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
		20 February 2013

MR JUSTICE MITTING:

1. In October 1997 the London Borough of Barnet ("Barnet") granted a 99-year lease on a 1.7 hectare site at Claremont Road, London NW2 to Hendon Football Club at an initial rent of £3,500 per year rising to £4,500 per year in 2004 and then at five-yearly intervals in accordance with increases in the Retail Prices Index. The rent is now £5,263 per year.
2. Hendon Football Club was then owned by the Arbiter Group (named after its founder). Some time in or before 2008 the shares in Hendon Football Club were acquired by MontClare Developments Ltd ("MontClare"). Hendon Football Club ceased to occupy the site. The buildings have now been demolished and the site is derelict and, for all intents and purposes, vacant. For several years it has been ripe for development.
3. Outline planning consent was granted to the Arbiter Group on 18 October 2004 for a care home and three blocks of flats. Negotiations for the sale of the freehold to Hendon Football Club took place but were overtaken by the property slump in 2007 and 2008.
4. The claimant is a registered charity incorporated on 7 October 1997 to further the Jewish religious education of girls of high school age. The school currently operates from premises at Hendon Synagogue which it expects it must vacate in August 2013. It now has 125 pupils and is rated outstanding by Ofsted. It has for some years sought to relocate to more suitable permanent premises. It saw an opportunity in the vacant Hendon Football Club site. It attempted to purchase the unexpired term of the 99-year lease unsuccessfully in 2010 and 2011 by negotiations with Hendon Football Club and its mortgagee, now - following the failure of the mortgagee - the Irish National Asset Bank Agency; all without success.
5. The claimant approached Barnet in December 2009 to discuss its interest in developing a school on the site with them. There is a difference of recollection between the participants to the discussions about precisely what was discussed and what was agreed. It is unnecessary for me to resolve those differences. They did originally give rise to a pleaded but unargued claim of legitimate expectation by the claimant that it would be notified of any decision by Barnet to sell the freehold before any decision was made. That proposition would clearly have been unsustainable because in July 2010 an e.mail sent by the claimant to Barnet stated that the claimant "would appreciate it if you would let me know if the council moved forward with any particular plan to sell the site", a form of words which indicates that no clear and unequivocal promise to notify the claimant beforehand if any intention to sell had been given had been made.
6. Meanwhile in May 2011 MontClare submitted proposals to buy the freehold of the Hendon Football Club site for £4 million upon the basis that planning consent would be granted for 526 habitable rooms. On 28 July 2011 the Cabinet Resources Committee gave authority to Barnet's officers to conclude negotiations with MontClare. There was a debate, both within Barnet and involving MontClare, about the number of habitable units for which planning consent was likely to be granted. MontClare revised its offer on 19 October 2011 to a cash price of £2.8 million and "overage" payments. The "overage" payments were to be calculated as follows: if planning consent for more than 359 habitable rooms was granted - that is to say 257 for private housing and 102 for affordable housing - £10,000 per habitable room of private housing (in excess of that number) would be paid together with 50 per cent of the excess of the price offered by registered social landlords for affordable housing over £4.1 million.
7. Barnet instructed the district valuer to advise on this offer. The district valuer advised on 6 January 2012 that the market value of the freehold was £2.8 million and that the consideration offered represented the best consideration for the council, particularly as the overage provision would enable it to benefit from any increase in the number of marketable habitable rooms over the benchmark level.
8. Meanwhile on 5 January 2012 the claimant discovered Barnet's intention to sell and to "ratify" the sale at a committee meeting on 9 January 2012. The claimant urgently lobbied Barnet. The meeting was put back to 28 February 2012. The claimant was told that it would have to submit any bid by 13 February 2012. It did so on 12 February; £3.5 million unconditional with a five per cent deposit payable in 60 days and the balance in nine months. The offer was, surprisingly, not headed "subject to contract". It could have been accepted as it stood despite its brevity. The claimant provided proof of funding seven days later as promised. There was no question about the ability of the claimant to exchange and fulfil a contract to purchase the site.
9. On 28 February 2012 the Cabinet Resources Committee resolved to instruct Barnet's officers to complete the sale of the site to MontClare. The decision was challenged by the first of the two judicial review claims which I have heard today. An injunction was granted to restrain the sale. This led Barnet to decide to retake the decision in July 2012. The district valuer was asked to evaluate both bids in a revised advice.
10. On 17 July 2012 the officers' report to the committee set out the alternatives and the district valuer's revised advice in the following terms:

"7.1 This disposal will achieve an initial capital receipt of £2.8 million and provision for an overage payment and a contractual commitment to pay the equivalent of Section 106 contributions assessed at £1 million as detailed in 7.2 below. The current rental of £5,263 per annum will cease to be payable.

