Compulsory purchase — Disposal — Section 191 of Town and Country Planning (Scotland) Act 1997 — Agreement between council and developer for compulsory acquisition and disposal of redevelopment site — Developer to indemnify council’s costs of compulsory acquisition — Whether indemnity capable of constituting best price or terms obtainable — Appeal allowed
The first appellant council wished to redevelop a run-down site in the centre of Glasgow. Both the respondent and the second appellant owned properties on the site and were interested in carrying out the redevelopment. Since the various properties on the site were in multiple ownership, the council planned to facilitate the scheme by entering into a “back-to-back” agreement with a single suitable developer. Under this, they would acquire the site compulsorily and would then convey it to the developer, in exercise of their powers under section 191 of the Town and Country Planning (Scotland) Act 1997, subject to an obligation to complete the development and to indemnify the council for their costs in respect of the compulsory purchase.
After inviting proposals from all the owners of properties on the site, the council decided to proceed with a proposal from the second appellant for the entire site. They rejected two proposals from the respondent, both of which involved development in association with other companies and one of which did not encompass the entire site.
The respondent brought proceedings to reduce that decision on the ground that a back-to-back agreement, under which the council would receive only an indemnity of their costs, did not secure the best price or the best terms that could reasonably be obtained for the disposal of the site, as required by section 191(3) of the 1997 Act. It contended that the council had not considered what developers might be willing to offer for the site and had assumed that a single comprehensive development was required without examining the possibility of involving more than one developer or carrying out separate but mutually compatible developments of different parts of the site. That action was dismissed at first instance but allowed on appeal. The council appealed.
Held: The appeal was allowed.
The primary objective of section 191 was to ensure that where land acquired for planning purposes was disposed of, it was done in a way that would secure the best use of the land or procure the carrying out of works that were needed for the proper planning of the area within section 191(2). Accordingly, a planning authority had to be satisfied that their proposed disposal would secure one of those purposes before subsection (3) came into play. Subsection (3) directed attention solely to the commercial implications of the transaction. The authority had to dispose of the land at the best price or on the best terms that could reasonably be obtained, consistently with the conditions upon which the land was to be conveyed in order to achieve their planning purposes under subsections (1) and (2). However, they need not aim to make a profit, since, in certain circumstances, the conditions that they considered it necessary to impose would result in a best price that fell below the compensation they had paid to acquire the land. In such cases, it was sufficient to get the best price that could reasonably be obtained. Similarly, they could properly choose to dispose of the land to a developer that offered a lower price but better “terms” than a rival for carrying out a comparable development. Terms that would produce planning benefits and gains of value to the planning authority could be taken into account, as well as terms resulting in cash benefits. Consequently, a disposal of the land in exchange only for an indemnity did not necessarily fall outside the scope of section 191(3).
The respondent had not discharged the burden of showing that the council had acted unreasonably in the instant case. There was no material before the court that could justify the inference that an indemnity was not the best deal that the council could reasonably have obtained. Nor had it been unreasonable to proceed on the basis that the entire site was to be developed under an agreement with a single developer.
Per curiam: As a general proposition, section 191 did not prevent a planning authority from deciding to contract for the disposal of land that they intended to acquire in the future. Nor would it necessarily be impossible, in such circumstances, for them to satisfactorily decide in advance what would be expedient within subsection (1) or would constitute the best price or terms within subsection (3).
Gerry Moynihan QC and Sarah Wolffe (instructed by the legal department of Edinburgh City Council) appeared for the first appellants; Roy Martin QC and Jacqueline Williamson (instructed by Russell & Aitken, of Edinburgh) appeared for the second appellant; Heriot Currie QC and James Mure (instructed by Semple Fraser LLP, of Edinburgh) appeared for the respondent.
Sally Dobson, barrister
