UPPER TRIBUNAL (LANDS CHAMBER)

UT Neutral citation number: [2013] UKUT 246 (LC)

 Case Number: BNO/9/2012

 

TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007

 

BLIGHT NOTICE – preliminary issue – subject property sold by claimants’ mortgagee in possession before Lands Chamber considered counter-notice – whether deemed withdrawal of blight notice – whether compensation could be awarded for loss – claimants’ hardship – reference struck out as having no reasonable prospect of success

 

IN THE MATTER OF A NOTICE OF REFERENCE

 

 

BETWEEN  JOHN DAVID PITMAN Claimants

AND COLLEEN PITMAN

and

NUNEATON & BEDWORTH BOROUGH COUNCIL Appropriate Authority

 

Re: 6 Hillcrest Road

Camp Hill

Nuneaton

CV10 9HB

 

 

Before: A J Trott FRICS

 

 

Sitting at: Upper Tribunal (Lands Chamber) 45 Bedford Square

London WC1B 3DN

on

30 April 2013

 

Mr Arthur Greenway for the Claimants

Rebecca Clutten, instructed by Pinsent Masons, for the Appropriate Authority

 

© CROWN COPYRIGHT 2013

 

The following cases are referred to in this decision:

 

Carrel v London Underground Limited (1995) 70 P&CR 135

Bennett v Wakefield Metropolitan District Council [1997] RVR 32.

Thomas v Plymouth City Council [1999] RVR 315

Mancini v Coventry City Council (1985) 49 P&CR 127

 

 

DECISION ON A PRELIMINARY ISSUE

Introduction

1.           The claimants in this reference, Mr John Pitman and Mrs Colleen Pitman, owned the freehold interest in 6 Hillcrest Road, Camp Hill, Nuneaton CV10 9HB when they served a blight notice in respect of it under section 150 of the Town and Country Planning Act 1990 on the appropriate authority, Nuneaton and Bedworth Borough Council, on 22 November 2011.

2.           The appropriate authority served a counter-notice under section 151 of the 1990 Act on 17 January 2012.  The claimants referred the objection to this tribunal on 17 February 2012.

3.           On 23 February 2012 the claimants’ mortgagee repossessed the subject property and on 15 June 2012 the mortgagee in possession sold the freehold interest to a third party for £39,000. 

4.           By an interlocutory application dated 6 September 2012 the appropriate authority sought to have the claimants’ reference struck out under rule 8(3)(c) of The Tribunal Procedure (Upper Tribunal) (Lands Chamber) Rules 2010, on the grounds that there was no reasonable prospect of the claimants’ case succeeding.  In support of its application the appropriate authority relied upon the tribunal’s decisions in Carrel v London Underground Limited (1995) 70 P&CR 135 and Bennett v Wakefield Metropolitan District Council [1997] RVR 32.

5.           The claimants objected to the application by letter dated 27 September 2012 and submitted that the tribunal could still determine compensation notwithstanding the sale of the freehold interest following the service of the blight notice.

6.           I refused that application on 12 October 2012.  I noted that in both Carrel and Bennett the Lands Tribunal held that the sale by the claimant of his interest before the tribunal had determined whether or not the blight notice was well-founded constituted a deemed withdrawal of the blight notice.  That was also the conclusion reached in the later case of Thomas v Plymouth City Council [1999] RVR 315.  But the facts of those three cases could be distinguished from the facts of the present reference.  In each of the three cited cases the claimant had voluntarily sold the freehold interest whereas in the present reference the mortgagee in possession had sold the freehold against the wishes of the claimants.  Whether the application of the relevant law to the facts in the present reference would produce a different outcome was a matter that the tribunal held could only be determined at a substantive hearing after a proper consideration of the arguments.

7.           On 6 December 2012 the appropriate authority made an interlocutory application for the determination of a preliminary issue.  This application was granted on 2 January 2013 and the tribunal ordered that there should be a hearing to determine the following preliminary issues:

(a) whether the disposal of the claimants’ freehold interest in the subject property on 15 June 2012, subsequent to the service of a blight notice on 22 November 2011, meant that the blight notice must be deemed to be withdrawn; or

(b) whether, if not resulting in a deemed withdrawal, the absence of any interest in the property meant that the claimants’ reference should be struck out by the tribunal as disclosing no reasonable prospect of success.

8.           The claimants were represented by Mr Arthur Greenway of Course & Shelton, surveyors and estate agents of Nuneaton.