7.2 Planning colleagues have assessed the value of the Section 106 contributions at around £1 million made up as follows:

(a) 15 per cent on-site affordable housing and a committed sum in the value of 3 per cent on-site affordable housing;

(b) an education contribution of £120,000;

(c) a traffic contribution of £40,000;

(d) a contribution of £200,000 towards improving the changing room facilities in the adjoining Clitterhouse Depot's buildings;

(e) a contribution of £200,000 towards providing a car park cafe and children's play equipment;

(f) a contribution towards drainage;

.....

10.2 Council officers have asked the DVS to comment on the school offer and to confirm their position on best consideration. The DVS have provided an addendum for their 6 January 2012 report and have stated the following concerning the proposed sale to the school:

'Whilst the offer of £3.5 million has been offered to the council to acquire the freehold of the school, as with any purchaser, this price might well be reduced once the potential purchaser considers that they are in a strong negotiating position. This might not happen and it is in no way a reflection of this particular bid but reflects general statements of the final price often falling below the opening bid. Whilst this could happen with MontClare ..... or their subsequent owners, as this is a culmination of many years negotiation, we consider it less of a risk. Although the school's offer for the freehold interest is £700,000 higher than the offer from MontClare Ltd in cash terms, there is no overage agreement as with MontClare Ltd. Also the council are likely to benefit from CIL payments and Section 106 contributions but in particular the provision of £4.1 million worth of affordable housing in their borough. Whilst this is clearly only an overview based on limited information, the DVS considers that the following factors should be considered prior to the offer from the school being accepted:

(1) Deliverability. If the school's owners acquire the wrong leasehold interest then they will be frustrated in their attempts to build a school;

(2) Section 106 and CIL contributions;

(3) Provision of 30 affordable housing units;

(4) Offer price may be reduced but it is currently £700,000 more;

(5) The housing option has been considered by the council and is likely to prove acceptable in planning terms. The council would need to confirm whether the provision of the school would be acceptable.'

10.3 The DVS have also confirmed that the council could save between £500,000 and £1 million as a result of the nomination rights on the affordable homes. It should be noted that the financial appraisal of the Section 106 and CIL have not been financially assessed. The level of affordable housing is based upon the existing planning permission. If this is not proceeded with and a lower density scheme is forthcoming then the benefits will probably be less but will remain a significant consideration.

10.4 In conclusion, it is the officer's view that the best consideration under Section 123 continues to be for the sale to MontClare Ltd for the following reasons:

(1) The DVS's advice set out above on the financial value and wider benefits from the MontClare Ltd bid;

(2) Uncertainty over whether the school bid will be maintained at its current level;

(3) Uncertainty over whether the planning permission will be forthcoming for the school proposals;

(4) The inevitable and considerable delay inherent in the school's bid and the consequences for the management of the site."

11. On 17 July 2012 the Cabinet Resources Committee decided to call in the proposal. On 31 July 2012 the Business Management Overview and Scrutiny Committee sent the decision back to the Cabinet Resources Committee for reconsideration. On 1 August 2012 the Cabinet Resources Committee resolved "to implement the decision of 17 July 2012 in relation to the sale of the freehold interest in the former HFC ground and adjoining land, Claremont Road, Hendon". Although the minutes trail does not make the point clear, what the Cabinet Resources Committee decided to do was to instruct Barnet's officers to proceed with the sale to MontClare. The minutes are laconic as to the reason for taking that decision.
12. To the extent that it is proper to fill them in by evidence from a senior officer, Mr Malinowski, Barnet's principal valuer, has filled in the gaps. He has explained that he sought advice from planning colleagues about the likely density of habitable units for which consent would be given. His colleague Philip Stanbridge was told in July 2012 that a density range of between 250 and 350 habitable rooms per hectare would be reasonable for the site. On that basis, and by a simple calculation, some 80 or 81 more units could be built on the site than the MontClare offer allowed for. A simple back-of-envelope calculation demonstrated that that element of the overage was therefore worth £800,000 (80 times £10,000 per room). Mr Malinowski also considered Barnet Council's Draft Residential Guidance in a supplementary planning document which suggested a range of 150 to 250 habitable rooms per hectare of suburban land and 250 to 450 habitable rooms in an urban setting. He also said that discussions had taken place with a number of housing associations, and Barnet was content that the assumed offer of £4.1 million for the affordable housing element of the proposal would be exceeded. He put a value of not less than £200,000 on that excess, giving a benefit to Barnet of £100,000.
13. Consequently, in his view, the expected payment would take the total consideration offered by MontClare to between £3.6 million and £4 million.
14. Mr Anderson, for the claimant, submits that I should be sceptical about an officer's explanation for the reasoning of a committee. I accept his proposition that I should treat that evidence with reserve, not least because the committee minutes are laconic and partly internally contradictory.
15. Matters have however not stood still. The sale of the land has been frozen by injunction but nevertheless discussions continue with MontClare. Mr Malinowski says - and there is no reason to doubt his word - that heads of agreement have now been agreed which provide for a guaranteed minimum overage of £1 million (£800,000 in respect of private habitable rooms and £200,000 in respect of the price to be offered by registered social landlords for the affordable rooms). This second decision has been the subject of a further judicial review challenge. It is agreed on all sides that the second challenge renders the first substantially academic.
16. The principal ground of challenge is that Barnet's decision to sell to MontClare, if implemented, would be in breach of Barnet's statutory duty under Section 123 (2) of the Local Government Act 1972. That provides:

