Belfields Ltd v Nextdom (Bootle) Ltd & Anor

On 30 May 2007 the first defendant, the Secretary of State for Communities and Local Government, confirmed with one small modification a compulsory purchase order made by the second respondents, Sefton Borough Council. The CPO, the Sefton Metropolitan Borough Council (Klonsdyke and Hawthorne Road) Compulsory Purchase Order 2005, was made under section 226(1) of the Town and Country Planning Act 1990 and related to 10.2 hectares of land consisting principally of disused industrial land and terraced housing in Bootle. An inspector held a public inquiry into objections to the CPO between July and November 2006. Three of the owners of land in the CPO who were among the objectors now apply under section 23 of the Acquisition of Land Act 1981 to quash the CPO as it affects their ownerships.

The CPO lands are part of a mixed commercial and residential area about 1 mile to the north of Bootle town centre and 6½ miles to the north ofthe centre of Liverpool. They lie on the east and west sides of Hawthorne Road. The area to the west of Hawthorne Road is bounded on its west side by the Leeds and Liverpool Canal and consists for the most part of cleared industrial sites. One of these, the Tannery site, is owned by the claimant Nextdom (Bootle) Ltd. Also within the area to the west of Hawthorne Road is the Mel Inn, a purpose-built club building. To the east of Hawthorne Road is a former industrial site, 2.2 ha in area, known as the Penpoll Estate. It is owned by the claimant Belfields Ltd. Immediately to the south of this is the area of terraced housing known as the Klondyke Estate. Within this area are two shop premises at 115 Monfor Road and 55 Humphrey Street that are owned and occupied by the third claimant, Mr Powell. Mr Powell lives in the rooms above the shop at 115 Menfor Road.

At the inquiry the cases advanced by Belfields and Nextdom were similar. They each accepted the need for the council’s redevelopment proposals, but they contended that there was no need for the council to acquire their lands, which, they said, they could redevelop themselves. Mr Powell’s case, advanced on his behalf by Ms M J Joyce, who also spoke for other small shopkeepers in the CPO area, was that the council had misunderstood the reason for the state of the terraced property within the CPO and that there was no need to demolish it and to redevelop the land.

The grounds of Belfields’ application are that the Secretary of State took into account a matter that was not part of the case put to them at the inquiry as justifying the acquisition of their land (the “Mel Inn point” – see below); that she failed to apply the correct test in determining whether there was a compelling case in the public interest for the acquisition; and that inadequate reasons were given for concluding that the acquisition was justified. Nextdom challenges the CPO on the grounds, firstly, that the Secretary of State failed to consider properly the issues and evidence regarding its intention or ability to develop the land or alternatively failed to give adequate reasons for her conclusions on this; secondly, that she failed to apply the correct legal and policy test for determining whether there was a compelling need in the public interest for the CPO; and, thirdly, that she erred in law in concluding that an agreement between the council and their preferred developer (the “Overarching Development Agreement”) was lawful and would not inhibit the council from deciding that it should not exercise its compulsory powers in relation to a particular site if the owner was capable of developing it itself. Mr Powell, whose contentions I permitted to be advanced on his behalf by Ms Joyce, put forward two technical points – that the CPO was not made pursuant to the correct statutory provision and that the council’s cabinet, which made the order, had no power to make it. The principal submission made on Mr Powell’s behalf was that confirmation of the order infringed his Article 6 rights. It was said that it did this in three respects: firstly, in that an agreement between the First Secretary of State and the council and two other councils (the “Market Restructuring (Implementation) Agreement”) amounted to prior approval of the CPO scheme; secondly, in that the Secretary of State had statutory power to disregard the objector’s contentions on the foundations for the council’s development plan policy on Housing Market Renewal; and, thirdly, in that significant findings of fact were not reported to the Secretary of State by the inspector.

Mr Powell also sought to rely on three additional grounds, notice of which had been given to the Secretary of State and the council on the first day of the hearing. In view of the lateness of the notice, I refused to permit these grounds to be relied on, although it is right to say that the arguments advanced in support of the principal grounds included elements of the matters that Mr Powell sought to add.

On behalf of Belfields Ltd Mr John Barrett submitted that the Secretary of State took account of and gave weight to a matter that was not part of the case put to the claimant, as part of the justification for acquiring its land, and that the claimant had been substantially prejudiced as a result. That matter was the Mel Inn and the need to relocate it on the claimant’s land. The inspector recorded (at paragraph 374) that there was no dispute that there was a need in the area for a facility of the type provided by the Mel Inn and went on to say that the need might increase once redevelopment had taken place. At paragraph 383 the inspector concluded that there seemed to be no reason in physical terms why the Mel Inn should not relocate to the Penpoll site. In the decision letter the Secretary of State (at paragraph 14) accepted the need in the same terms as the inspector and the conclusion as to relocation on the Penpol site. She went on to state that the continuing presence of the existing building would detract from the redevelopment and there was no substantial reason why it should not continue to function from within it existing catchment area. None of this, said Mr Barrett, had ever been put to the claimant at the inquiry or advanced as part of the council’s case.

This ground of challenge is founded on the assumption that the potential relocation of the Mel Inn on the Penpoll site formed part of the reasons of the Secretary of State for confirming the CPO. If it did not, there could clearly be no error of unfairness on her part in this respect. It is in my judgment quite clear from the inspector’s report that he did not regard this potential relocation of the Mel Inn as part of the justification for including the Penpoll site in the CPO. He did not mention it when recording the council’s case on the Belfields objection. On this he said:

“91.

Belfields accept that the area is in need of regeneration. The site is significant due to its size (2.2 hectares) and the number of dwellings it could accommodate. Belfields accept that its timely redevelopment is vital to transform the area. There is nothing between the parties as to the need for the development of the site, the nature of the redevelopment or the timescale. The dispute is how that can be delivered in line with the timescales that the Council has to meet under the Deed of Variation.

92.