9.           The appropriate authority were represented by Ms Rebecca Clutten of counsel.

10.        The hearing of the preliminary issue was held under the simplified procedure.

Facts

11.        I determine the following facts from the statement of agreed facts and the evidence.

12.        Camp Hill, where the subject property is located, lies to the north-west of Nuneaton and comprises an estate of approximately 3,000 dwellings.  It was built during the 1950s and 1960s partly by the local authority and partly by the National Coal Board, to provide housing for local mine workers.  In recent years Camp Hill has faced a number of significant socio-economic problems and since the late 1990s it has ranked as one of the most deprived wards within Warwickshire and falls within the top 10% of deprived wards in England.  Property values in Camp Hill are depressed relative to the rest of Nuneaton making it difficult for residents to trade up and creating a largely static population.

13.        In response to these problems a major regeneration of Camp Hill was planned and effected through an urban regeneration project aimed at improving the physical fabric of the estate and the economic and social well-being of its residents.  The project was managed by a partnership organisation formed as a company limited by guarantee and known as Pride in Camp Hill (PinCH).  It involved the appropriate authority, Warwickshire County Council, The Homes and Communities Agency, The Prince’s Foundation, local businesses and local residents.

14.        A master plan for the regeneration of Camp Hill was produced in 1999 and was to be implemented in three phases.  Phase 1 has been completed with the construction of 172 dwellings and phase 2 (240 dwellings) was commenced in October 2007 but is not yet complete.  Phase 3 (806 dwellings) was divided into sub-phases and the subject property was included in sub-phase 5.  Compulsory purchase powers have been obtained in respect of the early sub-phases of phase 3 but not in respect of the subject property.

15.        When the regeneration of Camp Hill commenced there was an early purchase scheme available to assist persons whose properties were not in a phase currently being acquired but who could show hardship on grounds of health, finance or employment. It was also a requirement of the scheme that the owner had attempted to sell their property on the open market.  The scheme was apparently suspended in 2008.

The case for the claimants

16.        Mr Greenway outlined the history of the claimants’ ownership of the subject property and said that they had been led to believe that the appropriate authority would acquire their freehold interest.

17.        Mrs Pitman had stopped working due to ill health in 2003 and her health had deteriorated in subsequent years.  The claimants discussed their personal circumstances with representatives of PinCH, following which a number of actions were taken by PinCH:

(i) They agreed to rehouse the claimants as council tenants at 18 Hawthorne Terrace, Camp Hill, a house that was adapted for the disabled.  The relocation took place at or around 26 May 2011.

(ii) They paid for the claimants’ costs of removal and also the costs of securing the subject property once it had been vacated.

(iii) They kept all the keys to the subject property and controlled access to it.

(iv) They commissioned a valuation of the subject property by the Valuation Office Agency on 11 June 2011 which valued the property at £62,500.

18.        The claimants put their property on the market in August 2011 and invited offers, the highest of which was £30,000.  This did not reflect the unblighted value of the house as previously determined by the VOA in June 2011.  Despite fulfilling the requirements of the early purchase scheme the appropriate authority would not acquire the subject property and so the claimants proceeded to serve a blight notice in November 2011.  The ostensible reason for the appropriate authority’s failure to buy the subject property was a lack of funds.

19.        The appropriate authority, following discussions between the claimants and PinCH, knew that the claimants could not afford to pay rent on their new council accommodation at Hawthorne Terrace and maintain their mortgage payments on the subject property.  As a result of the claimants’ inability to meet such a double financial obligation their mortgagee obtained possession of the property and sold it to a third party for a price (£39,000) that was substantially lower than its unblighted market value.  This fact distinguished the present reference from the cases cited by the appropriate authority.  The repossession of the subject property arose because the appropriate authority had knowingly allowed the claimants to take on the financial burden of a council rent which could only be serviced if the authority acquired the freehold interest in the subject property.  The claimants had not wanted to sell the subject property to a third party; they wanted, and expected, the acquiring authority to buy it, if not through the early purchase scheme then by virtue of a blight notice.  Their failure to do the former and their objection to the latter meant that the claimants had suffered extreme hardship.

20.        The claimants retained an interest in the subject property following repossession because they still owed their mortgagee £20,493, the balance of their mortgage following the sale of their house.  This debt would not have arisen if the appropriate authority had purchased the subject property for its unblighted value.  The subject property remained part of phase 3 of the Camp Hill regeneration proposals and would eventually be acquired by the appropriate authority.  The claimants had suffered loss and hardship for which they should be compensated.