"(2) Except with the consent of the Secretary of State, a council shall not dispose of land under this section, otherwise than by way of a short tenancy, for a consideration less than the best that can reasonably be obtained."

That provision has been the subject of previous judicial consideration in terms that I believe are now not controversial. Mr Justice Roch in R v Middlesbrough Borough Council ex p Frost Tree Ltd, 16 December 1988, observed:

"In my judgment, the word 'consideration' in Section 123 (2) of the Local Government Act 1972 refers to the price payable for the land. That price may consist simply of a sum of money offered for the land or it may consist in part of such a sum and in part of other elements such as rights in the nature of easements or a right to re-purchase reserved by the selling authority provided that such elements have a commercial or monetary value which is capable of being assessed by those expert in the valuation of land."

17. A differently phrased, arguably slightly wider, definition was adopted by Mr Justice Lightman in R v Pembrokeshire County Council ex p Coker [1999] 4 All ER 1007 at page 1013 paragraph 13:

"13 ..... When deciding whether (for the purposes of Section 123) the best consideration reasonably obtainable has been obtained, the only consideration to which regard may be had is that which consists of those elements of the transaction of commercial or monetary value to the local authority ..... "

Elements of purely social value, such as for example the creation of jobs in that case, do not count. Those propositions are uncontroversial. On the facts of this case they require a number of the benefits (which Barnet's committees were advised would accrue to the council) to be considered.

18. Mr Anderson submits that the committees took into account perceived benefits which could not form part of the consideration for the sale of the land, in particular the payments that were likely to be promised and made under Section 106 of the Town & Country Planning Act 1990 and the provision of affordable housing units. He also submits that those advising the committees - and so the committees - failed to evaluate and to discount appropriately the overage payments promised by MontClare. Thirdly, he submits that the committees were advised to give weight, or excessive weight, to the difficulties which would be experienced by the claimant in the furtherance of its proposals to develop the site for a school and other purposes. There is some force in his submissions.
19. The advice given by the officers did not clearly distinguish between those elements of the benefits which might accrue to Barnet which could form the consideration for the sale of the land and which could not. Secondly, the difficulties of fulfilling the claimant's development proposal should not have been treated as a relevant factor. The claimant's offer was unconditional. As I have noted, it was not even subject to contract. It was fully backed financially. It could have been accepted as it stood. It was not in point that the claimant might have experienced difficulties in fulfilling its hopes to build a school on the site.
20. I do not however accept Mr Anderson's point about the failure to evaluate and discount the overage element of MontClare's offer. As Mr Malinowski points out, the figures being put to the committees were, on the advice given by the planning department, conservative. The likelihood that the overage payments would not be achieved was at least outweighed by the likelihood that they would be significantly exceeded. Accordingly, I reject his criticism of the approach to that issue.
21. Mr Anderson submits that I should pay significant regard to what he categorises as procedural failures in this case. He observes - to my mind undoubtedly correctly - that procedural failings can play a part in the determination of the basic question which I have to decide, namely whether or not Barnet would have sold to MontClare under the terms proposed in breach of its duty under Section 123. As Mr Justice Hickinbottom observed in R (On Application of Midlands Co-operative Society Ltd v Birmingham City Council [2012] EWHC 620 Admin (paragraph 123):

"123 The duty in section 123 (2) is directed at outcome, not process; but that does not mean that process is irrelevant."