Belfield’s objection is that there is no need for the CPO, as they have their own proposals which have the benefit of planning permission. The Council would be content if the objector delivered the redevelopment of the Penpoll site within the timetable they have offered, subject to ensuring that the Council’s aspirations are met. The difference between the objector and the Council is whether there should be any mechanism to ensure that development should take place in the event of default.”

At paragraph 343 the inspector summarised the issue between the parties:

“With this background, the issue between the parties is a narrow one, and focuses on the mechanism by which the development of the site can be guaranteed. The concern is whether there is sufficient assurance that development will actually take place, in the light of access to funding and expertise.”

After discussing the factors bearing upon this issue, in relation to none of which did he make any reference to the Mel Inn, the inspector concluded:

“353.

In conclusion, although there is evidence of informed developer interest, there is no formal relationship with any developer. Therefore there is considerable uncertainty that this key development will go ahead without the Council’s intervention. Likewise there is no expertise on the part of the objector themselves to carry out the development. There is therefore no assurance that the development would actually take place, and confirmation of the CPO would provide this necessary certainty.”

The inspector dealt with the Mel Inn objection further on in his report:

“382.

It was accepted at the inquiry that the Mel Inn would consider relocation within their current catchment area. This catchment area includes the Penpoll site on the opposite side of Hawthorne Road and, in 2005, the Council considered community facilities in the area, and this process identified a need for a facility of a similar scale to the Mel Inn.

383.

The Bellway reserved matters scheme (2006) for the Penpoll site includes a social club, intended to take account of the Mel Inn. The ‘alternative’ reserved matters approval obtained by the owners (Belfields) of the Penpoll site also includes a licensed function room, and the landowners have acknowledged their willingness to include a community facility. The Mel Inn was identified as a possible anchor tenant in 2006 for such a new facility, but it was stated that the Mel Inn had indicated that it did not want to take on that role.

384.

There therefore seems no reason in physical terms why the Mel Inn should not relocate onto the Penpoll site. The Council stated that an offer, including a disturbance payment, was made to the Mel Inn in February 2006, and that the only remaining obstacle was one of price. The Mel Inn declined to comment on this assertion at the inquiry, and there is no reason to doubt the Council’s uncontested statement…

386.

Overall, the Mel Inn should clearly be acquired under the CPO given its pivotal position. The continuing presence of the existing building would detract from the redevelopment of the area. There is no reason why it should not continue to function from within its existing catchment area.”

Nowhere did the inspector say that that the need to relocate the Mel Inn provided an additional justification for the acquisition of the Penpoll site. In the passages relied on by Mr Barrett it does not seem to me that the inspector was doing more than to recognise that the Penpoll site could accommodate a relocated Mel Inn. He had reached the conclusion earlier in his report that it was necessary that the Penpoll site should be included in the CPO because of the uncertainty about its development if it was excluded. It was no part of his reasoning in reaching that conclusion that its acquisition was necessary to ensure the relocation of the Mel Inn, nor is there anything in his conclusions on the Mel Inn objection that he thought that its acquisition was necessary for this purpose. There is thus nothing to suggest that his conclusion that the Penpoll site should be included in the CPO would not have been reached in the absence of considerations relating to the Mel Inn.

The council maintained that the proposal that the Mel Inn should be relocated on the Penpoll site was always part of their case at the inquiry and Belfields must have realised this. Belfields denied that they were or should have been aware of this. It is unnecessary, however, in view of what I have just said to resolve this difference.

For her part the Secretary of State said at paragraph 19 of the decision letter that she had decided to accept the inspector’s recommendation to confirm the CPO for the reasons that he had given. She said that the letter constituted her decision to that effect. In relation to the Belfields objection the letter said:

“12.

The Secretary of State agrees that, in respect of the Penpoll site, the owner (Belfields) has alternative plans for the redevelopment of their site and has made substantial progress towards implementation, and that there is an extant planning permission obtained by Belfields for a scheme similar to that of Bellway (IR341). She also agrees, however, that there is considerable uncertainty that this key development will go ahead without the Council’s intervention. The Secretary of State agrees, therefore, that there is no assurance that the development would actually take place, and confirmation of the CPO would provide this necessary certainty (IR353).”

In relation to the Mel Inn objection the decision letter said:

“14.

In respect of the Mel Inn, the Secretary of State agrees that it provides a range of entertainment, functions and sporting facilities seven days a week. She also agrees that there is no dispute between the objector and the Council that there is a need for a facility of the type currently provided by the Mel Inn and that the need for such a facility may well increase once redevelopment has taken place and the population increases (IR374). However, she agrees with the Inspector that at best it could be described as utilitarian, resembling an industrial shed. She agrees that even in its current setting, surrounded by cleared sites, it adds nothing to the appearance of the area. She agrees that when the surrounding sites are redeveloped, it will look even more out of place, and will eventually detract from its surroundings (IR377). She agrees that this is clearly an important site in a prominent location and that the existing building would provide neither the massing nor the quality required for this important corner site (IR378). She agrees that there seems to be no reason in physical terms why the Mel Inn should not relocate onto the Penpoll site (IR384). The Secretary of State agrees with the Inspector, therefore, that the Mel Inn should clearly be acquired under the CPO given its pivotal position at the centre of the order lands. She agrees that the continuing presence of the existing building would detract from the redevelopment and that there is no substantial reason why it should not continue to function from within its existing catchment area (IR386).”

The decision thus, in my judgment, makes abundantly clear that the potential for relocating the Mel Inn on the Penpoll site formed no part of the justification for the inclusion of the Penpoll site in the CPO. The Penpoll site was included because of the uncertainty of its development if it was excluded; and the Mel Inn was included because it was thought appropriate that its site should be redeveloped. The assumption on which the challenge is based, that the need to relocate the Mel In on the Penpoll site formed part of the reasons for the confirmation of the order, thus has no foundation. This first ground of challenge therefore fails.

The second ground of the Belfields’ challenge, which also formed part of the Nextdom case, was that the Secretary of State had failed to apply the correct test in determining whether there was a compelling case in the public interest for the acquisition of its land. Mr Barrett referred to the policy statements in Circular 6/2004, where this was said:

“17.