The case for the appropriate authority

21.        Ms Clutten submitted that the only remedy for a blight notice was, under sections 150(1) and 154(2)(a) of the Town and Country Planning Act 1990, the  purchase by the appropriate authority of a claimant’s qualifying (proprietary) interest in the hereditament.  There was no alternative remedy and no provision for the acquisition of that interest from a purchaser subsequent to the service of a blight notice. 

22.        In the present reference the claimants’ freehold interest had been sold before the Lands Chamber had considered whether the appropriate authority’s objection to the blight notice was well-founded.  The consequence of that sale was that the claimants no longer had any interest in the subject property that could be purchased by the appropriate authority in the event that the Lands Chamber determined not to uphold the authority’s objection.  That being so there was no remedy available to the claimants under the blight notice procedure.

23.        Ms Clutten submitted that under these circumstances there were two ways to dispose of the reference.  Either the claimants should be deemed to have withdrawn their blight notice following the sale of their freehold interest or the reference should be struck out as having no reasonable prospect of success.

24.        A blight notice could be withdrawn expressly under section 156 of the 1990 Act.  Any notice to treat that was deemed to have been served in consequence of such a blight notice was also deemed to have been withdrawn and no compensation was payable in respect of the withdrawal of such a deemed notice to treat.  There was no express statutory provision for a deemed withdrawal of a blight notice but the Lands Tribunal had adopted a pragmatic approach in the three cases to which Ms Clutten referred.  In Carrel v London Underground Limited (1995) 70 P&CR 135 the claimant had purchased a leasehold interest in a mews cottage in central London in March 1989.  In November 1990 the Secretary of State for Transport made safeguarding directions which showed the property as being within the area safeguarded for the route of Crossrail.  The claimant served a blight notice in April 1991 and London Underground Limited, the appropriate authority, served a counter-notice in May 1991.  On 4 July 1991 the claimant referred LUL’s objection to the Lands Tribunal.  On 28 July 1991 the claimant exchanged contracts for the sale of his leasehold interest in the property to a third party with completion taking place three days later.  A hearing took place to consider three preliminary issues, two of which were relevant to the present reference:

(i) Whether the sale of the claimant’s interest subsequent to the service by him of a blight notice constituted a “deemed withdrawal” of the blight notice;

(ii) …; and

(iii) Whether, in any event, in the circumstances which had occurred, the claimant was entitled to be compensated, and, if so, by whom and for what.

25.        In its decision on the first preliminary issue the tribunal, Mr M St.J Hopper FRICS, said (at p147):

“However it is abundantly clear that the only remedy provided by the blight notice procedure is the acquisition of the relevant qualifying interest and there is no provision for the payment of compensation, or indeed of any other remedy. 

Further, even if the claimant was willing to withdraw the blight notice, there is no provision in the procedure for the payment of any compensation consequent upon withdrawal.

The only jurisdiction which lies with the Tribunal is to decide whether or not to uphold LUL’s counter-notice.  On the assumption most favourable to the claimant, ie if the Tribunal did not uphold the counter-notice, it would be of no assistance to the claimant because the Tribunal could not specify a date for the deemed notice to treat for LUL to acquire the claimant’s interest, which it is common ground no longer exists.  Any further proceedings in the Tribunal could therefore be of no effect.

In these circumstances I have no alternative but to find for LUL on the first preliminary point of law, ie the sale of the claimant’s interest subsequent to the service by him of the blight notice constituted a deemed withdrawal of that notice.”

26.        With regard to the third preliminary issue the tribunal said at 148:

“However, as far as the law of compulsory purchase compensation is concerned, I do not think the claimant is entitled to be compensated by LUL, or for that matter any body under it, and in particular I am bound to find that the claimant is not entitled to be compensated by LUL as a result of the blight notice served on his behalf on April 11 1991, whether or not it is deemed to have been withdrawn.”

27.        In Bennett v Wakefield Metropolitan District Council [1997] RVR 32 the claimants served a blight notice on 1 June 1995 and then sold their freehold interest in the subject property to a third party on 30 June 1995.  On 2 August 1995 the appropriate authority served a counter-notice and on 25 September 1995 the claimants made a reference to the Lands Tribunal.  The appropriate authority asked the tribunal to determine as a preliminary issue whether the sale of the claimants’ interest subsequent to the service of the blight notice constituted a deemed withdrawal of that notice.  The member, Mr A. P. Musto FRICS, said (at p34):

“However, it is clear that the only remedy provided by the blight notice provisions is the acquisition of the relevant qualifying interest and the payment of compensation under s157. ….

