Housing Act 1957–Purchase by local authority of unfit house not capable of repair at reasonable cost–Abortive proceedings under section 12–Subsequent procedure under section 17(2)–Purpose of section 17(2)–Whether purchase for temporary use pending demolition or closure or as permanent addition to housing stock–Comparison with temporary retention of unfit houses in clearance area–Parliament’s intention temporary postponement of demolition or closing–Acquisition for permanent housing ultra vires–Observations on judge’s discretion under section 20(3)–Appeal from county court judge dismissed
This was an
appeal by Southwark Borough Council from a decision by Judge McDonnell at
Lambeth County Court quashing a notification by the council of their
determination to purchase from Victoria Square Property Co Ltd a house at 37
Landells Road, London SE22. The notice was served by the council on the owners
after the council had decided not to accept an undertaking by the owners under
section 16(4) of the Housing Act 1957. The facts are fully set out in the
judgment of Bridge LJ.
Anthony
Scrivener QC and William Birtles (instructed by J B Parker, deputy town clerk,
Southwark) appeared on behalf of the appellants; Richard Fawls (instructed by
Stafford Clark & Co) represented the respondents.
Giving the
first judgment at the invitation of Megaw J, BRIDGE LJ said that the purchase
notice was served pursuant to sections 17(2) and 19 of the Housing Act 1957.
The owners appealed to the county court under section 20.
Part II of the
Act was headed ‘Provisions for securing the repair, maintenance and sanitary
condition of houses.’ Its main
provisions imposed on a local authority a statutory obligation to deal with
houses in its area found to be unfit for human habitation in one or other of
two ways. Sections 9 to 15, headed ‘Unfit premises capable of repair at
reasonable cost,’ embodied a procedure which might conveniently be called the
rehabilitation procedure, since the object was that houses to which the
procedure was applied should be repaired to the appropriate standard of fitness
for human habitation. Under the alternative procedure of sections 16 to 32,
headed ‘Unfit premises beyond repair at reasonable cost,’ the normal end-result
would be demolition of the unfit houses.
The local
authority served a notice under section 9 requiring the owners to carry out an
extensive schedule of works to the house. The owners appealed on the ground, inter
alia, that the premises were not capable of being rendered fit at
reasonable expense. Her Honour Judge Cooper, in Lambeth County Court, allowed
the appeal and quashed the notice. Though it was not wholly clear, it seemed
probable that her ground for doing so was that the owners had succeeded in
establishing the ground referred to.
The local
authority decided to proceed by way of acquisition under section 12 of the Act,
and themselves to carry out the scheduled works. There being no purchase by
agreement, they made a compulsory purchase order. They then appreciated that
they had not obtained from Judge Cooper an express finding under section 11(3)
that the premises were not capable of being rendered fit for human habitation
at reasonable expense–a finding necessary to support the compulsory purchase
order.
Accordingly,
they sought such an express finding from the county court. This application was
dismissed. It would be quite wrong to criticise the learned judge in any way,
since their Lordships did not know what were the reasons which prompted her to
dismiss the application. But his Lordship felt much sympathy with the local
authority in the difficulties in which this decision placed them. It was from
the frustration of the proposed compulsory purchase order that all the local
authority’s later problems stemmed. Recognising that that order could not now
be confirmed, the local authority withdrew it.
A notice was
served specifying a time and place pursuant to section 16 at which the local
authority would consider the condition of, and any offers with respect to, the
house. This notice was served necessarily on the premise that the local
authority was now satisfied, contrary to its previous view, that the house was
not capable of being rendered fit for human habitation at reasonable expense.
No notice of an intention to carry out works was served on the owners under
section 16(3), but at the specified time and place the owners offered a formal
undertaking pursuant to section 16(4) that the house would not be used for
human habitation until the local authority, being satisfied that it had been
rendered fit for that purpose, cancelled the undertaking. This undertaking was
not accepted by the local authority, who served on the owners a notice under
section 19 of their intention to purchase the house under section 17(2). The
owners appealed against this notice under section 20.
