Background
Local councils have statutory powers to acquire land for public parks, which is then held on trust for members of the public, who have the right to use them.
The Local Councils have the power to sell that land, but must first advertise their intention to sell in the local newspaper and consider any objections to the proposal. Having taken those steps, they can sell the land free from the public trust.
In this case, the Supreme Court considered whether the public trust survives a sale by the Council to a developer, where the council had failed to carry out those steps.
Facts of the case
In 2017, Shropshire Council sold land, which was part of Greenfields Recreation Ground in Shrewsbury, to a developer: CSE. Shropshire Council did not realise the land was subject to a public trust – it had had many uses over the years, and at the time of the sale was overgrown and not part of the park itself. As such, it did not advertise or carry out a consultation process before the sale. Shortly after, and despite some objections from the public that the land was dedicated for public use, CSE was granted planning permission to build houses on the land.
Dr Day, a local resident, did not know about the sale, but on hearing of the planning application, investigated the history of the recreation ground and established it was subject to a statutory trust for the benefit of the public. He brought judicial review proceedings challenging the grant of planning permission to CSE and argued that, even after the sale, the land remained subject to the public trust so the planning permission must be quashed. Shropshire Council subsequently agreed that the land had been subject to a public trust, but argued it had not survived the sale to CSE.
Judicial Review and Court of Appeal Judgments
Dr Day’s judicial review claim in 2019 failed - while the Judge acknowledged the public trust, she decided that the outcome of the planning decision would not have been any different as the Council would have concluded that the trust could not be enforced against CSE following the sale, so would have granted planning permission anyway.
In 2020, the Court of Appeal dismissed Dr Day’s appeal and said that the “statutory trust” over the land in favour of the public was not like a private trust, so it did not give rise to an equitable interest, and was lost with the sale of the land.
Shropshire Council’s audit flagged “serious governance weaknesses”, and an independent investigation was commissioned into the sale, which was very critical of the Council’s actions. The Council accepted responsibility, apologised to the residents and the community for its handling of the sale, and considered returning the land to the community. However, as Dr Day had appealed to the Supreme Court, they didn’t take any further steps, pending the outcome of the appeal.
Supreme Court decision
The Supreme Court agreed with the Court of Appeal that the statutory trust did not operate in the same was as a private trust, and dismissed any arguments that the public trust could be “overreached” on a sale of the land in the same way as a private trust, such that the public's interest transferred to the sale proceeds.
However, unlike the Court of Appeal, the Supreme Court decided that the public’s rights over the land were not extinguished on a sale of the land, and likened them to rights over village greens, or public highways, which can coexist with a private rights. The public’s rights are not extinguished on a sale of the land unless the local authority complies with its obligation to advertise the sale, and consult on it. As a result, the public could enforce their rights against the developer after the sale.
The Supreme Court therefore quashed the planning permission on the basis that the outcome would have been different if the local authority had known about the statutory trust, and taken the requisite steps to advertise and consult on the sale.
The Supreme Court acknowledged that “this leaves a rather messy situation in which CSE no doubt bought the land in the expectation of being able to develop it”, and laid the blame squarely at the Council’s door for failing to carry out the necessary investigative work to establish the status of the land. While declining to comment on where this left the parties, there was a strong hint that the sale should be unwound following the judgment which, given the Council’s previous comments, seems the likely next step.
What does this mean for developers?
While the Court’s consternation was reserved for the Council, this case also serves as a strong warning to developers to do their due diligence when purchasing land from local authorities, or face the possibility of paying a hefty price for development land which cannot be developed, and is subject to continuing public rights.
Authored by Paul Tonkin and Lucy Redman.