A compulsory purchase order should only be made where there is a compelling case in the public interest. An acquiring authority should be sure that the purposes for which it is making the compulsory purchase order sufficiently justify interfering with the human rights of those with an interest in the land affected.

18.

The confirming Minister has to be able to take a balanced view between the intentions of the acquiring authority and the concerns of those whose interest in land it is proposed to acquire compulsorily.”

In addition Mr Barrett referred to paragraph 16 of Appendix A to the circular, which sets out a number of factors that the Secretary of State could be expected to consider, including in particular the following:

“(iv)

Whether the purpose for which the acquiring authority is proposing to acquire the land could be achieved by other means. This may involve considering the appropriateness of any proposal put forward by the owners of the land, or any other persons for its use.”

Mr Barrett relied on the principles established in Prest v Secretary of State for Wales [1983] 81 LGR 193 and Chesterfield Properties v Secretary of State for the Environment (1998) 76 P & CR 117 and in particular that stated by Lord Denning MR in Prest at 198:

“I regard it as a principle of our constitutional law that no citizen is to be deprived of his land by any public authority against his will, unless it is expressly authorised by Parliament and the public interest decisively so demands…If there is any reasonable doubt on the matter, the balance must be resolved in favour of the citizen.”

Like Mr Barrett, Mr John Hunter for Nextdom referred to paragraphs 17 and 18 of Circular 6/2004, and he relied on Prest and Chesterfield Properties and De Rothschild v Secretary of State for the Environment (1988) P & CR 330. He pointed out that those cases pre-dated the Human Rights Act 1998, and he submitted that the effect of the Act, in the light of a landowner’s rights under Article 1 of the First Protocol, was to require the court, when reviewing a decision to confirm a CPO, to consider objectively the proportionality of the decision. In addressing proportionality, the intensity of review was greater than either the standard Wednesbury approach or the “heightened scrutiny” test established by the cases To be proportionate, he submitted, the CPO must either be the “least intrusive” means of achieving the public benefit sought or at least it must be reasonably necessary to achieve that benefit.

I do not accept that proportionality in a case such as this is to be determined by treating as a requirement that the CPO should be the “least intrusive” means of achieving the public benefit that is sought. Such a test was rejected by the Court of Appeal in R (Clays Lane Housing Co-operative Ltd) v The Housing Corporation [2005] 1 WLR 2229 (see paragraph 25 in the judgment of Maurice Kay LJ) and by Forbes J in Pascoe v First Secretary of State [2007] 1 WLR 885 at paragraphs 68 to 75, both of which were cases in which rights under Article 8, as well as under Article 1 of the First Protocol, were engaged. The policy requirement that a CPO will not be confirmed unless there is a compelling case in the public interest fairly reflects the necessary balance required under the Human Rights Act (see Bexley London Borough Council v Secretary of State for the Environment, Transport and the Regions [2001] EWHC Admin 323 at [33]-[48]), and the Secretary of State must be satisfied of this: see Hall v First Secretary of State [2007] EWCA Civ 612, per Carnwath LJ at paragraph 21.

Mr Barrett submitted that, when, at paragraph 12 of the decision letter (which I have set out above), the Secretary of State said that she agreed with the inspector (at paragraph 353 of his report) that, in the absence of the CPO,

“...there is no assurance that the development would actually take place, and confirmation of the CPO would provide this necessary certainty…”

she was applying an unnecessary and unfair test and one that conflicted with the policy contained in Circular 6/2004 and the principles established by the cases. Essentially the claimants were being required to establish that they would have to provide the assurance or certainty of development.

It is not sufficient, in my judgment, to fasten on this particular sentence in the way that Mr Barrett does and to found an argument on that. It must be read in context. The immediately preceding sentence to the one relied on was this:

“She agrees, however, that there is considerable uncertainty that this key development will go ahead without the Council’s intervention.”

Thus the Secretary of State was not confirming the CPO in relation to Belfields because there was lack of complete certainty that the development would go ahead without it: she was doing so on the basis that there was considerable uncertainty that it would. Set against this considerable uncertainty was the assurance that would be provided if the CPO were confirmed. That simple textual analysis, it seems to me, is sufficient to dispose of Mr Barrett’s point, but to concentrate on just two sentences in the decision letter and an inspector’s report that extends to 428 paragraphs is clearly not satisfactory. The decision letter must be read as a whole, and so must the inspector’s report.

The inspector dealt extensively with the current condition of the area, the causes of it and the need for regeneration. He recorded at paragraph 91, which I have set out above, that Belfields accepted that the area was in need of regeneration, and that the timely redevelopment of its site, which was significant because of its size and the number of dwellings it could accommodate, was vital to transform the area. Thus there was nothing between the parties on the need for development, the nature of redevelopment or the timescale. The dispute was as to how the redevelopment could be achieved in line with the timescale. In his conclusions the inspector said this:

“347.

The site has an important frontage onto Hawthorne Road, and would include a substantial proportion of the overall new housing planned for the Order Lands, as well as retail uses, community facilities, and environmental improvements. It would make a key contribution to the regeneration of the area, and if there is a significant level of uncertainty over the ability of the objector to undertake the development, this would justify the CPO. There are three remaining uncertainties related to the objector’s intention to redevelop the site.”

The inspector then went on to discuss these uncertainties, and he reached his conclusion in paragraph 353, which I have already quoted and with which the Secretary of State expressed agreement in paragraph 12 of the decision letter.

It is clear that the inspector and the Secretary of State, so far from demanding certainty, were weighing the degree of uncertainty of the development taking place in the absence of the CPO against the particular contribution that the Penpoll site would make to the regeneration of the area and the need for its development in accordance with the agreed timescale. This approach was, in my view, palpably proportionate; and in adopting it the inspector and the Secretary of State were justified, having concluded that there was considerable uncertainty about the site being developed in the absence of the CPO, in concluding that there was a compelling need for its inclusion in the order.

