detailed assessment.
40. MR LEWIS: You can do that my Lord. You can award it in principle, then detailed assessment for the parties to negotiate. If we cannot do that, then we could have a costs assessment. So your Lordship could do it that way around.
41. MR JUSTICE KING: What do you want to say first, Miss Joyce, about the principle of costs, that is to say that you should pay the costs of the respondent District Auditor, in the light of the fact that, in my judgment, you have failed in your appeal?
42. THE CLAIMANT: Yes, sir. I do understand there is a general principle, sir, it doesn't make it fair. What appalls me, sir, is this: In the £18,000 is 52 hours' work at exorbitant prices, prices --
43. MR JUSTICE KING: Well, Miss Joyce, can I help you. Because you are a litigant in person, I do not intend to make a summary assessment today. In other words, subject to anything you can say, but I doubt whether you can persuade me to the contrary, I am going to make an order that in principle the respondent is entitled to his costs of defending this appeal from you, but the amount of those costs will be subject of a detailed assessment, that is by a court on another occasion, when you can attend, in the absence of agreement reached between you and the District Auditor.
44. THE CLAIMANT: I am grateful for that, sir, but can I just finish my point of other principle.
45. MR JUSTICE KING: Yes, of course.
46. THE CLAIMANT: Fifty-two hours' work, sir, of four experts, plus counsel, at a rate per hour which is more than I get per week on my pension, sir, as I find to be unreasonable and extortionate and exorbitant.
47. MR JUSTICE KING: Yes, I am going to stop you because that does not go to the point of principle. It very properly goes, and fairly goes, to the issue of the precise amounts, the method of calculation, the reasonableness of the hours worked and the rate which has been claimed.
48. THE CLAIMANT: Sir, you are in advance of me. I'm sorry to be slow and ponderous --
49. MR JUSTICE KING: No, no.
50. THE CLAIMANT: -- but I'm not a High Court judge. Neither am I a QC or a legal adviser. Sir, I believe I have raised an important point and, quite frankly, I am disappointed at the judgment where it says, and you are confirming the DA, that a decision involving people's lives, property rights and enormous millions of pounds of public money, there is no requirement to specify that law.
51. MR JUSTICE KING: I understand that. That is your right.
52. THE CLAIMANT: Yes, yes, I'm just saying I find it quite appalling.
53. MR JUSTICE KING: You are entitled to that and I have no problem with that.
54. THE CLAIMANT: Yes, sir, and --
55. MR JUSTICE KING: I am going to stop you because --
56. THE CLAIMANT: -- I reckon that is a valid question to raise in a court of law.
57. MR JUSTICE KING: Yes, I understand the point you make. You are saying that you had a valid point to raise, it was a point which the court did have to consider and you raised arguments which were arguments for the court to consider; and you are saying that in those circumstances you should not have an order for costs made against you, having particular regard to your means. I understand that.
58. THE CLAIMANT: Yes.
59. MR JUSTICE KING: Yes, but as a matter of principle, I am afraid, costs have to follow the event, in my judgment, and there is no material before me which would justify not applying that principle. Therefore I shall make an order in principle that the costs of the respondent in respect of this appeal should be paid by the appellant Miss Joyce, but I do not make a summary assessment of those costs and, in the absence of agreement between the parties, the matter must go to a detailed assessment. I am sure the appropriate wording can be put on the order.
60. THE CLAIMANT: Yes, sir. Can I just clarify --
61. MR JUSTICE KING: Yes.
62. THE CLAIMANT: -- is it the power of this court or the court who will do the detailed assessment to actually specify the manner and the timing of any costs made, sir, finally?
63. MR JUSTICE KING: You mean, how you pay the ultimate sum?
64. THE CLAIMANT: Yes, sir.
65. MR JUSTICE KING: That is not a matter for this court immediately. Once the assessment has been made, you may make application to the court for the method of payment. I think that is right, Mr Lewis.
66. MR LEWIS: I believe so, yes.
67. THE CLAIMANT: Right, that's fine, sir.
68. MR JUSTICE KING: Very good. Thank you very much, Miss Joyce, thank you very much indeed. Thank you, Mr Lewis.
69. MR LEWIS: Thank you very much, my Lord.