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OUTER HOUSE, COURT OF SESSION
[2006] CSOH 188
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P1273/06
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OPINION OF LORD HODGE
in the cause
JOHN FINDLAY
(as executor of the
late
Robert Findlay)
Petitioner;
in
Petition for
Judicial Review
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Petitioner: Sir Crispin Agnew Q.C., Carmichael, Advocate;
Morton Fraser LLP
Respondents: Mrs. S.P.L. Wolffe, Advocate; Simpson &
Marwick WS
6 December 2006
[1] The
petitioner is the son and surviving executor of the late Robert Findlay ("Mr
Findlay"), who was the owner of Redhouse Farm, Blackburn. In 1967 Mr Findlay sold a field of about
14 acres to West Lothian County Council, which acquired the land for
development under threat of compulsory purchase in terms of section 37 of Town
and Country Planning (Scotland)
Act 1947. When in 2002 the land was
recognised as being surplus to requirements, the statutory successors to
West Lothian County Council, namely West Lothian Council ("the
respondents"), resolved to sell the field and advertised it on the open
market. At that time the northern part
of the field was allocated for housing in both the relevant Structure Plan and
Local Plan and the field was advertised for sale at offers over г950,000. Mr Findlay's executors raised an
application for judicial review which was settled when respondents by letter
dated 19 November 2002
undertook to dispose of the field "in accordance with the Crichel Down
Rules". In December 2004 the respondents
initiated a process to give the executors the opportunity to repurchase the
land in accordance with the Crichel Down procedures set out in Scottish
Executive circular 38/1992 ("the Crichel Down circular"). This judicial review arises from decisions
taken by the respondents in this context.
[2] The
judicial review application challenges two decisions of the respondents taken
in December 2005 and March 2006 respectively.
The first decision was to impose as a condition of an offer to extend
the timescale in which the sale could be completed that the respondents would
review the price agreed in April 2005.
The second decision, which the executors challenged if the first
decision was valid, was the respondents' stipulation of a price at which the
field would be sold without giving the executors any opportunity to negotiate
on the price.
[3] This
judicial review application raises two main issues. The first is the way in
which the Crichel Down circular should be interpreted. The second is the relationship of the
obligations arising as a result of the respondents' undertaking to operate the
procedures in the circular with their statutory duty, under section 74(2) of
the Local Government (Scotland)
Act 1973, not to dispose of land for a consideration less than the best that
can reasonably be obtained.
The
Crichel Down circular
[4] The
procedures, so far as relevant, are set out in paragraph 18 of the
Crichel Down circular. First, the
public authority invites the former owner to buy the land at a valuation made
by the authority's professionally qualified, appointed valuer and the former
owner then has two months in which to indicate his intention to purchase (stage
1). Thereafter parties have two months
to agree terms other than value (stage 2).
After those terms are agreed parties have six weeks to negotiate the
price (stage 3). Paragraph 18 also
provides: "If the price or other terms cannot be agreed within these periods,
or within such extended periods as may reasonably be allowed (e.g. to negotiate
appropriate clawback provisions), the property will be disposed of on the open
market". Paragraph 24 of the Crichel
Down circular provides that disposals to former owners under these arrangements
will be at current market value.
[5] There
was no dispute as to the policy behind the Crichel Down circular. Bingham LJ in
R v Commissioner for the New Towns ex parte Tomkins [1989] 58
P & C R 57, 65-66 stated:
"the guidelines
reflect another policy objective also: that the former owners of land which had
earlier been compulsorily purchased for purposes of ... development and is now
not needed for that purpose should ordinarily be given the first opportunity to
buy back what had been their land at its full current open market value, taking
account of development prospects.
The public
interest underlying this policy is obvious also. When land is compulsorily purchased the
coercive power of the state is used to deprive a citizen of his property
against his will. He is obliged to take
its assessed value whether he wants to or not.
This exercise is justified by the public intention to develop the land
in the wider interests of the community of which the citizen is part. If, however, that intention is not for any
reason fulfilled, and the land becomes available for disposal, common fairness
demands that the former owner should have a preferential claim to buy back the
land which he had been compelled to sell, provided he is able and willing to
pay the full market price at the time of re-purchase, that price reflecting the
development potential of the land."