The only jurisdiction which lies with this tribunal is to decide whether or not to uphold the council’s counter-notice.  On the assumption, most favourable to the claimant, ie if the tribunal did not uphold the counter-notice, it would be of no assistance to the claimant because this tribunal could not specify a date for the deemed notice to treat for the council to acquire the claimant’s interest, which following the sale no longer existed.”

28.        The final case cited by Ms Clutten was Thomas v Plymouth City Council [1999] RVR 315.  The claimants served a blight notice on 24 July 1997.  They then sold their freehold interest in the subject house on 12 August 1997.  The appropriate authority served a counter-notice on 11 September 1997 and the claimants referred their objection to the Lands Tribunal on 12 August 1997.  The member, Mr P H Clarke FRICS, said (at p315):

“What, then, is the position where, as in this reference, the claimant disposes of his interest in the house before the council’s objection to the blight notice has been determined by this tribunal?  If the case were to proceed and the blight notice found to be valid, the council would be deemed to be authorised to acquire ‘the interest of the claimant’ in the house, an interest which he has now disposed of to a purchaser.  Clearly, the blight notice can have no effect in these circumstances and the claimants accepted that the council cannot now be required to purchase the house.  I agree.

The claimants submitted, however, that, as an alternative to purchase, I can award compensation under the blight notice for loss suffered by the sale of the house at a price below market value due to the blight.  He said that, although I have no jurisdiction to authorise the council to buy the house, I have the power to order the payment of compensation for loss.  [The] solicitor for the council said that I have no power to award compensation under a blight notice which does not lead to an acquisition.  I agree.  The Lands Tribunal is a statutory tribunal and has only the jurisdiction given to it by Parliament under statute.  I am satisfied that this tribunal has no power to award compensation for loss suffered on the sale of blighted property.  The claimants could not direct me to any provision in the Town and Country Planning Act 1990 which gives the tribunal this power.”

29.        Ms Clutten submitted that it was not relevant to the ratio of these three cases that it was the claimant who sold the house rather than a mortgagee in possession.  The ratio in each case was the decision that a blight notice could have no effect once the qualifying interest forming the subject of such a notice had been sold to a third party.  In Bennett the claimant had not conceded that the remedy of purchase could no longer apply following such a sale but the Lands Tribunal decisions were the same regardless of whether or not such a concession was made.  It did not matter in the present reference that the mortgagee in possession and not the claimants had sold the freehold interest in the subject property.  It was the sale itself that was significant and meant that the proceedings could be of no effect if they continued. 

30.        The three Lands Tribunal decisions were consistent on facts that were similar to those in the present reference.  Since June 2012 the claimants have held no interest capable of being acquired by the appropriate authority.  The claimants’ outstanding mortgage debt was a contractual obligation and not a proprietary interest capable of being acquired by the appropriate authority.  The authority sympathised with the situation of the claimants and they had done what they could to assist through PinCH.  But the statutory provisions did not allow what the claimants were seeking and the reference should not be allowed to continue.

31.        It did not matter whether the blight notice was deemed to have been withdrawn by the claimants or whether the reference was determined to have no reasonable prospect of success; the effect was the same either way.  Ms Clutten said that it was the authority’s case that deemed withdrawal of the blight notice was appropriate.  She said that any person acting reasonably in the circumstances of this reference would have withdrawn their blight notice.  The notice should therefore be deemed to be withdrawn, in which case the tribunal had no further jurisdiction to consider the matter.  Alternatively, once the claimants’ freehold interest was sold there was no remedy available to them under the blight notice procedure and therefore no reasonable prospect of the reference succeeding.

Conclusions

32.        The claimants’ case focused upon the hardships and losses which they submit were caused by the appropriate authority’s failure to purchase the subject property and the subsequent sale of the freehold interest by the mortgagee in possession.  In Mancini v Coventry City Council (1985) 49 P&CR 127 the Court of Appeal considered the question of whether hardship and the alleviation of hardship were matters that were relevant to the question of the validity of the objections in a counter-notice to a blight notice.  In the court’s first judgment Purchas LJ said (at p145):

“The words ‘hardship’ or ‘reasonableness’ are not found in any provision in section 195 [of the Town and Country Planning Act 1971] which is the section giving jurisdiction to the Lands Tribunal.  Of course, the whole object of these provisions is to relieve hardship.  But the hardship which qualifies for relief is defined quite clearly under the various statutory provisions to which I have already referred.  There is no mention in the section, as the editor remarks, of either discretion or the mitigation of a decision which otherwise follows from the statutory provision because of hardship, other than the hardship specifically provided for in those subsections.”

