Real property – Transfer of land – Local authority – Compensation – Claimant applying for judicial review of direction by defendant secretary of state not to pay compensation on transfer of land to local authority – Whether decision contrary to European Convention rights – Application dismissed
A school had been based on land at Hackford Road in Stockwell, London for many years. The school had taken various forms and title to the site passed from owner to owner without any consideration being paid. In early 2010 the school became a foundation school and the claimant charity was incorporated and became its foundation. The site was transferred to the claimant for no consideration, to be held on trust for the purposes of the school. Leisure facilities and residential accommodation had been constructed on the site and were being rented out on a commercial basis. In late 2010, the school became an academy. The claimant retained title to the site but was required to grant a lease to the trust which operated the academy.
In 2018, the school became a primary school and the site was transferred to the second interested party local authority without payment of any consideration, pursuant to two directions made by the defendant secretary of state under paragraph 15 of part 3 of schedule 1 to the Academies Act 2010. The claimant did not challenge the transfers as such, but it alleged that the decision not to pay compensation in respect of part of the site, referred to as the leisure centre land, was unlawful. It complained of breaches of article 1 of the first protocol to the European Convention on Human Rights (A1P1), article 14 of the Convention and the public sector equality duty (PSED) in section 149 of the Equality Act 2010.
The High Court refused the claimant’s application for permission to apply for judicial review. Permission to appeal was granted. The Court of Appeal determined the matter as an application for judicial review rather than an appeal.
Held: The application was dismissed.
(1) The defendant was amply justified in concluding that no compensation should be paid to the claimant for the leisure centre land. There were exceptional circumstances making it inappropriate for compensation to be payable.
The reality of the situation was that the site, including the leisure centre land, had been held by successive entities for the purposes of the publicly-funded school there. The land had passed from one owner to another with changes in the education system, but always without consideration and without any injection of private capital. The different title-holders could aptly be thought of as custodians. The claimant would receive a windfall from the second direction if it were compensated for the leisure centre land: Vistins v Latvia (Case No 71243/01) (2014) 58 EHRR 4 applied.
(2) A1P1 required deprivations to be “subject to the conditions provided for by law”. Where there was an expropriation the state had to set up a procedure for assessing and determining the payment of compensation. On the face of it, paragraph 15(3)(a) of schedule 1 to the Academies Act 2010 gave the defendant an unfettered discretion to decide what, if any, consideration should be paid, without anything to limit uncertainty, arbitrariness or inconsistency. Moreover, while paragraph 21 of schedule 1 empowered the defendant to make regulations containing incidental, consequential and supplemental provisions, none had been made. Nor had any relevant guidance been issued.
However, the absence of a formal procedure or guidance on the payment of compensation did not give rise to a breach of A1P1 in the present case. The discretion conferred on the defendant by paragraph 15(3)(a) was not in fact unfettered. Exercise of the power was constrained by reference to the purpose for which it had been conferred and other conventional public law principles in accordance with normal duties of fairness, rationality, proportionality and due process, as well as A1P1.
Further, a fair procedure was in fact put in place and the defendant had adopted a procedure ensuring an overall assessment of the consequences of the expropriation; and the claimant had had ample opportunity to advance the arguments it wished and to address points raised by the defendant.
(3) The claimant argued that it had been discriminated against contrary to article 14 of the Convention. It said its situation was analogous to that of a foundation for a foundation school and, had it been a foundation which was disposing of the leisure centre land, it would have received compensation for enhancements to that land under the scheme laid down by schedule 22 to the School Standards and Framework Act 1998. However, a foundation disposing of land under the regime for which schedule 22 provided would have been bound to use such of the publicly funded proceeds of the disposal as were not claimed by the local authority on relevant capital expenditure, ie, capital expenditure in relation to the premises of the school in question or another school, college or academy. In contrast, the claimant wished to be able to apply any compensation for purposes unconnected with the school. Had the claimant been a foundation whose foundation school had been discontinued, paragraph 5 of schedule 22 to the 1998 Act would have been in point and enabled the defendant to make a direction similar to the second direction here. In all the circumstances, there had been no breach of article 14 of the Convention.
(4) The defendant accepted that there had been a breach of the PSED. However. it was highly likely that compliance with the PSED would have made no difference to the decision that the claimant should not be paid compensation. There were very compelling reasons not to award the claimant any compensation and no likelihood of a decision not to do so having significantly adverse equalities implications. When the breach came to light, an equality impact analysis had been conducted. Its conclusions were not such that, had it been known earlier, the defendant would have required the local authority to use scarce public funds to give the charity an unjustified windfall. Accordingly, relief would be denied under section 31(2A) of the Senior Courts Act 1981.
Andrew Sharland QC and Stephen Kosmin (instructed by Lee Bolton Monier-Williams LLP) appeared for the claimant; Jonathan Moffett QC and Matthew Smith (instructed by the Government Legal Department) appeared for the defendant; the first interested party did not appear and was not represented; Jonathan Auburn (instructed by SV Law) appeared for the second interested party.
Eileen O’Grady, barrister