Factual
Background
[6] After
the settlement of the first judicial review application in November 2002, there
appears to have been a hiatus until 22
December 2004 when the respondents sent the executors an invitation
to purchase and heads of terms which included a proposed price of г2,000,000
and stated that the date of entry was to be mutually agreed. The letter referred to the timescales in the
Crichel Down circular and warned that failure to comply with those timescales
could lead to the offer being withdrawn and the land being disposed of on the
open market. The letter also stated that
it was not intended to form part of a legally binding contract and that formal
missives would be required. By letter
dated 13 January 2005 the
executors stated their intention to purchase the field, but did not agree to
the terms proposed. On 24 January 2005 the respondents
confirmed that the price stated in the heads of terms was current market value
determined by their appointed valuer and that price took account of the terms
of the detailed planning brief for the site which had been prepared in 2002 and
current land values in the area. The
respondents also reminded the executors of the terms of paragraph 18 of Crichel
Down circular which provided for disposal of the land on the open market if
parties did not reach agreement on the price within the stipulated
timescale. In response to a request by
the executors' solicitors, the respondents sent them the planning brief on 1 February
2005. The planning brief stated:
"It is believed
that all services are available close to the site. Drainage pipes appear to be present running
parallel to, and just within, the eastern boundary of the site. ... Developers
must contact service providers and SEPA directly for their specific
requirements. ... Interested parties must satisfy themselves on
all matters relating to ground conditions and services."
Sir Crispin Agnew QC accepted on
behalf of the petitioner that the agreement which I mention in the following
paragraph was reached on the basis that it was for the executors to satisfy
themselves as to these matters.
[7] In
an undated letter, which was probably sent in February 2005, the respondents
sent the executors' solicitors expanded heads of terms. The significant change in the heads of terms
was that the respondents now stipulated that the date of entry was 30 September
2005. The heads of terms also stated
that the sale of the field was to be on the basis of unconditional missives, other
than in relation to standard title matters. There was a flurry of activity in late April
2005 as the stage 3 deadline under the Crichel Down procedure approached and on
22 April agreement was reached between the respondents and surveyors on behalf
of the executors that the purchase price was to be г1,820,000. I was informed that the reduction in price
resulted from an agreement that the developable area of the field was less than
had originally been thought and that the price per developable acre was not
altered. The respondents confirmed the
agreement as to price by letter dated 27
April 2005 and enclosed expanded heads of terms, which the
executors' solicitors accepted by letter dated 17 May 2005.
In those heads of terms the date of entry was stated to be 30 September
2005. Thereafter it appears that the
executors and the developers, with whom they were negotiating a back-to-back
agreement, investigated the site and there were some discussions between the
executors' solicitors and the respondents as to the terms of the missives.
[8] A
problem emerged for the executors on 7
September 2005 when, in response to an inquiry on 19 August 2005, Scottish Water wrote
to the developers' engineers stating that the existing waste water
infrastructure in the Blackburn area had insufficient
capacity to accommodate the additional demands from their proposed
development. Scottish Water stated that
they would object to the development unless the developers promoted a
satisfactory waste water scheme and were prepared to meet the costs of that
scheme. Scottish Water also stated that
they could only determine the impact of the proposed development if they
undertook a drainage impact assessment and that if the developers instructed
them to carry out such an assessment they would be expected to meet the
cost. Faced with this difficulty, the
developers asked the respondents to extend the "long-stop date" (i.e. the date
of entry) from 30 September 2005. The
respondents by letter dated 15 September 2005 declined to do so, stating that
they had adhered to the requirements of the Crichel Down rules. But, after further representations by the
executors' solicitors, the respondents by letter dated 30 September 2005 agreed a revised
"long-stop date" of 31 December 2005.
In that letter the respondents stated
"settlement must take place within this period". The respondents also suggested that it would
be possible to conclude missives in early course and confirmed that the
purchase price would not be adjusted "given the agreed terms negotiated
previously".
[9] This
extension of time did not resolve the executors' problems. On 22 December
2005 the solicitors acting for the executors wrote to the
respondents intimating that Scottish Water had not yet confirmed that they had
adequate drainage capacity to accommodate the proposed development of the
field. They explained that the
developers had funding which would be available only when Scottish Water gave
that confirmation. The executors'
solicitors therefore asked the respondents further to extend the "long-stop
date" until Scottish Water had made available a proper assessment of the
drainage capacity and to allow the executors to use all reasonable endeavours
to settle within 20 days after receipt of that assessment.
[10] The respondents replied by letter dated 23 December 2005. As the letter contains one of the decisions
which the petitioner challenges in this judicial review application, I quote
the material parts of the letter. In it
the respondents' solicitor stated:
"I have been
instructed by my client Service, Property Management, to advise you that they
are prepared to extend the long-stop date until 31st March 2006 but
on the strict understanding that you will confirm in writing that you accept
and will respond with expediency [sic] to the following:
1.
The Council reserves the right to review the purchase
price.
2.