Nextdom’s objection in relation to the Tannery site raised similar considerations to Belfields’, and the inspector stated the issue between the parties in identical terms. It was, he said in his conclusions at paragraph 358, “…a narrow one, and focuses on the mechanism by which the development of the site can be guaranteed. The concern is whether there is sufficient assurance that development will actually take place without the CPO, in the light of access to funding and expertise.”

The inspector made clear that he considered the site and the timing of its development were important in the regeneration of the area. He said

“365.

The site is in an important location fronting onto Hawthorne Road and is adjacent to the canal. Positioned between the Toprain and 511 Hawthorne Road sites, it is an important early component of the redevelopment proposals, and would provide for some 70 homes for both the decanting of existing occupiers of the area and for newcomers. It is common ground that the site should be redeveloped in a timely manner, in accordance with the timetable set out in the SPG. It would make an important contribution to the regeneration of the area, and if there is a significant level of uncertainty over the ability of the objector to undertake the development, this would justify the CPO.”

At paragraph 366 the inspector said that there were five areas of uncertainty in relation to Nextdom’s intention and ability to develop the site. He went on to discuss these and then, in a conclusion that formed the basis of the Secretary of State’s decision (in paragraph 13 of the decision letter), he said:

“372.

In conclusion, although there is evidence of some developer interest, there is no formal relationship with any developer. Likewise there is limited expertise on the part of the objector to carry out the development. There is no persuasive explanation as to how the objector can go from the current position to completion of development in 2 years, and there is no provision in the submitted S106 obligation to enable the Council to undertake the work in default. There is therefore considerable uncertainty that this important development will go ahead, and confirmation of the CPO is therefore justified.”

As with the Belfields objection, the conclusion that the CPO was justified in the light, on the one hand, of the importance of achieving development of the site and, on the other, of the considerable uncertainty as to the development of the site in the absence of the CPO shows, in my judgment, an approach that is proportionate, and on the basis of it the Secretary of State was entitled to conclude that the case for confirmation was compelling.

This ground of challenge was also put in an alternative way by Mr Barrett and Mr Hunter. They said that, by adopting the approach that they did, the inspector and the Secretary of State were effectively placing the onus on the objectors to show that there was no uncertainty about their ability to develop their sites and this was unfair and disproportionate. It is clear, however, that the council adduced evidence and argument to support their case on this issue and that this was taken into account along with the evidence and arguments of the objectors. Given that the issue was one on which it was proper for the Secretary of State to base her decision, I can see no error of law in her doing so by weighing the evidence and arguments that both sides had advanced.

Mr Barrett and Mr Hunter advanced a further argument. It related to a section further on in the inspector’s report (at paragraphs 408-416) where the inspector rejected the argument put forward by the council that, if individual sites were excluded from the CPO, this would have consequences for the entire CPO and the redevelopment because Government funds might be allocated elsewhere or withdrawn. At paragraph 411 the inspector said that there was no evidence that the exclusion of individual sites would actually result in the loss of funding, only that it could theoretically happen and that the consequences for the programme would have to be reassessed. At paragraph 414 he treated as of little weight the council’s argument that omitting individual sites could affect cross-subsidy between development packages and the viability of the schemes. Then he said, in the passage relied on by Mr Barrett and Mr Hunter:

“415.

The whole process of a CPO carries with it inherent uncertainty. It is not a persuasive argument to suggest that, in a CPO covering a wide range of interests, omission of individual sites would cause the entire scheme underpinning the CPO to fall. That would be to assume that the bodies seeking to promote and support the CPO have excessively rigid systems, which are unable to react to changing circumstances.”

Mr Hunter suggested that, if the whole CPO process carried with it inherent uncertainty, by parity of reasoning the inspector could only reasonably conclude that “a mere doubt or uncertainty” about the development of a site would be insufficient to justify its inclusion in the order. Mr Barrett said that the inspector and Secretary of State were perversely adopting two different evidential standards. I cannot accept this. There are two things to be said about the contention. The first is that the inclusion of the Penpoll and Tannery sites was not based on a mere doubt or uncertainty. The inspector regarded the uncertainty about their development as considerable. Secondly, it does not follow that because the CPO process may be uncertain it would be right to add to the uncertainties of achieving regeneration by excluding such a site from the CPO. Rather the reverse would seem to be the case.

For all these reasons, therefore, I do not think that the Secretary of State applied an incorrect test in concluding that the Penpoll and Tannery sites should be included in the CPO, and this ground of challenge fails.

The inspector identified three uncertainties relating to Belfields’ intention to develop the Penpoll site. He said:

“348.

Firstly, although it is clear that substantive discussions have taken place with a major developer, these discussions have not resulted in a concluded agreement. The most recent evidence is that technical investigations need to take place before any exchange of contracts, and there is a reference to gaps in the technical data. In addition, George Wimpey Main Board approval would need to be sought. In the absence of a concluded agreement, these matters cause a substantial amount of uncertainty.

349.

Secondly, neither the objector nor any potential developer partner have been in discussions with the Riverside Housing Association, who would be likely to be the social housing provider. Only very initial comments have been received from Riverside, instigated by the Council’s consultation on the planning application submitted by the objector. It is true that house builders such as Wimpey can bid for Housing Corporation funding for social housing, but there is nothing to suggest that this has happened. At the very least, this could lead to redesign and delay.

350.

Thirdly, should Wimpeys or another developer not be confirmed, it has not been suggested that the objector themselves has the necessary expertise to undertake the development. If final agreement is not forthcoming with Wimpeys or another developer, there is considerable doubt as to whether the objector would be in a position to undertake the work themselves.

351.

The Council’s suggested Development/Suspension Agreement would have enabled the objector to go ahead with their proposal, but would have provided the important fallback that the council could step in. No response was made by the objector to the suggested Agreement, nor any explanation of any perceived problems. The suggested Agreement would have provided that the Council would not act upon it until it was reasonably apparent that the objector was unable to comply with and/or procure the development of the site.”

