Judge finds council sold seafront land at undervalue but refuses to quash decision

Canterbury City Council sold land on the seafront in Whitstable to a property developer for less than best consideration but the case was not appropriate for a quashing order, a High Court judge has ruled.

The case of Whitstable Society v Canterbury City Council [2017] EWHC 254 concerned actions taken by the city council in relation to its ownership of “the Oval Chalet”, a former outdoor roller skating rink.

On 11 December 2014 Canterbury’s Executive resolved to authorise its Head of Property to conclude a sale of the Oval Chalet and on 21 January 2015 a contract for this sale was entered into. Both of those actions were the target of the legal proceedings.

The claimant advanced five grounds in its challenge:

1. The notification and consultation proceedings required in relation to open space land owned by a local authority ought to have been gone through in respect of the sale of the Oval Chalet.
2. The contract which was entered into was ultra vires the resolution made on 11 December 2014 and the contract should therefore be quashed.
3. The business of the Executive on 11 December 2014 was improperly and unlawfully advertised in breach of the relevant requirements of the Local Government Act 1972.
4. The contract for the sale of the land was entered into at a value which was less than the best which could reasonably been have been obtained for the land and therefore in breach of the relevant legal requirements under the Local Government Act 1972.
5. The council was in breach of the Public Sector Equality Duty when it reached the resolution which it did and, consequently, entered into the contract for the sale of the land.

Mr Justice Dove rejected four out of five grounds, finding amongst other things that the land was not open space.

However, he found for the claimant on the fourth ground, namely that there had been a sale at an undervalue. “In my view there is substance…. in the claimant's contention that there has been a breach of s123(2) of the 1972 Act  and a legal error by the defendant, in that the defendant failed to obtain best consideration for the land since the sum it accepted was based on a valuation predicated on it being inevitable that affordable housing would be required.”

The High Court judge nevertheless said this was “not an appropriate case bearing in mind the undue delay which has occurred and the prejudice to third parties and good administration which would occur for relief by way of quashing the decision of 11th December 2014 to be granted”.

Following the ruling Canterbury City Council said in a statement: “We are pleased that the judge has found in our favour on four of the five grounds. He also concluded that there had been unnecessary delay by the claimants in bringing their case, which has held up this development from going ahead.

“Importantly, he has allowed us to continue with the contract with the developer. This is welcome news because Whitstable will now benefit from a substantial new area of public open space.”

The council added: “The judgment makes it clear that the Oval Chalet did not consist of, or form part of, an open space. However, the new development will provide open space that the people of Whitstable have not had use of at that location for many years.”

It expressed disappointment at losing on the best consideration part of the case, which it said was due to out of date assumptions around affordable housing. The council will take time to fully consider this element of the ruling, it added.

“However, we have already reviewed our land disposal procedures as a result of the Oval Chalet case,” the council said.

“Changes include seeking, where necessary, two independent Royal Institution of Chartered Surveyors valuations, instead of one, when not going to competitive tender, making as much information public as possible in our committee reports and a new consultation process with ward councillors.

“We will also consider whether any further changes are needed as a result of this judgment.”

James Goudie QC and Edward Capewell of 11KBW appeared for Canterbury.

11KBW said: “This is an important decision on the meaning of ‘open space’ in the Local Government Act 1972 and Town and Country Planning Act 1990, on the requirements for the sale of land for best consideration under the 1972 Act, and on the discretionary refusal of relief in judicial review claims…

“The judgment will be of wide interest to local authorities involved in the disposal of land and to developers.”