You will provide copies of all correspondence and
documentation to date between your client and/or Boyack Holmes and Scottish
Water as well as copies of any future correspondence between these
parties. The purpose of this proviso
being that the Council need confirmation that everything possible has been and
is being done to resolve the Scottish Water issue.
3.
You will provide confirmation that the sale to Mr
Findlay is not conditional upon Boyack Homes (or any other developer) securing
permission for their proposed development of this site."
[11] The executors' solicitor, having responded by telephone on 23 December 2005, also responded by
letter dated 4 January 2006. In reply to the respondents' first condition
in their letter of 23 December, he stated:
"The Council's
position is noted. I take it that in
considering any review of the purchase price regard would have to be had to the
timescale with[in] which we are able to settle the transaction and also if the
Scottish Water Assessment discloses some major problem that is something which
the Council may have to take into account."
[12] On 19 January 2006 the executors' solicitors sent the
respondents correspondence between the developers and Scottish Water, which
revealed discussions about the cost of the assessment and the developers'
eventual instruction of and payment of over г15,000 for the drainage impact
assessment on 26 October 2005. The
executors' solicitors also wrote to the respondents on 23 January 2006 about the conveyancing of the
site. On completion of the drainage
impact assessment, Scottish Water wrote to the engineers for the developers,
intimating that they considered the modelled development flows were
acceptable. The executors' solicitors
telephoned this good news to the respondents on 3 February and wrote to them on
6 February stating that they were in a position to proceed towards settlement
of the transaction.
[13] On 3 March 2006
the executors' solicitors wrote expressing concern about the respondents' delay
in following up their requests in relation to the conveyancing of the
field. By fax dated 6 March the
respondents stated (among other things) that they were seeking to increase the
price to reflect current values. This
drew a swift response from the executors' solicitors who in a letter and fax
dated 7 March expressed disappointment at the proposal to increase the price,
suggesting that that would cause further delay and that the value of development
land had not increased materially. The
respondents' valuer replied by letter dated 10 March 2006 stating that they
were not willing to reconsider their decision to reassess the price. He pointed out that the valuation had been
agreed in April 2005 and that having considered recent evidence of movement in
the market he assessed the current value as г2,388,000. He intimated that he had instructed the
respondents' solicitor to conclude the transaction on those terms. This is the second decision which the
petitioner challenges in this judicial review.
[14] The executors' solicitors replied by letter of 14 March 2006 to the respondents'
valuer, protesting that an uplift of г568,000 (or 31.21%) was unreasonable and
unacceptable. They wrote on the
following day to the respondents' solicitor and for the first time challenged
the legal basis on which the respondents sought to increase the price. In short they asserted that there had been an
agreed price and that there was no mechanism in the Crichel Down rules by which
that price could be reviewed. The
correspondence between the parties then moved to its close with the
respondents' valuer, on 23 March 2006, rejecting an offer by the executors to
pay interest on the earlier agreed price from 31 December 2005 and then on 18
April the executors' solicitors writing to confirm that the executors would
seek a judicial review of the respondents' decision. On 25
April 2006 the respondents' solicitor wrote to the executors'
solicitors in the following terms:
"It is the
Council's view that the Crichel Down Rules have been exhausted in terms of the
Scottish Executive Circular 39/1992 and on the basis that there has been
failure to agree the purchase price.
The Council
reserved the right to review the purchase price and put in place the long-stop
date of 31st March 2006 in my letter to you dated 4 January 2006 and
thereafter increased the price in terms of the letter by Scott Hughes [the
respondents' valuer] to you dated 10 March 2006. You advised your clients did not accept the
revised price in your letter of 15
March 2006.
My instructions
are that the Council is now considering marketing the site for sale."
The parties never concluded
missives for the re-purchase of the field.
Parties'
submissions
[15] Sir Crispin Agnew QC for the petitioner advanced four principal
submissions. First, he submitted that
the Crichel Down rules did not envisage an agreed price being unilaterally
changed. Thus the respondents had acted ultra vires in imposing a condition for
the review of the price when granting an extension of the long-stop date on 23
December 2005. In the course of the
debate he revised the formulation of this submission, acknowledging that it was
not a matter of ultra vires but a
breach of the petitioner's legitimate expectations arising out of the
respondents' undertaking to comply with the Crichel Down rules. He referred to R (Bibi) v Newham London
Borough Council [2002] 1 WLR 237. In
support of his submission that the date of valuation envisaged in the Crichel
Down rules was either the date when the former owner stated his intention to
re-purchase or, in this case, the date when the price was agreed in April 2005,
he referred to R v Commissioner for the New Towns ex p Tomkins
(above), Manchester City Council v Secretary of State for the Environment (1987)
54 P & C R 212 and Stannifer
Developments Ltd v Glasgow
Development Agency 1998 SCLR 870 and 1999 SC 156. He also referred to the English Crichel Down
rules (circular 06/2004), in which in the Annex giving guidance to Government
departments it is suggested (at p.120) that current market value means the
market value at the date of receipt by the disposing department of the former
owner's intimation of intention to purchase.