Mr Barrett submitted that the inspector’s reasons in these paragraphs were inadequate. Neither he nor the Secretary of State had sought to grapple with Belfields’ case, which was that the reason why no developer agreement had been concluded was because of the presence of the CPO. In relation to the absence of discussions with the housing association, no conclusion or reasoning was attached about the consequences that might flow from the possible redesign or delay to which the inspector referred. As far as the ability of Belfields to carry out the development was concerned the inspector did not explain why their position was any different from that of the council, who were similarly not developers.

In relation to the absence of a developer agreement, the inspector recorded Belfields’ case as follows:

“85.

The letters from Persimmon and George Wimpey demonstrated clear and obvious developer interest. This has been progressed further by a more recent letter from Wimpey, which states their preparedness to purchase the site, subject to matters set out in the letter (sections of the letter redacted for reasons of commercial confidentiality). The developers are competent, experienced and extremely well resourced. Self evidently, whilst there remains a CPO it is unrealistic to expect the conclusion of a joint venture agreement. However, the fact remains that this is a demonstration of the high level of interest. Both developers were made aware of the contents of the S.106 Obligation and the proposed timescales contained within it.”

It appears, therefore, that there was no evidence before the inspector that it was the CPO that had prevented a developer agreement. This was simply asserted to be self-evident. The inspector was able to see the correspondence and form a view as to why no agreement had been entered into. He found that the most recent evidence was that technical investigations needed to take place before any exchange of contracts and that there was a reference to gaps in the technical data. In these circumstances there was, in my judgment, no need for him to deal with the contention that it was self-evident that the reason that there was no agreement was the CPO.

The inspector’s reasoning in relation to the housing association is, in my view, clear. Belfields had not been in discussion with the likely social housing provider; such comments as had been received form Riverside were limited and had resulted from the council’s consultation; and, while Belfields’ development partner could bid for Housing Association funding, nothing suggested that this had happened. I cannot see what more the inspector needed to say about redesign and delay, other than that at the very least these could result.

Nor was there, in my view, any reason for the inspector to explain why the position of Belfields was different from that of the council. That difference was clear. Unlike Belfields the council had entered into an agreement with their developer, Bellway. I do not think, therefore, in this respect, any more than in the others there was any failure to give adequate reasons, and this third ground of challenge by Belfields consequently fails.

The inspector identified and discussed five areas of uncertainty related to Nextdom’s intention and ability to develop the Tannery site before expressing the conclusion at paragraph 372 that I have quoted. These were: the absence of a developer agreement, the absence of proposals for social housing, doubt about Nextdom’s ability to develop the site itself if a development partner failed to materialise, the need to obtain planning permission, and doubts about the cost of remediation. Mr Hunter said that in considering these matters the inspector left certain material considerations out of account and failed to give adequate reasons for his conclusions. In argument he criticised the inspector’s conclusion on three of the five areas of uncertainty.

The first matter was the cost of remediation. The inspector said on this:

“371.

Fifthly, there is doubt as to the costs of remediation [111, 114, 118-120, 141-142]. The objector accepts that this may have caused uncertainty in the past, although recent work may have gone some way towards resolving this. However, there remains a considerable difference (estimates from around £0.5m to £2.2m) between the objector’s position and that of the Council, and although the eventual costs would have to be carried by any developer, this adds to uncertainty.”

The paragraph numbers referred to are those that in which the inspector summarised the cases of Nextdom and the council on the remediation issue.

Mr Hunter said that, in expressing himself as he did, the inspector had failed to deal with the conflicting evidence on the costs of remediation. He had simply recorded the difference between the estimates and then said that there was therefore uncertainty about them. It was in issue whether the council’s estimate of £2.2m was realistic or pessimistic, and the inspector ought to have dealt with the conflicting evidence on this and reached a conclusion on it. By failing to do this he had failed to give adequate reasons.

I do not think this criticism is justified. The inspector stated when recording the council’s case at paragraph 141:

“There is now an agreed statement between the experts, noting that the current investigative work is insufficient to be able to develop a detailed remediation strategy. The cost of carrying out such work is in the range £0.5m to £2.2m, and it is agreed that the objector’s estimate of remedial work does not include the provision of a clean capping layer or the provision of ground gas protection measures.”

It is, it seems to me, sufficiently clear that the inspector concluded that the range of the estimates set out in the agreed statement was a realistic range and saw no reason to reject the council’s estimate as unduly pessimistic. I do not think that in relation to this particular issue, among the great number that arose, it was necessary for him to do more than this and to set out an explanation of why he considered the council’s estimate to be realistic. It was sufficient for the objector to know that its contention on the range of possible costs was not accepted.

Mr Hunter’s second point related to the inspector’s conclusion on the third area of uncertainty, the ability of Nextdom to develop the Tannery site. The inspector said:

“369.

Thirdly, there is doubt whether the objector has the ability to undertake the development themselves, if a development partner does not materialise. The disputed question of the financial resources available to Nextdom was not resolved. However, whatever resources may be available to the objector, there is the additional concern that the company does not have the necessary expertise to undertake a development of this nature, as their track record of developing purely residential developments is limited. The combined effect of these matters is to cast doubt on whether the objector would be in a position to undertake the work themselves, in the event that no developer partner were forthcoming.”

Mr Hunter said that the question of Nextdom’s financial resources was a principal controversial issue and the inspector should have reached a conclusion on this instead of leaving the matter up in the air. In the absence of such a conclusion his reasoning was inadequate. He had not treated the matter of financial resources as of no consequence when saying that, whatever might be available, the company did not have the necessary expertise to carry out the development, because he said that it was “the combined effect of these two matters” that cast doubt on whether Nextdom would be able to undertake the work themselves.

I do not think that Mr Hunter is right in characterising the resources available to Nextdom as one of the principal controversial issues. In terms of the inspector’s overall conclusions at paragraph 372 (set out above), expressly referred to by the Secretary of State in paragraph 13 of the decision letter as the basis for rejecting Nextdom’s objection, the resources point did not feature, and the inspector’s treatment of it in paragraph 369 clearly gave it less importance than Nextdom’s lack of expertise. It was sufficient in these circumstances, in my judgment, for the inspector to say that the question was not resolved, and I do not think that Nextdom has been substantially prejudiced as a result.