22. On the facts of this case, even though I accept as I have indicated that some of Mr Anderson's criticisms of the decision-making process are justified, I am satisfied that they are not material to the outcome of this case. My task is to judge whether or not Barnet's proposal to sell to MontClare is or is not unlawful. On the facts as they are known now to be, it is unquestionably lawful. The heads of agreement negotiated subsequent to the making of the decision have established that MontClare are willing to pay a price greater than the £3.5 million offered by the claimant. The minimum payment that they guarantee is £3.8 million. Given that those are the only two bids on the table, Barnet would, in my judgment, be in breach of its duty under Section 123 (provided it decided to sell) if it were not to sell to MontClare on those terms. I cannot of course exclude the possibility that the claimant or for that matter a third party may at the eleventh hour come up with a bid that trumps that of MontClare. If that happens then in the fulfilment of its duty under Section 123 Barnet will have to give proper consideration to the bid provided of course that it is viable, financially sound and not subject to conditions which require its apparent value to be significantly discounted.
23. To that end, I have been invited by Mr Anderson, and by Mr Goudie QC for Barnet, to indicate what payments other than the cash price and overage can properly be taken into account or could properly be taken into account in the event that such an offer is made. The peg upon which this exercise is hung is the advice offered to the committees by the officers and the district valuer in July 2012. One element of the benefit to the council - the creation of thirty affordable housing units in the borough - is clearly not part of the consideration and could not properly be taken into account under Section 123. One [other] element - the payments promised under Section 106 to offset the costs to Barnet created by the completion of any development - also in my judgment cannot be taken into account as part of the consideration.
24. I reach that conclusion for two reasons. First of all, applying the test set out by Mr Justice Roch, they are not "elements such as rights in the nature of easements or a right to re-purchase reserved by the selling authority" which relate to the sale of the land or the value of the purchase consideration offered for the land. They would represent payments to offset the costs of development - a different matter.
25. Greater difficulty is caused by the value of nomination rights. Those I understand to be the right of Barnet, reserved in any sale by Barnet to a registered social landlord, to nominate tenants of the housing units. By achieving that benefit, Barnet saves the costs of locating housing units for tenants elsewhere and so reduces the cost to it of fulfilling its housing duties under the Housing Act 1988. (I express my conclusion about this issue tentatively because I have only heard brief argument upon it and may not fully understand all of the ramifications).
26. Applying Mr Justice Roch's test, those seem to me to represent "other elements such as rights in the nature of easements or a right to re-purchase reserved by the selling authority" because they amount to benefits accruing to Barnet from the use of the land sold. Mr Anderson argues that they are benefits which result from development. That is true. But I do not see why a local authority, which for this purpose is a special seller, cannot take into account the benefits accruing to it from future use of the land resulting from a development proposed by the purchaser. The benefits clearly fall within the definition of consideration adopted by Mr Justice Lightman. They are "elements of the transaction of commercial or monetary value to the local authority". Further, they are not offset, unlike the Section 106 payments, by any corresponding cost. Those observations do not form any part of the reason for my decision which is based simply on the fact that the offer made by MontClare is clearly now the better of the two offers on the table. But to the extent that they offer any guidance to the parties in the future, I have made them.
27. For the reasons which I have given - although I accepted some of Mr Anderson's arguments and criticisms of the process - I reject these claims and I dismiss them.
28. What consequences, if any, does that give rise to?
29. MR GOUDIE: There are three matters. In the course of your Lordship's judgment you referred to an e.mail from the council's planning department - Mr Philip Stanbridge - in relation to habitable rooms and referred to it being in July 2012; it was actually in July 2011. When your Lordship comes to correct the transcript, there is that matter (the document is at page 320 of the papers).
30. Secondly, I ask that the injunction be discharged. That was originally granted by His Honour Judge Thornton QC on 31 May 2012; continued by Mr Justice Bean on 18 July; and, thirdly, continued by Mr Justice Stadlen on 14 December. It was in fact an injunction until this hearing though in a sense it lapses. Whether or not it is discharged, I would certainly resist any application for it to be renewed.
31. MR JUSTICE MITTING: The prima facie position is that it is discharged as a result of my decision.
32. MR GOUDIE: It is. Thirdly, I ask for an order that the claimant pay the defendant's costs. I have a schedule but I do not think my friend has seen it. We were not anticipating the matters would proceed with as much expedition. We are grateful to your Lordship for the fact that it has done. I am not in a position to ask that there should be a detailed assessment today. I can hand the schedule up to your Lordship.
33. MR JUSTICE MITTING: If you had not given a copy of it to your opponent beforehand, I can do no other than order costs to be the subject a detailed assessment if not agreed, either wholly or in proportion or not at all. I cannot assess them summarily today.