The respondents had acted on a misconception of their statutory duty to
achieve the best consideration that could reasonably be obtained. They had fulfilled that duty in agreeing the
price in April 2005 and were under no continuing duty thereafter.
[16] Secondly, he submitted that if the respondents were entitled to
bring the re‑purchase negotiations to an end in December 2005, they
required to give reasonable notice of their intention to do so, by giving an
ultimatum such as was sanctioned in the law of contract in Rodger (Builders) Ltd v
Fawdry 1950 SC 483. He referred also
to Burns v Garscadden (1901) 8 SLT 321.
The respondents had not done so, depriving the executors of an
opportunity to complete the transaction.
[17] If, contrary to his first submission, the respondents were empowered
to review the price, he submitted, thirdly, that they acted unlawfully in
imposing an increased price unilaterally and in failing to give the executors,
who had been advised that the market had not moved to the extent that the
respondents claimed, an opportunity to negotiate the price. This was envisaged in the Crichel Down rules,
which the respondents purported to follow until their letter of 25 April 2006.
In any event they purported to reserve the right to review the price and it was
implicit in the word "review" that they would negotiate the price with the
executors. Finally he submitted that it
was unfair and Wednesbury unreasonable
for the respondents to impose such a price increase on a take it or leave it
basis. It was unfair in the context that
the executors had not been given the opportunity, by means of an ultimatum, to
complete the transaction in December 2005 at the April 2005 price. It was also
unfair because, if the executors did not take the field at the revised price,
the respondents would gain the benefit of the drainage impact assessment for
which the developers had paid.
[18] Sir Crispin invited me to reduce the decision of December 2005
to review the price and the decision of March 2006 to increase the price. He submitted that the court should order the
respondents to complete the conveyance of the land at the April 2005 price
within a reasonable period which the court should fix. In any event, if the respondents were
entitled to review the price after 31 December 2005, he submitted that the
court should order them to negotiate a price for the land with a valuation date
of 1 January 2006, which he submitted was when the executors had been in a
position to settle the transaction.
[19] Mrs Wolffe for the respondents invited me to dismiss the
petition. She advanced five principal submissions. First, she submitted that the Crichel Down
rules were merely guidance as to government policy; they were commended to but
were not of themselves binding on local authorities. They were open to a range of possible
interpretations and the court should not interfere with the respondents'
actings unless their interpretation was outside that range. She referred to R v Secretary of State for
Defence ex parte Wilkins [2000] 40 EG 180.
The petitioner's argument that the Crichel Down rules were exhaustive
was misconceived. If it were correct, it
would undermine the petitioner's case as the rules contain no power to extend
the long-stop date once the terms of the re-purchase have been agreed. Properly construed, the rules were silent on
many matters and that did not mean that those things were not permitted.
[20] Secondly, she submitted that what the Crichel Down rules
offered was the first opportunity to purchase.
She accepted that it had to be a real opportunity but the time limits on
reaching agreement were set out in paragraph 18 of the rules. The respondents had a statutory duty to
obtain the best consideration and could not be held indefinitely to a price
which with the passage of time had become less than the current market
value. She referred to Buttle v Saunders [1950] 2 All ER 193, R
v Lancashire County Council ex p
Telegraph Service Stations Ltd (unreported, McCowan J 20 June 1988), R v
Commission for the New Towns ex p Tomkins (above), R v Secretary of State for
Defence ex p Wilkins (above), J D P
Investments v Strathclyde Regional
Council 1997 SLT 408 and Morston
Assets Ltd v City of Edinburgh
Council 2001 SLT 613. She submitted
that the Crichel Down rules should be interpreted in the context of the
respondents' statutory duties and that those duties could trump any obligation
under the rules.
[21] In relation to the valuation date she submitted, thirdly, that
the petitioner's reliance on the guidance to government departments in the Annex
to the English Crichel Down rules did not support the view that the date at
which land was to be valued was immutable.
It was merely guidance on guidance.
In this case parties had valued the field as at April 2005. Even if there was an understanding as to the
appropriate valuation date, that did not mean that the value could not be
reviewed if the passage of time rendered the earlier valuation outdated.