Thirdly Mr Hunter took issue with the first of the inspector’s areas of uncertainty:

“367.

Firstly, although it is clear that some discussions have taken place with developers, these discussions have not resulted in a concluded agreement. The objector purchased the site in 2002, although discussions with the Council until 2004 focused on employment uses. Since that time, the objector has stated that discussions have taken place with a number of housebuilders, although it was sated that a number had been put off by the threat of the CPO or concerns about the Council’s even-handedness. However, these allegations were not substantiated. It was clear at the beginning of the Inquiry that a contract with a developer was anticipated, but this did not materialise by the time the Inquiry closed over three months later. The length of time during which the site has been in the objector’s ownership and has not been developed lends a substantial degree of uncertainty to the position.”

Mr Hunter submitted that the length of time that the site had been in Nextdom’s ownership (since 2002) and had not been developed was immaterial since there was no question of the land being brought forward for development in advance of the Development Brief, which was not published until November 2004. The inspector was thus in error in concluding that this was a factor that added to the uncertainty. This contention seems to me to be based on a misreading of this paragraph of the inspector’s report. The inspector was clearly aware and took account of the fact that the focus up to 2004 was on employment uses, but there was nevertheless a substantial period of time after that date during which lack of progress towards development suggested uncertainty about Nextdom’s ability to bring it about. It was the failure to conclude an agreement with a developer, and the fact that the anticipated agreement did not materialise during the three months of the inquiry, that appears to have been the principal factor in his conclusion on this area of uncertainty, and this was the matter to which he referred in his concluding paragraph, 372. I do not think there was any error of law in this respect.

Nextdom’s case at the inquiry was that it should be left to develop the Tannery site itself. In his conclusions on the objection, the inspector said this:

“356.

However, Nextdom considers that the site can and will be developed without the CPO. The Council has stated that if there is evidence that the owner of a site or a developer can progress the development, in accordance with the SPG for the area, then the Council would see no need to acquire the land by compulsion. It is agreed that there is no need for the entire development underpinning the CPO to be carried out by a single developer, and that there is no reason why the objector or their developer partner should not carry out the development.”

At the inquiry Nextdom had advanced a number of concerns about the council’s Overarching Development Agreement (ODA) with its chosen developer, Bellway. One of its contentions was directed at a provision in the agreement (in paragraph 6.3 of Schedule 2) under which the council agreed following confirmation of the CPO to “use all reasonable endeavours to secure the vesting” in it of all outstanding interests by means of the general vesting declaration procedure. Nextdom said that this provision unlawfully fettered the council’s discretion not to acquire the totality of the order lands and rendered worthless the council’s assurance that it would not implement the CPO in relation to any site the owner of which was able to progress the development.

The inspector dealt with this contention as follows:

“361.

Secondly, the ODA is said to fetter the Council’s discretion by restricting the circumstances in which, if the CPO is confirmed, the Council can choose not to acquire a given site. The argument is that the ODA requires the Council to implement the confirmed CPO on particular sites, which conflicts with the assurance that it would not necessarily do so. This would not leave open the possibility of the landowner developing the site. However, the ODA obliges the Council to use all reasonable endeavours to secure the vesting of all outstanding interests. If the Council had agreed not to enter onto an objectors land on condition that the objector carry out the development in accordance with an agreed timescale, then it would not be reasonable to secure entry. This gives the Council the necessary flexibility.”

The pleaded ground of challenge on this conclusion, that the inspector and the Secretary of State should have concluded that the agreement imposed an unlawful fetter on the council’s discretion not to implement the CPO in relation to a particular site, was not pursued with any vigour. It is, in my judgment, without foundation. Every contractual arrangement that a council enter into restricts their discretion to act otherwise than in accordance with the contract. Such a restriction is only unlawful, however, if it is unreasonable. It does not seem to me that, in a term of this sort, in an agreement under which a council are securing regeneration through the employment of a developer, is in principle unreasonable, and I can see no reason to conclude that the provision here was unlawful.

As advanced before me Mr Hunter’s principal submission on this provision of the ODA was that the inspector had erred in his construction of it. An obligation to use reasonable endeavours required the promisor to take all reasonable steps in its power which were capable of producing the desired result. Whilst the council had latitude to decide what steps were reasonable to achieve the desired end, they were not free to decide that, although the desired end was within their power, they did not any longer consider it necessary to achieve it.

I do not think that the inspector was in error as Mr Hunter submitted. If the council had agreed or were to agree not to acquire a particular site or if through their conduct or representations they were otherwise inhibited in law from exercising their power to acquire the site, any decision on their part to vest the site would be susceptible of legal challenge. Vesting in these circumstances would not be capable of being achieved by the exercise of reasonable endeavours. What the consequences would be for the contractual relationship between the council and their preferred developer is another matter and one which formed no part of the submissions that were advanced. This ground of challenge to the Secretary of State’s decision accordingly fails for this reason; and I would only add that it is by no means clear in any event that what the inspector said about potential non-implementation of the CPO in relation to particular sites formed any part of the Secretary of State’s reasons for confirming the CPO.

For Mr Powell, Ms Joyce contended that the CPO as purportedly made was invalid for two reasons. The first reason related to the identification of the statutory power under which the order was made. It was stated to be made under section 226(1)(a) of the Town and Country Planning Act 1990, and Ms Joyce’s contention was that, since that section had been amended by the Planning and Compulsory Purchase Act 2004, the absence of any reference to the section as amended invalidated the order. This argument had been raised at the inquiry, and the inspector had in my judgment quite rightly rejected it in paragraph 2.1 of his report, pointing out that under section 20(2) of the Interpretation Act 1975 the reference to the section was a reference to it as amended. Ms Joyce’s particular concern was that no reference was made to subsection (1A), which had been inserted by the 2004 Act and provides that a local authority must not exercise the power to acquire under subsection (1)(a) unless they think that the development or improvement is likely to contribute the achievement of the promotion or improvement of the economic, social or environmental well-being of their area. However, as Mr Paul Brown for the Secretary of State submitted, there was no need for reference to be made to this provision since it does not contain the power under which the CPO was being made. What it does is to impose a limitation on the exercise of the power. Ms Joyce’s contention is for this reason unfounded.