34. MR GOUDIE: I am confident that the claimant will find our needs very reasonable.
35. MISS HOLLAND: There are two matters, the first of which is something not material to your decision. MontClare, you may recall, are two separate MontClare companies.
36. MR JUSTICE MITTING: I do know that. For the avoidance of quite unnecessary confusion, I simply glossed over that.
37. MISS HOLLAND: I just wanted to make it clear so there is no confusion for the future that there is that separation.
38. MR JUSTICE MITTING: It is on the transcript but I am not going to correct the judgment to add three sentences explaining that.
39. MISS HOLLAND: I raise the matter. I also seek our costs in relation to the matter. I, likewise, do not have a schedule because it was anticipated that we would have a full day of argument and would not fall within the rules of summary assessment. I therefore would ask for costs in principle and for payment on account. I have information as to what our bottom line figure is in relation to costs and I have documentation as to counsel's fees. I do not have a schedule.
40. MR ANDERSON: I have three observations to put before you: first, the position in relation to costs. We resist the defendant's application that we should pay their costs and the interested party's application that we should pay their costs. First, the interested party: the usual rule - - - - -
41. MR JUSTICE MITTING: The usual rule is you only pay one set of costs.
42. MR ANDERSON: Only pay one set of costs. In this case, while the interested party may have interest in the proceedings the materials advanced have not in fact taken matters beyond what the council had adduced. So there would not be any reason to depart from that in this case.
43. MR JUSTICE MITTING: Their interests coincide.
44. MR ANDERSON: Secondly, in relation to the defendant's application for costs, first of all, there are two separate claims for judicial review that have been before you. In relation to the first of those claims, there has been little substantive defence, I would suggest, put forward. That is the claim in relation to the February decision. Whilst in actual correspondence the council said it robustly defended the position, all we then have is the application to discharge the injunction which then ended up being considered in our permission application in relation to the second claim. That essentially relied upon the July decision to say that the February decision was academic.
45. So I say in relation to that first decision that the claimant should get its costs for bringing that claim because this was a case, I submit, where the defendant sensibly thought that it would not have a prospect of defending that decision on its own and therefore took it back. I know that in relation to the value of the bids at that time we have had nothing at all to suggest that at that stage MontClare were offering any guarantee of £800,000 plus £200,000 or anything like it - obviously the basis on which they succeeded today.
46. For that reason, in my submission, the claimant should get its costs in relation to the first.
47. MR JUSTICE MITTING: It is one of the bases on which they succeeded. I have, as you noticed, observed that I have rejected your suggestion that the overage should have been discounted.
48. MR ANDERSON: You have, but at the stage of the February decision we had not had, for example, the DVS addendum before that. So at that stage it is very difficult to see how they could make any argument of overage.
49. In relation to the claimant's costs of the second proceedings, I make the following observations. The claimant, in its letter before action (which is at 169 in the bundle), expressly asked the respondent for clarification of those elements that the respondent said it had taken into account as part of the consideration. All the claimant asked the defendant to do was allow it an opportunity to put in a further bid by the end of October 2012. In the defendant's letter before action and in their summary grounds for resistance the defendant at no stage intimated that there was an overage clause that they had valued at £800,000 or that they thought was likely to yield £800,000.
50. There are two possibilities: one is at that stage in time the council had that in its mind as a reason justifying its decision but did not bring it forward and in my submission it plainly should have done because that would obviously be a potentially material consideration and material to permission. The other possibility is at that stage that a guarantee in relation to overage had not been reached and, there again, at that stage it could not be said as at the date of the hearing the consideration offered by MontClare was necessarily greater.
51. I invite you when considering the principle of how costs should be allocated to bear in mind that until the detailed grounds of resistance the claimant had no information that this was coming at all and that should be taken into account by the court when considering the principle of how costs should be allocated. Until that point the claimant should recover its costs of the proceedings. We also have a schedule. I suggest, while we have not succeeded before you today in relation to the claim, the court has accepted a number of criticisms the claimant made of the council's decision and has offered what can only be useful guidance going forward. That in some respects is a practical success for the claimant, both because it makes clear the certain factors that might otherwise be taken against it going forward - at least the view of this court is it should not be taken against it - and that is a real practical success, as it were, for the claimant. Again it is accepted, for example, that certain aspects which were taken into account it was wrong to do so; it did not and that should reflect the court's decision on costs in principle. These are my submissions on costs.
52. MR JUSTICE MITTING: If I were to accept that there is something in what you say but not quite as much as you urge, is this a case - rather than making cross orders on various bits of the claim - for making a proportionate order?