In his
reserved judgment on May 20 1977 Judge McDonnell held that a local authority
was only entitled to purchase property under section 17(2) for the purpose of
using it temporarily pending demolition–not for the purpose of obtaining a
permanent addition to their housing stock.
The first
question for their Lordships was whether this was a correct conclusion. The
primary purpose of section 17(2) was clearly to enable the local authority to
use a house to provide temporary housing accommodation notwithstanding that its
condition fell short of the standard of fitness for human habitation prescribed
by the statute. But was the power limited to cases where the purpose of the
local authority was to use the house only for a limited period and in a
condition affording such a limited standard of accommodation?
To his
Lordship’s mind, the most helpful approach was to compare the provisions of
sections 17 and 29 with the comparable provisions in Part III, dealing with
clearance areas, which also provided for the postponement of clearance and the
use of unfit houses during a period of postponement to provide housing
accommodation. Whereas Part II provided quite different procedures for dealing
with individual unfit houses according to whether they could or could not be
rendered fit for human habitation at a reasonable expense, the clearance area
procedure under Part III ignored that distinction, so that houses were liable
to be demolished or acquired at site value even though they could be rendered
fit for human habitation at a quite modest expense.
Section 48(1)
empowered a local authority by whom an area had been declared to be a clearance
area to postpone, for such period as it might determine, the demolition of any
houses on land purchased by, or belonging to, the authority in that area, being
houses which, in the authority’s opinion, were or could be rendered capable of
providing accommodation of a standard which was adequate for the time being.
Looking at
this provision, and that of subsection (4), in the context of the clearance
area procedure, his Lordship found it clear beyond argument that Parliament
could not possibly have intended section 48 to frustrate the whole procedure
and enable the local authority to go back on its own declared belief, which was
the starting point, that the most satisfactory method of dealing with the
conditions in the area was to demolish all the buildings, by empowering the
authority, after acquisition, to carry out works to restore the houses to a
state of fitness for human habitation, to add them to their housing stock, and
thus to obviate the necessity for demolition.
His Lordship
would therefore give a strictly limited construction to these provisions. He
asked himself whether there could be any justification for giving a different
and wider construction to the corresponding provisions in Part II of sections
17(2) and 29. The correspondences of language between the two sets of
provisions were, in his Lordship’s judgment, too numerous and too striking to
admit of different interpretations being applied to them. The only difference
in the language was the reference in section 48(4) to ‘houses retained by a
local authority under this section for temporary use for housing
purposes.’ But this did no more than
make explicit what was already clearly implicit in the language of section
48(1). His Lordship could not believe that this express reference to temporary
use was intended to introduce into section 48 a limitation on the local
authority’s powers to which they would not otherwise be subject.
If section 17
were not given a limited construction, an anomaly would arise from the
continued exclusion of the statutory implied conditions of fitness for human
habitation from lettings of houses after they had been restored to a condition
of fitness. If Parliament had ever contemplated that houses acquired under
section 17(2) might be so restored, his Lordship would expect to find a
provision in section 29 that the exclusion of section 6 of the Act should cease
to operate after such a restoration.
A more
important point is that if section 17(2) were given this limited construction
it could still fit aptly into the general scheme of Part II, and would in no
way inhibit a local authority from achieving its proper purposes if it operated
the statutory machinery sensibly and correctly.
His Lordship
thought the learned county court judge reached a correct conclusion on the
construction of the statute, and that the proposed acquisition was ultra
vires. He would dismiss the appeal on this ground.
He would also
dismiss it on the ground that, even if the judge were wrong in his decision on
the question of vires, his decision on the merits to allow the owners’
appeal and accept their undertaking under section 16(4), and allow their appeal
against the purchase notice on that ground, could in no way be impugned. A
judge’s discretionary decision could be attacked only if shown to be erroneous
in point of law.