The second technical point was that the resolution to make the CPO was made, not, as it should have been, by the council, but by the council’s cabinet. Under the council’s constitution the making of compulsory purchase orders is a function that is an executive function that is delegated to the cabinet. Ms Joyce’s contention was that the power to make a CPO was conferred by statute on the council and could not be delegated. I cannot accept this argument. Mr Powell had advanced it in an earlier application under section 23 (Powell and others v Secretary of State for Communities and Local Government and Sefton Metropolitan Borough Council [2007] EWHC 2051 (Admin), 22 August 2007), in which he and others challenged the validity of the Sefton Metropolitan Borough Council (Queens Road and Bedford Road) Compulsory Purchase Order 2005. Sullivan J rejected the argument.

Miss Frances Patterson QC for the council explained why the argument was wrong. Under section 13(2) of the Local Government Act 2000 any function of a local authority that is not specified in regulations made under subsection (3) is to be the responsibility of an executive of the authority under executive arrangements. The regulations made under subsection (3), the Local Authorities (Functions and Responsibilities) (England) Regulations 2000, specify functions that are not to be the responsibility of the authority’s executive or are to be its responsibility only to a limited extent. The executive’s power to make compulsory purchase orders is not one of the specified functions. Under section 38(1) of the 2000 Act a local authority must have regard to any guidance issued by the Secretary of State. Guidance has been issued in New Council Constitutions: Guidance to English Authorities 2000 (as amended in 2001), and paragraph 5.17 says that “Some residual planning functions…such as…making compulsory purchase orders will be the responsibility of the executive”.

The principal argument advanced by Ms Joyce on Mr Powell’s behalf was that neither the Secretary of State as confirming authority nor the inspector in his duty to report the inquiry to the Secretary of State complied with the requirements of a fair hearing by an impartial tribunal. This failure to comply with Article 6 was said to have three elements. The first was that the Market Restructuring (Implementation) Agreement of 31 March 2004 effectively amounted to the prior approval of the CPO. The same contention on that and other agreements was advanced before Sullivan J in relation to the Queens Road and Bedford Road CPO, and he said this about it in paragraph 13 of his judgment:

“Now, there is no doubt that under those agreements the Council was offered financial support under the regeneration of pathfinder areas programme and that certain targets were set for the acquisition of properties, the demolition of properties and so forth, and funding was provided upon the basis that those targets would be met. However, the answer to this point is to be found in both the skeleton argument of Mr Maurici and in the skeleton argument of Ms Patterson QC on behalf of the local authority. Clearly there cannot be any dispute that the Secretary of State does have a policy of encouraging the regeneration of pathfinder areas in the manner proposed by this council and, that because there is such a policy, funding is provided for its implementation. But that is a very long way from saying that the outcome of any particular compulsory purchase order or the fate of any particular property in a compulsory purchase order is effectively a foregone conclusion. As the Franklin case (Franklin v Minster of Town and Country Planning[1948] AC 87) demonstrates, while there may in principle be unlawful pre-determination, it exists only if the Secretary of State has forejudged any genuine consideration of objections to a Compulsory Purchase Order and simply does not genuinely consider the objections that have been made. One only has to read the Inspector's report for it to become perfectly obvious that the Inspector did very carefully consider all of the points made in respect of each individual objector, and reached conclusions in respect of them. I accept that the objectors do not agree with those conclusions, but the conclusions were open to the Inspector on the evidence. The Secretary of State has accepted those conclusions. Thus there is no evidential basis for the claim that there was in some way prior approval.”

I respectfully adopt the judge’s reasoning in that paragraph, and I reach the same conclusion on the report of the inspector in the present case and the decision that was made on the basis of it.

Secondly, Ms Joyce referred to the provisions in rules 13 and 17 of the Compulsory Purchase by Public Authorities Inquiries Procedure Rules 1990, which precluded questions on the merits of Government policy and section 245(1) of the 1990 Act, which permitted the Secretary of State to disregard objections that amounted in substance to an objection to the provisions of the development plan. The council’s UDP and other planning documents specified that the order lands would be subject to clearance under the “Housing Market Renewal” policy. So, Ms Joyce said, there was a denial of access to a court to those objectors who wished to question the basis of the policy. Again, this was a matter raised before Sullivan J in the earlier case. There the judge said at paragraph 10 that the criticism was beside the point because it was clear from the decision letter that the preclusive provisions were not applied by the Secretary of State. The same is the case here. The inspector, having summarised the parties’ cases, devoted a substantial part of his report (at paragraphs 295 to 319) to his conclusions on the current condition of the area, the causes of that condition and the need for comprehensive treatment. In the decision letter this was said:

“10.

The Secretary of State agrees that the overwhelming balance of the evidence is that the residential part of the Order Lands and the wider South Sefton area have been experiencing low demand and increasing vacancy rates for many years, and that this has led to housing market failure (308). She agrees that the overwhelming balance of the evidence demonstrates that housing market failure has occurred in the residential/retail part of the Order Lands, and that even taken together, the matters raised by objectors in relation to the actions of the Council and RSLs could only have had the effect of aggravating an already depressed situation (IR312).

Thus neither the inspector and the Secretary of State sought to preclude the objectors from contending that the housing market renewal policy was founded on a misapprehension of the causes and nature of the conditions in the area and that the CPO was for this reason unjustified. On the contrary it is clear that the objections were listened to and considered, and conclusions on them were reached.