53. MR ANDERSON: That may be a sensible way.
54. MR JUSTICE MITTING: If I go along that path, what do you suggest the proportion should be?
55. MR ANDERSON: I have not had an opportunity to consider the costs schedules.
56. MR JUSTICE MITTING: I am not inviting figures. I am inviting percentages. I am not asking for you to say it should be X thousand pounds. I am asking you to assume there will be a detailed assessment and that there will be an order for payment of costs one way or the other: (1) which way it should be, (2) in what proportion or percentage should it be, and (3) do you accept it should be across the totality of the claims or that they should be treated separately, that is to say the first and second judicial reviews?
57. MR ANDERSON: I am sorry.
58. MR JUSTICE MITTING: These questions are often very difficult and they arise all of a sudden at the end of a case and unless you have a reserved judgment you can consider in advance and is then handed down you do not have that much time for consideration. I am not suggesting that anyone puts in written submissions because it causes a lot of extra work for you. If you are able to deal with the matter now on your feet it would probably be better.
59. MR ANDERSON: I would suggest in view of the facts here, in my submission, the claimant should get its costs of the first claim and at least a period of time in relation to the second claim. It would be appropriate to make no order and leave each party to bear its own costs. Bear in mind, from the council's point of view, any guidance given by this court is potentially useful to them in discharging their functions quite apart from the immediate decision. So I would suggest it may be appropriate to let the costs losses lie where they fall.
60. There are two other matters.
61. The first matter is I wish to ask for permission to appeal against the decision. Very briefly, I think there are three basic points I would make. First, I submit, as I submitted unsuccessfully before, in terms of the court's framework of the issue before it, it ought properly to be looking at the decisions as they were made at the time. The decisions that the claimant challenged were public law decisions of the Cabinet Resources Committee and it had real practical effect. It is perfectly proper for the claimant to bring challenges to those decisions. In my submission, on the other grounds of appeal, those decisions do not withstand scrutiny because we do not know if the Cabinet Resources Committee had proper information before it about how far it should be assessed necessarily. So my first ground basically is the court, looking at the position today, asking whether the council would be in breach today is asking the wrong question. What it should be looking at is when the Cabinet Resources Committee decided to authorise its officers to negotiate with MontClare was that a lawful decision. I submit that it was not.
62. The second ground of appeal is in relation to the approach to the evidence of Mr Malinowski before the Cabinet Resources Committee. The court suggested that Mr Malinowski's evidence filled in the blanks of the minutes, as it were, of the CRC. Mr Malinowski was quite clear that the figures in relation to the overage were never put to the CRC which he expressly says in his witness statement at paragraph 67. In my submission it cannot be a case where the officer is filling in the record. The reality is that that material was never before the decision maker in the first place. So the decision maker himself had literally no basis on which to say that they thought that the overage clause had any particular value. I am not saying that if they had asked they could have been given information and could not have taken that into account, but they did not ask, they did not have that information. So that cannot possibly have been the basis for their decisions.
63. The third point is in relation to the nomination rights. All I say in relation to that is that the question whether or not nomination rights can properly be taken into account as far as consideration of the land as compared with, as it were, the vehicle by which they can be delivered, if nomination rights are envisaged by the Section 106 obligation then for the same reasons the Section 106 obligation should be taken into account, in my submission, the nomination rights should not be taken into account. One can envisage contractual mechanisms by which a party could offer nomination rights as consideration for the sale of land but in the evidence in this case was that they were likely to be part of the Section 106 agreement. For that reason also I submit the court fell into error.
64. The final matter is to invite you to extend the injunction. In the event that you are with me that permission to appeal should be granted, I would submit it would follow that the status quo should be preserved until then. If you are not with me, I would ask that the injunction be extended at least up until the time limit for the claimant to bring an appeal or pending determination of an application for consideration by the Court of Appeal should such an application be made.
65. MR JUSTICE MITTING: That is twenty-one days. It is customary for you to ask for seven days on top for the Court of Appeal to consider it.
66. MR ANDERSON: Yes. In my submission that would be appropriate because I do argue that there is a real prospect of success on the appeal. Furthermore there is no real prejudice to any party by doing that. No party can have a legitimate interest in the sale proceeding if it is proceeding on anything other than a sound legal basis whereas from the claimant's point of view if the sale proceeds to another party without us having an opportunity to submit another bid the effect is obviously very serious indeed given the importance of the site. For those reasons I would submit it is a case where it would be appropriate to extend the injunction for that situation.