The following
figures were agreed:
|
Present |
£1,000-£1,500 |
|
Site value |
£700-£1,000 |
|
Value with |
£5,500-£6,000 |
|
Cost of |
£4,000 |
|
Value with |
£10,500-£11,000 |
In deciding whether or not it was just to exercise a compulsory
power of expropriation, the financial implications of the decision for the
property owner must always be relevant. What weight should be given to such
implications in any particular case was another matter. In some cases they
might be decisive, in others negligible.
Mr Scrivener
had contended that the judge failed to take into account relevant matters and
that his decision was so unreasonable that the court should reverse it. His
main argument on this part of the case was that, in regarding the financial
detriment to the owners, the judge was taking account of an irrelevant matter.
The acceptance of the owners’ undertaking under section 16(4) enabled them to
evict their sitting tenant, whom the local authority were then obliged to
rehouse. The large financial gain which this brought to the owners was an
adventitious consequence of the fact that the house had been allowed to fall
into disrepair. As an argument on the merits, this had much force; but as an
argument to impugn the judge’s decision as erroneous in law it was fallacious,
because it confused relevance with weight.
Agreeing,
WALLER LJ said he would add a few words as to the exercise of the discretion.
Clearly the judge had a complete discretion to balance the housing needs of the
inhabitants on the one hand with justice to the person having control of the
house on the other.
Where a local
authority made a demolition or closing order, section 30 enabled any person who
could show the local authority that the house had been well maintained, wholly
or partly in consequence of work carried out by him or at his expense, to get a
well-maintained grant in addition to site value. The local authority no doubt
would have to consider whether it was just that another house-owner whose house
was in bad repair and not fit for human habitation and who would not qualify
for a well-maintained grant should, nevertheless, because of the action of the
local authority itself, be able to get vacant possession of the house and by
that action, and because of the very poor condition of the house, possibly
obtain (as in this case) five times the site value by selling the house. On the
other hand, there may be counterbalancing advantages to be taken into account,
such as the probable condition of the house if improved by a private developer,
or the possibility that private funds would complete the improvements and
therefore the cost would not be a burden on the ratepayers. No doubt the county
court judge on appeal would have similar considerations in mind when exercising
his discretion.
Even if the
council had succeeded on the main question of whether they had power to
purchase the house, his Lordship would have been in favour of dismissing the
appeal because the arguments for the local authority would not have persuaded
him that the judge exercised his discretion on wrong principles or took into
account irrelevant matters.
MEGAW LJ
agreed with Bridge LJ on the first issue, as to the extent of the local
authority’s power under section 17(2).
He would have
felt concern at the consequences of that conclusion in limiting the scope of a
housing authority’s powers, if he had thought that section 12 had not been
available to the authority enabling them to purchase the property compulsorily,
subject to ministerial approval. However, even if he were wrong as to the
availability of section 12, he would have thought it a matter for the
legislature to consider and, if as a matter of policy it was thought right, to
amend the Act.
The Court of
Appeal had jurisdiction, under section 108 of the County Courts Act 1959, to
consider an appeal on a point of law. An exercise of a discretion by the judge
of a county court would involve a point of law if it had been exercised on a
wrong principle, ie if he had taken into account some matter as being material
which he ought not to have taken into account, or vice versa, or if the
exercise of his discretion was so unreasonable that it could be explained only
on the basis of error in principle. The jurisdiction of the Court of Appeal in
such a case was thus much less extensive than that of the county court, when
dealing with the first appeal to the courts, under section 20(3) of the Housing
Act 1957.
While his
Lordship doubted whether, on the hypothesis that his view on the first issue
was wrong, he should himself have thought it right on the material before the
trial judge to have exercised the discretion in the way it was exercised by the
judge, he was unable to hold that there had been shown to have been an error in
point of law.
The appeal
was dismissed with costs. Leave to appeal to the House of Lords was refused.