[22] Fourthly, while accepting that the respondents' undertaking to
dispose of the field in accordance with the Crichel Down rules had given rise
to legitimate expectations, she submitted that the court required to consider
precisely what those expectations amounted to: R (Bibi) v Newham London
Borough Council (above). At the
outset that expectation was that the respondents would act in accordance with
the Crichel Down rules in a way which was consistent with their statutory duty
to obtain the best consideration for the land.
By 22 December 2005, the respondents had complied with the Crichel Down
rules and that procedure had been exhausted; there was no legitimate
expectation of any postponement of the date of settlement. There was no obligation on the respondents to
give a further ultimatum before taking the field to the open market. The rule in Rodger (Builders) Ltd v
Fawdry (above) was a rule of the law of contract and was not relevant to
administrative law. In the present case
there were no concluded missives and the executors could at any stage have
walked away from the deal. In any event,
the respondents' letter of 30
September 2005 was an ultimatum making time of the essence. The respondents decided to increase the price
in order to reflect current market values in March 2006 and thereby comply with
their statutory duty. In so doing they
considered that they were acting in accordance with the Crichel Down
rules. The executors could have no
legitimate expectation that the respondents would act in a way that was ultra vires: Ali Fayed v Advocate General
2004 SLT 798.
[23] Finally, Mrs Wolffe submitted that there had been no unfairness
in the way in which the respondents had acted.
The initial judicial review in 2002 and the passage of time until
December 2004 caused no unfairness as at all times the executors were entitled
to re-purchase the field only at current market value and would have sold on in
that market. The respondents did not
gain from the developers' expenditure on the drainage impact assessment as the planning brief required any
purchaser to satisfy himself on that matter.
The respondents had given the executors between January and December
2005 to negotiate binding missives and the executors could have acted more
promptly. As a fall back she submitted
that if the respondents were held to have been Wednesbury unreasonable in seeking to revalue the field, the court
should withhold any remedy; if the executors' solicitor had demurred to the
respondents' reservation of the right to review the price as a condition for
granting the extension of time from 31 December 2005, the respondents would
simply have refused to grant an extension.
She referred to King v East Ayrshire Council 1998 SC 182.
Decision
[24] As the petitioner's challenge is based principally on the
assertion of the frustration of a legitimate expectation, it is appropriate to
start by considering the nature of the asserted expectation. I was referred to the judgment of the Court
of Appeal in R (Bibi) v Newham London Borough Council (above)
in which (at paragraph 19) Schiemann LJ stated:
"In all
legitimate expectation cases, whether substantive or procedural, three
practical questions arise. The first
question is to what has the public authority, whether by practice or by
promise, committed itself; the second is whether the authority has acted or
proposes to act unlawfully in relation to its commitment; the third is what the
court should do."
Taking that first question, I am
satisfied that the undertaking which the respondents gave in their letter of 19
November 2002, in which they promised to dispose of the field in accordance
with the Crichel Down rules, committed them to complying with those rules in
giving the executors an opportunity to re-purchase the late Mr Findlay's
field. The undertaking was clear and
unambiguous. Using the terminology of
Lord Woolf in R v North and East Devon Health Authority ex p
Coughlan [2001] QB 213 CA, which Mrs Wolffe produced in her bundle of
authorities, I consider that the undertaking gave rise to both procedural and
substantive legitimate expectations. The
expectation was procedural in so far as the undertaking was to comply with
those rules in disposing of the field; it was substantive in that the
respondents undertook to give the executors an opportunity to re-purchase.
[25] As there was a legitimate expectation of a substantive benefit,
the relevant issues are (i) whether by their acts or omissions the respondents
frustrated that expectation and (ii) if so, whether the frustration of the
expectation was so unfair as to amount to an abuse of power. See ex
parte Coughlan (above) in which Lord Woolf discusses, among others, the
Revenue cases, In re Preston [1985] AC 835 and R v IRC ex p MFK Underwriting Agents Ltd [1990] 1 WLR 1545. In assessing whether there has been an abuse
of power, it is necessary for the court to consider the legitimate expectation
in the statutory context in which the public authority was operating and to ask
whether there is any overriding public interest which justified its
dishonouring the undertaking and thus frustrating the expectation. It is clear that that the executors could
have no legitimate expectation that the respondents would be held bound in
fairness by their undertaking if the undertaking was or had become inconsistent
with their statutory duties - see Ali
Fayed v Attorney General (above),
Lord President Cullen at paragraphs 118-119, and R v Devon County Council ex p
Baker [1995] 1 All ER 73, Simon Brown J at 88-89, whom Lord Woolf cited
with approval in ex parte Coughlan (above)
at paragraph 73.