The third element of the alleged failure to comply with Article 6 is the suggested inadequacy of the inspector’s report in relation to findings of fact. It appears that a similar argument was also advanced before Sullivan J in the earlier case. Ms Joyce said that under the previous inquiry procedure rules, which were replaced in 1990, an inspector was required to include his findings of fact. There was no such requirement under the current rules, which were accordingly deficient in Article 6 terms because it was impossible for the Secretary of State to reach a decision unless the facts had been established. Sullivan J rejected this. He said at paragraph 8 of his judgment, in a passage that I adopt for the purposes of the present case:

“That criticism of the change in the rules is wholly misconceived. The change in the rules reflected the reality in planning and Compulsory Purchase Order inquiries and other inquiries of a similar kind. It is very difficult to disentangle straightforward findings of fact from matters of judgment or opinion and thus one very often sees findings of fact and conclusions and opinions mixed up. Thus, whether a site is a particular acreage or not is a question of fact; whether it is unduly prominent, whether it is run down, why it is run down, those are matters of opinion, and judgment. Thus it is that conclusions are required from an Inspector and those conclusions will embrace both matters of fact and matters of opinion or judgment on which the Inspector will ultimately make his or her recommendation. If it can be demonstrated that in reaching his or her conclusions the Inspector has omitted to make an essential finding of fact, not a matter of disputed judgment, then that may form the basis of a legal challenge, because if the Inspector has not found an essential fact then neither the Inspector nor the Secretary of State would have been able to take it into account as a relevant consideration. So the rules first of all reflect the reality, that is to say the difficulty of distinguishing between fact and opinion in cases like this but, secondly, they do not preclude the possibility of a legal challenge upon the basis that it was necessary to find a particular fact and that fact was not found.”

The complaint is made that the paragraphs in the inspector’s report summarising the objectors’ case (paragraphs 185 to 192) were simply a bland, uninformative, non-factual, impressionistic description of the case. None of the facts that they sought to rely on appeared in the body of the report, so that the Secretary of State could not have known what their case was. Ms Joyce said that what they expected was a report in full to the Secretary of State so that she would know what had been said at the inquiry.

In the grounds of claim no more than the following was said about the shortcomings in the inspector’s report consequent upon the procedure rules only requiring him to include his conclusions and recommendations in relation to the facts: “As a result significant facts which emerged through cross-examination, supporting the objectors case, are not reported.” I asked Ms Joyce in the course of her submissions what were the facts that she suggested the inspector ought to have reported to the Secretary of State and had failed to report. She referred to the section of the report in which the inspector summarised the general case for the residents represented by the organisation called Venus, where the inspector had footnoted certain documents that the objectors had relied on. She said that what the inspector ought to have done was to set out what it was that the documents said about the particular points to which the footnotes related.

The paragraphs to which Ms Joyce directed my attention are these:

“186.

The general case is largely taken from closing submissions, as no general evidence (apart from the particular experience of individuals affected) was submitted.

187.

Over the last 2/3 years the area has been in decline, and local residents have reported a lack of security and no faith in the future. The effects of the MHRI programme have been negative, with many residents moving away from the area.

188.

In closing, Venus introduced a report¹⁹⁷ from summer 2006, which updated the key findings of the 2005 Housing needs Assessment Update. Particular attention was drawn to the fact that Sefton’s house prices are significantly above the regional average and are the highest in Merseyside. The increase in house prices in Bootle was also stressed¹⁹⁸. The report notes that Bootle has moved from having an excess of affordable housing in 2003, to having the second most pressing needs in Sefton¹⁹⁹. The report also that HMRI pathfinder is not tasked with meeting affordable housing needs, except as they arise from the HMRI process²⁰⁰.

189.

The CPO is based on the assumption of housing market failure, but this itself was based on the discredited CURS Report^201. In closing, Venus presented a table²⁰² of tenure profile and voids on the Klondyke Estate from 2000 to 2006. None of the Council’s evidence shows information on vacancies or voids, and the whole concept of housing market failure is challenged.

190.

There is a continuing need for the type of properties which exist on the Klondyke estate, as is shown by the Council’s Housing Register. Only when voluntary acquisition and tinning up began did voids begin to grow. The Council’s own evidence²⁰³ demonstrates a Borough wide shortage of smaller accommodation – the type of accommodation which the Council are proposing to demolish on the Klondyke estate.

191.

The decision not to relet properties (September 2003) has had a consequential harmful effect on the area. This is demonstrative of housing management failure, not housing market failure.”

The footnotes in each case identified the document referred to and, where the reference was to a particular paragraph from a document, the paragraph referred to. Other than setting out the text of each paragraph, which was plainly unnecessary, there was nothing more than this that the inspector could in my judgment reasonably have done. The criticism advanced by Ms Joyce in relation to these paragraphs is plainly unfounded.

Ms Joyce also criticised for lacking evidence to support them the inspector’s conclusions on the current condition of the area and the causes of that condition. Those paragraphs, from 295 to 313, deal in what appears to me to be an admirably clear and specific way with the rival contentions of the parties. Ms Joyce directed general criticism at a number of these paragraphs. Thus she criticised the following paragraph, in which, she said, the inspector was setting out his opinion but not stating the disputed facts or how he had resolved them:

“308.

The cumulative effect of these factors, as presented in a convincing and comprehensive manner by the Council, is that the area has gone beyond the point of no return, and that radical intervention is necessary. The overwhelming balance of the evidence is that the residential part of the Order lands and the wider South Sefton area have been experiencing low demand and increasing vacancy rates for many years, and that this has led to housing market failure.”

The reference to “these factors” was to matters referred to in the immediately preceding paragraphs, where the inspector referred back to earlier paragraphs setting out the parties’ cases. Those earlier paragraphs contained footnotes identifying the source of the particular matters relied on. Thus the factual and judgmental basis for this strong conclusion of the inspector (which was specifically relied on by the Secretary of State in paragraph 10 of the decision letter) was clearly stated.

Thus I can see no basis, in this or in the other paragraphs to which Ms Joyce referred, for the contention advanced on Mr Powell’s behalf that the Secretary of State did not have presented to her in the inspector’s report the factual material that she needed to make a valid decision.

For the reasons that I have set out each of these applications is refused.