Local authority selling land — Claim for rectification of transfer — Whether transfer giving effect to true agreement of parties — Standard of proof — Whether transaction void because sale for less than best consideration reasonably obtainable — Sections 123(2) and 128(2) of Local Government Act 1972 — Claim dismissed
In July 1999, the claimant council and the defendant reached an agreement in principle over the sale of the freehold of a football ground, which was occupied on a 99-year lease by a football club. The eventual contract, and the subsequent transfer of March 2002, provided for payment by the defendant of £10,000, and contained a restrictive covenant limiting the use of the land to the playing of association football by the football club “for the period of ten years from the date hereof”. A supplemental deed, also expressed to be for a term of 10 years, enabled the defendant to require the early modification or release of the covenant upon payment of further consideration “SAVE THAT the Purchaser will not be required to pay further consideration in the event that the Football Club Permanently Relocate”. These provisions meant that any further payment by the defendant would be optional: it could avoid payment by waiting for the 10-year cut-off point, and could obtain modification or release even earlier in the event of the club’s relocation.
The claimants subsequently sought rectification of the transfer and supplemental deed by the elimination of the 10-year cap. They argued that they had executed the two instruments while labouring under an erroneous belief, of which the defendant had been aware, that the instruments gave effect to the parties’ true agreement, which had been contained in the July 2001 accord and which had not provided for a time limit. In the alternative, the claimants sought a declaration that the transfer was void by virtue of section 123(2) of the Local Government Act 1972, on the ground that it constituted a disposal of land, without the consent of the Secretary of State, for a consideration that was less than the best that could reasonably be obtained. On the latter point, the defendant relied upon section 128(2), which provided that the absence of the necessary ministerial consent would not render invalid a purported disposal of land by a local authority “in favour of any person claiming under the authority”.
Held: The claim was dismissed.
1. The civil, and not the criminal, standard of proof applied to all the elements that the claimants were obliged to establish in order to succeed in their claim, although, because the case concerned rectification, the evidential burden was heavy: Atlantic Marine Transport Corporation v Coscol Petroleum Corporation (The Pina) [1991] 1 Lloyd’s Rep 246, Re H (Minors)(Sexual Abuse: Standard of Proof) [1996] AC 563 and Thomas Bates & Son Ltd v Wyndham’s (Lingerie) Ltd [1981] 1 EGLR 91 considered. In this case, rectification of both the contract and the conveyance fell to be considered at the same time: Craddock Bros Ltd v Hunt [1923] 2 Ch 136 applied. The claimants had failed to show that they had intended the contract, the transfer and the deed to carry out, rather than to vary, the terms agreed in principle in July 2001.
2. On the evidence, the consideration that the claimants had achieved on the sale was not the best that could reasonably have been obtained. However, the defendant had been able to rely upon section 128(2). That section laid down no limits as to the circumstances in which “the person claiming under the authority” could rely upon the statutory validation, and it conferred protection even where the local authority themselves were challenging the disposal: R v Pembrokeshire County Council, ex parte Coker [1999] 4 All ER 1007 and R v Hackney London Borough Council, ex parte Structadene Ltd [2001] 2 All ER 225 applied. The defendant was a person claiming under the authority for the purposes of the section.
Grant Crawford (instructed by the solicitor to Barnet London Borough Council) appeared for the claimants; Andrew Hunter (instructed by Clintons) appeared for the defendant.
Sally Dobson, barrister