Ruling on Permission to Appeal

67. MR JUSTICE MITTING: I will deal with the application for permission to appeal first because that is not something on which anybody else has any right to a say.
68. I refuse permission to appeal. The challenge to the decision taken in July and August and to the factors then taken into account is academic. The challenge to my approach to Mr Malinowski's evidence, I think, does not give credit for the fact that I have accepted the suggestion I should deal with it sceptically so far as the decision-making process of the committee goes. As to nomination rights, my remarks were, as I expressed them to be, not necessary for my decision. They are therefore obiter. You cannot appeal against obiter remarks.
69. For those reasons I do not believe there is any prospect of success on appeal.
70. That leaves costs and the injunction.
71. MR GOUDIE: So far as the injunction is concerned, I resist that. There is no necessity for this. Your Lordship has decisively rejected permission to appeal. It is not apparent indeed that if there were anything in any of the grounds of appeal which have been advanced it would make any difference as to the outcome of any appeal. You have also made it clear in the course of your judgment that one cannot exclude the possibility of an eleventh-hour bid, whether from the claimant or from anyone else. And if that happened, the council clearly would have to give proper consideration to any such bid if it were viable and so on and so forth. That duty therefore applies.
72. My friend says that the claimant should have the opportunity to put in another bid. They have that opportunity at any time up and until any contract may be concluded. If they make such a bid then it would have to be considered before any contract were entered into. So we resist there being an injunction.
73. So far as costs are concerned, on the basis that in asking simply that the claimant should pay our costs that I may have been going a little too far, I submit that the alternative position is that each side should bear its own costs of the first judicial review proceedings. So I move from asking for 100 per cent of those to asking for nought per cent of those, but that the defendant should get 100 per cent of their costs of the second judicial review proceedings. There is no reason why they should not.
74. MISS HOLLAND: So far as the injunction is concerned, you gave a robust refusal as to the challenge by the claimant in this case. The suggestion that no prejudice has been suffered is quite inappropriate in the circumstances where my client suffered tremendous costs, time and delay by reason of the judicial review proceeding. I repeat what Mr Goudie has already submitted to you as to the alternative (?) way forward in relation to an injunction. Most importantly, perhaps I should emphasise this point, the court's jurisdiction to grant an injunction should not be used to enable a claimant in these circumstances to have a commercial advantage of putting its own offer together when it has had the chance and indeed the onus during the course of the last six months to do so.
75. So far as costs are concerned, I heard you say the parties should only pay one set of costs. I do not seek to undermine that principle in any way. What I seek to do is to draw your attention to specific elements of this scenario, perhaps the most fundamental of which is my client is obviously a known party in proceedings which involves the grant of an injunction to restrain it in relation to the sale. Therefore it is clear it is right to be before the court, being touched by this injunction. It is fundamental. It should not be deprived of its costs of being allowed to be before the court on such an important matter when they are subject to that form of relief.
76. In addition, this is a case where - you recall from the evidence - substantial aspersions have been cast on my client's financial wherewithal. Matters have been raised personally (if I could so describe it in relation to corporate entities) which you would not normally have in these situations which they have had to answer. That has meant we have had to put in two witness statements dealing with actually challenging the evidence which has been put before the court in relation to those things. Beyond that, you will recall that at the start of our submissions we were very careful - we are not repeating anything that has already been said by the council - to do that with a view to the costs situation.
77. For those reasons it is not a case where my client has simply come along and repeated, and therefore asked the claimant unjustifiably to pay two sets of costs. They have made individual allegations and, most importantly, my client is entitled to be represented on such a serious transaction where there is injunctive relief against them.
78. MR JUSTICE MITTING: As I understand it - and correct me if I am wrong - the allegations about lack of financial capacity were made during the course of the consideration by the council of two proposals rather than during the course of the litigation.
79. MISS HOLLAND: The majority of it is but nevertheless they form part of the factual matrix, evidential background, in the witness statements and made particularly, you will recall, in the later witness statements (the second statement of Mr Landesberg). We specifically had to say that certain aspects of those evidences were simply not true and it was not right they were before the court uncontradicted in terms of accounts of what has gone on in relation to meetings and discussions with representatives of my client. It cannot be right therefore that those matters having been put in, my client would not be allowed the opportunity to answer them particularly when, taking the broad overall approach, the claim has been rejected. My client should be compensated for those matters which have been unnecessary, by being here and dealing with matters separately, as we have observed, from the defendant's position.
80. MR JUSTICE MITTING: Mr Anderson, I would like you to come back on the suggestion that because you have obtained an injunction against the interested party so the normal rule does not apply.
81. MR ANDERSON: I am not aware of any authority on the issue to provide exceptions to the situation. In my submission it is in the nature of the injunctive relief question it should not be. The injunctive relief in this case - - originally the relief by His Honour Judge Thornton (page 229 of the bundle) was the defendant –

