R (on the application of Daniel Johns Manchester Ltd) v Manchester City Council [2018] EWHC 464 (Admin) concerned land in a regeneration area.
It was owned partly on a freehold basis, and partly on a long leasehold basis, by a developer who obtained planning permission for a multi-storey apartment building and retail development.
The developer also sought, and received, confirmation – albeit “without prejudice and subject to contract” – that the council, as the freehold owner, was prepared to consider the sale of its interest to the developer for £10,000, on completion of the development.
In due course, the developer decided that it needed additional land – for amenities and car parking – to make the development viable. And, when proposals to include part of an adjoining site came to nothing, the developer decided to sell its land to the company, rather than undertake the development itself.
On discovering that the freehold title was split between the developer and the council, the company asked the developer to obtain fresh confirmation that the council was still willing to consider a sale of its freehold.
Following provision of the confirmation requested to the developer (which was, once again, expressed to be “without prejudice and subject to contract”), the company entered into an unconditional contract to buy the land from the developer with the intention of seeking to amend the planning permission during the course of development in order to increase its density and scale.
After discussing the new proposals with the company, the council decided to place the sale of the freehold “on hold”. It hoped to persuade the developer to abandon its plans to try to increase the scale and density of the development (which might cause the development to become mired in a protracted planning dispute) or, alternatively, to include the adjoining site in the development as well.
The company accepted that the council was free to decide whether or not to sell the freehold, but argued that the council should have reached its decision by reference only to legitimate public law considerations.
The council argued that it was acting in its capacity as a private landowner. And, in the absence of fraud, corruption, bad faith or an improper motive (ie the knowing pursuit of an improper purpose), private law challenges to decisions made under and by reference to the terms of a contract are amenable to challenge only where there is a relevant and sufficient nexus between the decision and the grounds of complaint.
Consequently, there was no basis for interfering.
The court agreed. There was no question of fraud, corruption or bad faith.
Furthermore, the judge was satisfied that the council knew that it could not prevent the company from implementing the existing planning permission as it stood, and was not trying to do so.
It remained possible to develop the land in accordance with the original planning permission (although the apartments might be less valuable as a result). And, since it was impossible to impose the full range of public law obligations on the council without a sufficient connection between the existing planning permission and the council’s decision not to sell the freehold, the court refused to interfere.
Allyson Colby is a property law consultant