[26] In addressing what was the content of the legitimate
expectation, I turn therefore to the disputed issue of how the Crichel Down
rules should be interpreted and what they required the respondents to do. In this case, because of the undertaking, it
is immaterial that, as Mrs Wolffe submitted, the rules of themselves are not
binding on the respondents because they are a statement of policy in relation
to surplus government land and are only commended to local authorities for
application where appropriate. Nonetheless
their status as a statement of policy is material to the correct approach to
their interpretation.
[27] As mentioned in paragraph 19 above, Mrs Wolffe referred me to R v
Secretary of State for Defence ex parte Wilkins and in particular to an obiter dictum by Moses J at p.182 in
which he referred to R v Monopolies and Mergers Commission ex parte
South Yorkshire Transport [1993] 1 WLR 23 in support of the view that there
might be a range of interpretations which a decision maker might properly
adopt. I did not derive much help from
this passage in which Moses J recorded a party's submission and accepted it
only as a fallback. But it is a succinct
statement of an approach to the interpretation of the Crichel Down rules and
there are other cases which bear on the correct approach for the courts to take
in relation to the interpretation by public authorities of policy
documents. I invited counsel to comment
on the Scottish case, Freeport Leisure
plc v West Lothian Council 1999
SC 215 and the following English cases: Northavon
District Council v Secretary of State
for the Environment [1993] JPL 761, Virgin
Cinema Properties Ltd v Secretary of
State for the Environment [1998] 2 PLR 24, R v Derbyshire County
Council ex p Woods [1998] Env LR 277 and R v The Secretary of State
for the Environment, Transport and the Regions and Kettering Borough Council ex
parte Tesco Stores Ltd [2001] JPL 686.
[28] Counsel did not take issue with the approach taken in these
cases. Mrs Wolffe submitted that they
supported her submissions. Sir Crispin
Agnew accepted the approach in these cases in relation to policy documents
which contained broad statements of policy.
But he submitted that the cases were of only limited relevance in
relation to the Crichel Down rules in a context where a public authority had
undertaken to dispose of the property in accordance with those rules. Further, while there were paragraphs in the
Crichel Down rules which contained broad statements of policy to which the
decision maker could give a range of interpretations, paragraph 18 was prescriptive
and was not open to a range of meanings.
He submitted that the Crichel Down rules contained legal rules. Once a price had been agreed, there was no
mechanism by which the public authority could, while operating within the
rules, impose a different price on the would-be purchaser.
[29] In my opinion there is a distinction to be drawn between the
interpretation of documents which have the force of law, such as legislative
texts, or which confer legal rights and obligations, such as contracts, on the
one hand and documents that are statements of policy on the other. The task of interpreting the first class of
documents is that of giving a legal meaning to the words used. Different legal documents may be interpreted
using different methods, but the task is the same. In an Act of Parliament or in subordinate
legislation every sentence has the force of a law or part of the law. Contracts are drafted with varying degrees of
skill and formality but their drafters intend to confer legal rights or impose
legal obligations by the words which they use.
The courts will try to give an objective meaning to the words of a
contract, but, if they cannot, those words or the contract as a whole may be
unenforceable from uncertainty (see, for example, May & Butcher Ltd v The
King [1932] 2 KB 17). An opinion or judgment of a court of law
will be interpreted in a different way because, unlike a statute, not every
sentence that a judge writes has the force of law. It is the ratio
of the decision that may contain the law that binds an inferior court. But again the interpretative exercise for the
court is ascertaining the legal meaning of the words used. In each of these cases the interpretation of
the words is a question of law.
[30] Statements of policy, such as national planning guidelines or
the Crichel Down rules, are not as a general rule intended to have legal
effect. The meaning to be given to such
documents is a question of fact, so long as the decision-maker gives the words
a meaning that is not perverse or irrational.
As a result, misinterpretation of such documents does not of itself necessarily
entail an error of law (Freeport Leisure
Ltd (above) at 221H).
[31] The court will interfere with a decision based on the
decision-maker's interpretation of the relevant wording of such a document only
if he has given the words a meaning which they could not properly have or has
restricted their meaning in a way which the breadth of their terms could not
justify (Northavon District Council (above)
at 763-764). The court has first to
determine as a matter of law what the words are capable of meaning. In many cases, some understanding of the
thought and purposes behind the policies will be needed in order to determine
the scope of the words used in the policy document. Particularly where a policy document uses
open textured criteria which require the decision maker to make a qualitative
judgement, regard must be had to the policy context as well as the ordinary and
natural meaning of the words used. If
the words are capable of bearing more than one meaning, the court will then
consider whether the interpretation which the decision-maker has adopted is
within the range of meanings which the words are capable of bearing. Only if the decision-maker's interpretation
is outside that range or is otherwise perverse or Wednesbury unreasonable (for example because it is unduly
restrictive having regard to the breadth of the words used) does the court have
grounds to interfere with the decision, as only then has there been an error of
law. See R v Derbyshire County Council
ex p Woods (above) Brooke LJ at 290-291; ex parte Tesco Stores Ltd (above) Keene J at 692.