"be restrained from disposing of its freehold interest in land known as Hendon Football Club ..... London ..... until determination of the claimant's application for judicial review or further order."

That is clearly directed to the council because that is the person who has freehold land. That cannot be directed to MontClare. I am looking to see the terms of the order Mr Justice Bean made.

82. MISS HOLLAND: I can assist. If you go to divider 12, file 1, at 229, interested parties. Paragraph 2 states that the injunction continues in force until determination of the claim (we are named interested parties). It is trite law that in relation to an injunction in relation to a property matter both parties - - the purchasing party is obviously affected by the injunction and is bound by it. It is a matter of clear injunction law.
83. MR JUSTICE MITTING: You cannot buy from someone who is prohibited to sell to you. The council can be assumed to comply with the court order. The effect on you is, although significant, indirect.
84. MISS HOLLAND: I am clearly touched by the injunction as a matter of contempt of court matters.
85. MR JUSTICE MITTING: Quite; you and the council together. Both of you would be subject to contempt proceedings.
86. MISS HOLLAND: Or indeed if I tried anything actually to undermine that injunction individually.
87. MR JUSTICE MITTING: There is nothing you could do.
88. MISS HOLLAND: I will not go into the problem.
89. MR ANDERSON: It does not provide a basis why the claimant should have to pay their costs. It is quite clear.

Ruling on Injunction and Costs

90. MR JUSTICE MITTING: I refuse to extend the injunction order pending any appeal against my decision. The prejudice to the public interest in further restraining the sale of this land is potentially significant. The prejudice to MontClare's private interest is likewise potentially significant. Had I thought that there were arguable grounds of appeal or that there might be arguable grounds of appeal which might be accepted by the Court of Appeal to raise the prospect of success on appeal, I might have viewed it differently but I do not. Accordingly, I do not think it is right to grant an injunction, the only effect of which would be to prevent the contracting and completion of a sale which I have decided is within the powers of Barnet.
91. Costs have presented me with a more difficult question. I have no criticisms of the decision-making process of Barnet. The first judicial review claim achieved something in that it secured the re-taking of the decision and securing further advice from the district valuer about the value of competing bids rather than just one. I accept the submissions on both sides that I should make no order for costs as to the first judicial review claim.
92. As far as the second judicial review claim goes, the criticisms that I made about the decision-making process apply to that and it is not right that the defendant local authority should emerge scott-free from the making of such criticisms. Nevertheless the claimant has not won and it would plainly be wrong for me to order the defendant to pay any of the claimant's costs. On balance, I think the claimant has got a good deal less out of this litigation than have the defendant local authority and has failed in its basic argument that the local authority are in breach of duty under Section 123.
93. For those reasons I order the claimant to pay fifty per cent of Barnet's costs of defending the second judicial review claim. I am not persuaded that I should depart from the usual rule that a claimant should only be called upon to pay one set of costs in a failed judicial review claim. MontClare clearly have a very significant stake in the outcome of this litigation but their interests and arguments coincide with those of Barnet. And although I am grateful for Miss Holland's written and oral submissions, in the end I have decided the case on the basis of those made by Mr Goudie.
94. Although an injunction was ordered in this case, it bound directly only one. Although Miss Holland says if her clients had sought to frustrate it they would have ended up in difficulty, and that submission is right, there was never any prospect that they would, and this claim could have been determined in the same way as it has been without active participation on the part of MontClare. Accordingly, I do not think it is right to depart from the usual rule. I make no order for costs as between the claimant and the interested party.
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