House of Lords decision
In November 2006, the House of Lords delivered their Judgement
on the long running case Standard Commercial Property Securities v
Glasgow City Council relating to a redevelopment site at Buchanan
Street / Bath Street / West Nile Street, Glasgow. Glasgow's attempt
to have this site brought forward for a development deserving of
its context has been the subject of litigation since 2000, and as
one of their Lordships said, if Glasgow decides to proceed, the
Compulsory Purchase Orders still have to be made, and presumably,
may well be objected to.
However, at the end of what is a second round of cases, their
Lordships considered in detail the meaning of Sections 189 and 191
of the Town and Country Planning (Scotland) Act 1997, and the scope
of a local authority's freedom of action in interpreting and
applying those powers, when entering into agreements with private
sector developers, and rejected the challenge to the Council's
actings.
The Town and Country Planning (Scotland) Act 1997 Sections 189
and 191 permits the acquisition and disposal of land which "is
required in order to secure the carrying out of development,
redevelopment or improvement" and "is required for a purpose which
it is necessary to achieve in the interests of planning of an area
in which the land is situated". Section 191(3) says that any such
land disposed of shall not be disposed of otherwise than at the
best price or on the best terms that can reasonably be obtained.
There is no provision for the consent of the Ministers in this
instance, which is in contrast to the power under the Local
Government (Scotland) Act 1973, which allows for disposal of the
land for less than the best market value with the consent of
Scottish Ministers.
In summary, the planning objective which Glasgow City Council
has held on to through all the litigation was that the site should
be made available for a high quality mixed use development,
probably including retailing, which took account of the surrounding
townscape, permeability from the street, and make provision inter
alia for public art.
From the outset the problem has been that the site was in mixed
ownership. The two principal proprietors have apparently not been
able to agree on a mutually acceptable approach. This prime site
has therefore been sitting in a dishevelled state opposite the
Royal Concert Hall and the Buchanan Galleries main entrance doing
not much more than being a blot on an important urban area. The
City decided in 1999 to utilise its planning powers to unlock the
impasse. To allow redevelopment to happen the Council put together
a framework whereby the Council would choose a preferred developer
and facilitate taking control of the site using compulsory purchase
powers. There was a false start to this plan which was struck down
by the Court of Session but the Council started again, developing
their revised plan carefully with regard to the remarks made by
that Court. There were various carefully developed criteria for
choosing the preferred developer and the best scheme. The Council
would then enter into a "back to back" agreement whereby the
Council would acquire the necessary interests in the site using its
compulsory purchase powers under the Planning Acts, and then
transfer the land to the successful developer. The consideration
for this sale was to be the sum that would be required to indemnify
the Council against any costs in exercising their Compulsory
Purchase powers, and then transferring the property to the
preferred developer.
The unsuccessful developer, who was also the other proprietor of
the site challenged this arrangement and the Council first won,
then lost in the Court of Session and then appealed. The House of
Lords who have now upheld the Council's proposed scheme and
vindicated the back to back arrangement, and the right to go for a
consideration based on indemnity.
Fundamentally, their Lordships found that the onus lay on the
challenging unsuccessful developer to show exactly how the Council
had acted unreasonably and/or outwith the powers in the Town and
Country Planning Act, and that they failed to do this, and failed
to show that the Council could and should have done things
differently. They had argued that the Council had failed to meet
the requirement in section 191(3) to go for the best price, or the
best terms that could reasonably be obtained, because the Council
had not considered whether they could obtain a better "price" for
the land. However, the challenging developer throughout all the
litigation, had never in fact suggested that they themselves would
have offered a higher price than mere indemnity, or had led any
evidence that the Council could have got a higher value, or shown
convincingly what mechanism could have been used for this, or said
that they would have offered the Council a better consideration
than indemnity themselves. In fact, Lord Brown of
Eaton-under-Haywood, in an interesting side comment said that he
found the prospect of a planning authority seeking to generate a
profit through the exercise of its statutory powers of acquisition
"deeply unattractive". As he put it, such an approach would be
"almost inevitably at the expense of some beneficial aspect of the
development scheme".
In their Judgements, their Lordships pointed out that Section
191(3) requires the best price, or the best terms that can
reasonably be obtained, and chose a wide interpretation of the
phrase "the best terms". Section 191 imposes two separate duties on
a planning authority when disposing of land, both to progress its
planning objectives under Section 189, and also to do so
responsibly as regards the public purse. This latter requirement
was said to be the "commercial" category of obligations which the
Council had, which should be seen as a general duty to safeguard
the public purse from the sale of public assets under value.
However, in fulfilling these legal duties the Council could
properly include as "best terms" aspects of the quality of the
development; the pedigree of the proposed developer; such items as
timescales and deliverability; and other aspects of the development
scenario which have a bearing on the profitability of a scheme,
even although they were not necessarily represented by a specific
financial value. In conclusion; the whole idea of a back to back
agreement, based on a consideration which is restricted to
indemnity, but takes into account the quality and planning
objectives of the development, is vindicated. Any Council
considering such an approach to solve a site problem in their area
now have a model which has been tested in the Courts to follow.