[32] Interpretation of policy documents is primarily a matter for
the decision-maker and not the court because in most cases it is not a question
of law. This is principally because of
the nature of the document, which does not of itself have legal effect. While judges sometimes speak of exercising
self-restraint in respect of such documents, it appears to me to be a question
of the limits of the court's jurisdiction.
[33] Interpretation of policy documents is primarily a matter for
the decision-maker also because of the broad texture of the words which
policy-makers often use in such documents.
But there is no complete dichotomy of approach between documents which
of themselves have legal effect and policy documents which do not. In some cases, statutory criteria are so
imprecisely worded that there is a range of conclusions which a decision-maker
can reach in applying the criteria to the facts of a particular case without
committing an error of law.
Interpretation of the words of the statute is a question of law but
there may be no single exclusively correct interpretation where the words are
imprecise. Where a statute uses language
whose breadth calls for an exercise of judgement by a decision-maker, the court
will not interfere with a decision where the decision-maker remains within the
permissible field of that judgement.
There the court exercises self-restraint as the decision is at least in
part a question of law, but the court declines to substitute one view of the
meaning of the words for another tenable interpretation. Thus in R
v Monopolies and Mergers Commission
ex p South Yorkshire Transport Ltd (above), the House of Lords recognised
that the Monopolies and Mergers Commission had a margin of judgment in deciding
what amounted to "a substantial part of the United Kingdom" in section 64(3) of
the Fair Trading Act 1973; see Lord Mustill at 32-33. See also Freeport
Leisure Ltd (above) at 221G. Thus
documents which have legal effect may use words whose breadth gives the
decision-maker or party to a contract a degree of discretion in interpretation
with which a court will not interfere by imposing its own view of the meaning
of the words.
[34] The Crichel Down circular is a policy document. Some passages of the Crichel Down rules are
not capable of bearing a wide range of meanings. For example the timetable in paragraph 18 for
the agreement of heads of terms is unambiguous.
Where a former owner had a legitimate expectation that a public
authority would apply the Crichel Down rules, if that authority were
unilaterally to allow less time than the paragraph envisaged, that decision
would be open to challenge if it frustrated the legitimate expectation. Other passages or phrases involve issues of
judgement. For example, there will be a
range of values which different professional valuers may reasonably and
honestly put forward as the current market value. Significantly, there are many matters on
which the Crichel Down rules are silent.
One of those is the date at which the land should be valued. It is clear that there must be a valuation
date to enable the price to be agreed in order to comply with the timetable set
out in paragraph 18. I consider that the
English guidance, which states that it is the date on which the former owner
indicates that he wishes to purchase, is an appropriate arrangement if the
parties have not agreed another date. In
this case the parties valued the land as at April 2005 and I see nothing
objectionable in that.
[35] The Crichel Down rules are silent as to what is to be done
after the terms and price have been agreed in accordance with paragraph
18. Thus in this case, we are concerned
with the interpretation of silence. The
issue therefore is whether the respondents' actions were consistent with a
tenable interpretation of the broad policy articulated in the Crichel Down
circular in a context where the rules did not set out any procedures or
timescales.
[36] It is likely, as was envisaged in the heads of terms in this
case, that in most cases the parties having reached a paragraph 18 agreement
will then negotiate a binding contract of sale and the transaction will
thereafter be completed by the conveyance of the land. But the rules do not provide for that
process, nor is any mechanism set out to deal with delays between completing
the paragraph 18 arrangements and the conclusion of missives or the settlement
of the transaction. In my opinion it is
for the public authority in discussion with the would-be purchaser to provide
the mechanism for the timeous completion of the contract and the conveyance of
the land. So long as the public
authority, in establishing procedures which are not set out in the Crichel Down
rules, gives the former owner what in the circumstances of the particular case
is a real opportunity to purchase his land, the precise means of so doing is
within the authority's discretion. In
this case the respondents did so by stipulating in the heads of terms a
settlement date, initially of 30 September 2005, to which the executors
agreed. Thereafter, in order to give the
executors a further opportunity to ascertain whether the proposed development
could have access to public sewers for its drainage, the respondents granted a
continuation to 31 December 2005.
Subject to the question of the ultimatum procedure, which I discuss in
paragraph 39 below, there was nothing to prevent the respondents from bringing
the discussions with the executors to a close on 31 December 2005 and then
seeking to dispose of the land on the open market.