Section 195 of the 1971 Act has been replaced, in substantially the same form, by section 153 of the 1990 Act.

33.        Stephenson LJ said (at p147):

“I regard hardship, and the alleviation of hardship, as quite irrelevant to the question of the validity of the objections in the objection notice.  The duty of the tribunal is, as the House of Lords laid down in Essex Incorporated Congregational Church Union v Essex County Council [1963] AC 808, to consider the counter-notice and the validity of its objections, and if those objections are valid, whatever the hardship to the applicant, the tribunal must say so and invalidate the blight notice.  No question of the reasonableness of a respondent council’s decision, or of any discretion in it, arises; either the objection is good or it is not, and if it is good, the tribunal must say so.

Therefore, I think that the tribunal did fall into error in considering hardship and alleviation of hardship at all.”

34.        In the present reference I am not concerned at this stage with the question whether the appropriate authority’s counter-notice was well-founded.  Rather I am concerned with the question whether, because of the sale of the subject property before the question of the validity of the blight notice has been determined by this tribunal, the jurisdiction of the tribunal to consider the counter-notice has been rendered nugatory.  In considering this issue it seems to me that, as in Mancini, the personal circumstances of the claimants are not relevant and I take no account of them or of any hardship arising.

35.        Ms Clutten’s submissions, supported by the cited authorities, are, in my opinion, persuasive in establishing the following principles:

(i) The only remedy available to a claimant under the blight notice procedure is the acquisition by the appropriate authority of the claimant’s interest.

(ii) If, at any time between the service of a blight notice and the determination by the tribunal of whether to uphold a counter-notice, the claimant’s interest is sold to a third party, there will be no remedy available to the claimant.

(iii) It does not matter whether the sale of the claimant’s interest is the voluntary act of the claimant or the result of a mortgagee in possession exercising its powers of sale.  It is the fact of the sale and not the reason for it which is relevant.

36.        Applying these principles to the present reference I reach the following conclusions:

(i) The subject property was sold by the mortgagee in possession to a third party on 15 June 2012, since when the claimants have been unable to avail themselves of the only remedy under the blight notice procedure. 

(ii) The claimants are not entitled to any compensation in respect of the service of the blight notice or otherwise and, in particular, are not entitled to be compensated in respect of their outstanding mortgage debt following the sale of their freehold interest.

(iii) The claimants’ lack of a remedy means that it would be otiose and inappropriate to proceed to a substantive hearing to consider the blight notice and the grounds of objection specified in the counter-notice.

37.        Ms Clutten identified two ways of disposing of this reference.  Firstly, she says that the authorities have consistently treated the claimant, once his interest has been sold, as having made a deemed withdrawal of the blight notice.  Secondly, in the absence of a remedy following the sale of a claimant’s interest, there can be no reasonable prospect of a reference succeeding in which case it should be struck out.

38.        I prefer the second of these alternatives and I hereby exercise the tribunal’s discretion to strike out the subject reference under rule 8(3)(c) of The Tribunal Procedure (Upper Tribunal) (Lands Chamber) Rules 2010 on the grounds that, following the sale of the claimants’ interest, there is no reasonable prospect of the claimants’ case succeeding.

39.        I did not strike out the claimants’ case following the appropriate authority’s earlier interlocutory application because I considered that the claimants should have the opportunity to consider and argue whether a forced sale of the claimants’ interest by the mortgagee in possession could be distinguished in law as well as on the facts from the cases cited by the appropriate authority.  But the claimants produced no evidence or argument to support such a distinction.

40.        I do not favour the assumption that the claimants are deemed to have withdrawn their blight notice for two reasons:

(i) There is no statutory mechanism for the deemed withdrawal of a blight notice.  As Ms Clutten observed the tribunal adopted this device in the cited cases as a pragmatic solution to the loss of any remedy for the claimants.

(ii) The claimants did not sell their freehold interest, it was sold by the mortgagee in possession.  At all times the claimants consistently maintained their desire that the appropriate authority acquire their interest.  Under these circumstances, and with an alternative and equally effective means of disposal available, I consider that it would not be appropriate for the claimants to be deemed, against their will and intention, to have withdrawn their blight notice.

41.        The reference was allocated to the simplified procedure under which costs are not awarded unless under exceptional circumstances.  Neither party suggested that there were any such circumstances in this reference and I therefore make no award as to costs.

Dated 21 May 2013

 

A J Trott FRICS