Urban development corporation — Regeneration of designated area — Dissolution — Agreement transferring UDC undertaking and revoking functions — Whether agreement lawful — Claim allowed
Under sections 134 and 135 of the Local Government, Planning and Land Act 1980, the claimant was empowered to designate any area of land as an urban development area and, for the purpose of regenerating that area, to establish an urban development corporation (UDC). Section 136 of the 1980 Act conferred wide powers on UDCs for the purposes securing the regeneration of its area.
The claimant brought proceedings for declarations relating to the legality of an agreement between the first defendant council and a UDC, Cardiff Bay Development Corporation (CBDC), pursuant to section 165 of the Act, whereby the undertaking of CBDC was transferred to the first defendants. The agreement was subject to a condition subsequent that CBDC’s rights and liabilities under the agreement would be transferred to the claimant by virtue of section 165A. However, the transfer was limited in time and the agreement provided that either party could call for the onward transfer to unidentified third parties under certain specified circumstances.
The purpose of the claim was to determine, in the light of sections 136, 165, 165A and 165B of the Act, the lawfulness of the arrangements under which the first defendants managed the urban development area.
The issues for the court were whether: (i) the powers of acquisition and disposal under section 136 were sufficiently wide to embrace the agreement purportedly made under section 165; (ii) under sections 136 and 165, CBDC could lawfully agree to transfer the undertaking to a local authority for a limited period only; and (iii) under sections 136 or 165A, the claimant could lawfully acquire, in succession to CBDC, its right to receive the undertaking or to nominate a third-party transferee.
Held: The claim was allowed.
(1) The agreement could not reasonably be treated as either a purported or actual exercise of section 136, which could not save a transfer that had not been lawfully achieved by an agreement under section 165. A UDC might enjoy a power of transfer or disposal under either section, but the critical distinction was the reference in section 165 to “transfer” of “the whole or any part of the undertaking”. This case involved such a transfer or attempted transfer and, regardless of section 136, was not “incidental to the purposes of” the regeneration.
(2) Section 165 did not prohibit transfer of the undertaking for a limited period. The primary purpose of the section was to protect the undertaking when the UDC’s task of regeneration had been completed. That might be achieved by a single transfer to a body that was intended to manage the undertaking in perpetuity followed by the dissolution of the UDC. However, section 165 did not prohibit the more tentative and cautious approach by which the transferee’s ability to manage the undertaking would be tested by a temporary or conditional transfer.
(3) Property, rights and liabilities under a section 165 agreement could be transferred lawfully under section 165A, even though its effect was to bestow upon the claimant a right of transfer it did not enjoy independently under section 165. Read together, section 165, 165A and 165B required the transfer of the outstanding rights and liabilities under the section 165 agreement either to a statutory body approved by the claimant or to the claimant itself. The claimant, in contemplation of the dissolution of CBDC, was entitled to stand in its shoes, for the purpose of exercising its rights and of meeting its liabilities under the agreement.
David Lloyd Jones QC and Clive Lewis (instructed by the legal department of the National Assembly for Wales) appeared for the claimant; Richard Gordon QC and Martin Chamberlain (instructed by the legal department of the Cardiff City Council) appeared for the first defendants. Charles Parsley (instructed by Nicholas Neal, executive director of the Land Development & Legal Services department of the Welsh Development Agency) appeared for the second defendant
Eileen O’Grady, barrister