[37] The respondents were under a statutory duty to obtain the best
consideration that could reasonably be obtained in disposing of the field: section
74(2) of the Local Government (Scotland)
Act 1973. In agreeing a timetable for
completing the sale of the field to the executors the respondents were bound to
have regard to this duty. The second
major question that arises in this case is how a public authority balances its
statutory duty to obtain the best consideration with its obligations in
implementing the Crichel Down procedures.
In my opinion, in the light of the authorities set out in paragraph 20
above, the answer is straightforward to state but perhaps more difficult to
apply in some cases.
[38] The public authority by agreeing a sale at current market value
in accordance with the guidance in paragraph 24 and the procedures in paragraph
18 of the Crichel Down rules acts in accordance with its duty to obtain
best consideration at that time.
Thereafter the public authority must allow the would-be purchaser a real
opportunity to complete the transaction within a reasonable time. What is a reasonable time will vary from case
to case. When land prices are reasonably
static, the public authority may allow more time for completion without
creating a conflict with its statutory duty than when prices are moving upwards
rapidly. If parties enter into binding
missives of sale, the matter is then governed by contract. If there are no missives of sale, the public
authority, having set a reasonable timescale and having allowed the would-be
purchaser that time to conclude missives and to complete the transaction, is
entitled to review the market value of the land. Where the public authority has reliable
evidence that the market value of the land has increased materially since the
price was agreed under paragraph 18 of the Crichel Down rules and has already
given the would-be purchaser a reasonable opportunity to conclude missives and
complete the transaction, it would have to review the price in order to comply
with its statutory duty. The respondents
did so in this case. Alternatively, on
expiry of the time limit the public authority could dispose of the land on the
open market.
[39] I am not persuaded that the respondents had to give the
executors an ultimatum in December 2005 if they wished to bring to a close the
negotiation for the re-purchase of the land.
The ultimatum procedure in Rodger
(Builders) Ltd v Fawdry (above)
and similar cases exists in our law of contract to enable an innocent party to
make the other contracting party's failure to perform on time a material breach
of contract which would entitle the innocent party to rescind. The procedure is needed because, as a general
rule in a contract for the purchase of heritable property, payment of the price
on the appointed day is not an essential term of the contract. In the present case there was no
contract. The respondents made it clear
in their letter of 30 September
2005 that the executors had to complete the proposed re-purchase by
31 December 2005. See paragraph 8 above. That was sufficient notice. Had the respondents chosen at the end of
December 2005 to terminate their discussions with the executors and to market
the field on the open market, without giving the executors a further ultimatum,
that course of action would not in my opinion have involved any unfairness which
could be categorised as an abuse of power.
[40] The respondents' decision to continue to take forward the
proposed transaction with the executors after 31 December 2005, by extending the "long-stop" date to 31 March 2006, meant that,
having reviewed the value of the land, they required to offer the land to the
executors at its new open market value.
The respondents in extending the "long-stop" date professed to be acting
in accordance with the Crichel Down rules, although the rules set down no
procedures for prolonging the transaction.
By so doing, they undertook to allow the executors an opportunity to
purchase at the reviewed market price, as paragraph 24 of the rules requires a
sale at current market value. This again
in my opinion gave rise to a substantive legitimate expectation. But it has not been demonstrated that the
respondents did anything to breach that undertaking. In my opinion the Crichel Down rules did not,
either expressly or by implication, require the respondents to negotiate with
the executors over the reviewed value. Nor
was such a requirement implicit in the condition that allowed the respondents
to review the value. The respondents
could, consistently with the policy in the Crichel Down rules, have invited
negotiations on the reviewed open market value.
But they were entitled to interpret the policy underlying the Crichel
Down rules as requiring them merely to offer to complete the transaction at the
then current market price.
[41] The executors did not pursue their assertion that the price
which the respondents specified was not supported by the evidence of the market
and was therefore not the current market value.
Instead they challenged the respondents' entitlement to alter the price
from that which had been agreed in April 2005 and advanced that as their
principal submission in this judicial review.
[42] I am not persuaded that the respondents have resiled from their
undertaking or otherwise frustrated a legitimate expectation. Nor have they acted unfairly in such a way as
to amount to an abuse of power. The
petitioner's application therefore fails.
While the court has a discretion to withhold a remedy when a judicial
review challenge has been made out (London
& Clydeside Estates Ltd v
Aberdeen District Council 1980 SC (HL) 1 at 31 and King v East Ayrshire Council (above)), that
issue does not arise in this case.
Conclusion
[43] The challenge to the respondents' decisions fails. I therefore sustain the third, fourth and
fifth pleas-in-law for the respondents and refuse the petition.
