Fairmount Investments Ltd v Secretary of State for the Environment

JurisdictionEngland & Wales
CourtHouse of Lords
JudgeViscount Dilhorne,Lord Simon of Glaisdale,Lord Russell of Killowen,Lord Edmund-Davies
Judgment Date24 June 1976
Judgment citation (vLex)[1976] UKHL J0624-1
Date24 June 1976

[1976] UKHL J0624-1

House of Lords

Lord Diplock

Viscount Dilhorne

Lord Simon of Glaisdale

Lord Edmund-Davies

Lord Russell of Killowen

Fairmount Investments Limited and Others
Secretary of State for the Environment

Upon Report from the Appellate Committee, to whom was referred the Cause Fairmount Investments Limited and others against Secretary of State for the Environment, That the Committee had heard Counsel, as well on Monday the 17th, as on Tuesday the 18th, Wednesday the 19th and Thursday the 20th, days of May last, upon the Petition and Appeal of the Secretary of State for the Environment of 2 Marsham Street, London, S.W. 1, praying, That the matter of the Order set forth in the Schedule thereto, namely, an Order of Her Majesty's Court of Appeal of the 5th of November 1975, so far as therein stated to be appealed against, might be reviewed before Her Majesty the Queen, in Her Court of Parliament, and that the said Order, so far as aforesaid, might be reversed, varied or altered, or that the Petitioner might have such other relief in the premises as to Her Majesty the Queen in Her Court of Parliament, might seem meet; as also upon the Case of Fairmount Investments Limited, lodged in answer to the said Appeal; and due consideration had this day of what was offered on either side in this Cause:

It is Ordered and Adjudged, by the Lords Spiritual and Temporal in the Court of Parliament of Her Majesty the Queen assembled, That the said Order of Her Majesty's Court of Appeal, of the 5th day of November 1975, in part complained of in the said Appeal, be, and the same is hereby, Affirmed, and that the said Petition and Appeal be, and the same is hereby, dismissed this House: And it is further Ordered, That the Appellant do pay, or cause to be paid, to the said Respondents the Costs incurred by them in respect of the said Appeal, the amount thereof to be certified by the Clerk of the Parliaments.

Lord Diplock

My Lords,


I have had the advantage of reading in draft the speech prepared by my noble and learned friend Lord Russell of Killowen. I agree with it and I would therefore dismiss the appeal.

Viscount Dilhorne

My Lords,


The appellants are the owners of 64 out of 68 houses in an area of about 2·94 acres declared by the Southwark Borough Council to be a clearance area as in their view the houses were unfit for human habitation and the most satisfactory way of dealing with the conditions in the area was to demolish all the houses. On the 9th January 1973 they made a compulsory purchase order which, if confirmed by the Secretary of State, would enable them to acquire the appellants' 64 houses on payment of site value.


The appellants also owned houses within a quarter of a mile which the inspector in his report said were "almost identical … in design and condition" but "inferior for rehabilitation purposes". In 1973 the Council gave the appellants notice of their intention to acquire those houses to improve them "in order to deal in some measure with their long housing list, put at 8,242 families".


The council sought to acquire the appellants' 64 houses not to provide homes fit for human habitation for those on their housing list but to make the area an open space.


In June 1970 the appellants' agent had met the council's surveyor and together they had inspected some of the 64 houses which were typical of the rest. Following the inspection the appellants were told that the council would consider an application for improvement grants in respect of five houses, typical of the others. The appellants submitted plans and specifications in relation to two houses showing what they proposed to do to improve them and on the 6th August 1970 the council's property surveyor wrote to the appellants saying

"After careful inspection I can see no reason that your scheme should not be adopted and I await your formal application."


Before formal application was made, the appellants were told that it would be a waste of time for them to proceed further as the council proposed to make the area an open space. On the 6th April 1972 the appellants were told by letter that that was the council's intention.


As the appellants objected to the compulsory purchase order and did not withdraw their objection, a public local inquiry was ordered. It was held in September 1973 and lasted two days. After the hearing the inspector inspected the houses. He reported in favour of the compulsory acquisition of the appellants' 64 houses under Part III of the Housing Act 1957, which meant their acquisition for site value. His findings, conclusions and recommendations were generally accepted by the Secretary of State with some modifications immaterial to this case.


The appellants then applied unsuccessfully to the High Court for an order quashing the compulsory purchase order but their appeal to the Court of Appeal (Cairns, James and Shaw L.JJ.) succeeded, all the members of that court being in favour of allowing the appeal. From that decision the Secretary of State now appeals.


The appellants alleged that the requirements of natural justice had not been met and that they had in consequence been substantially prejudiced.


In 1957 the Committee on Administrative Tribunals and Inquiries (commonly referred to as the Franks Committee) reported (Cmd. 218). It, inter alia, considered and made recommendations as to the procedure to be followed in relation to inquiries, stressing the need for an authority seeking to acquire land to inform those affected of its reasons for doing so in order that they might be better able to prepare and present their case (paragraphs 280, 281) and that the right of individuals to state their case cannot be effective unless the case of the authority is adequately presented at the inquiry (paragraph 306).


Following their report, the Compulsory Purchase by Local Authorities (Inquiry Procedure) Rules 1962 ( S.I. 1962 No. 1424) were made. They do not apply, we were told, to acquisitions under Part III of the Housing Act 1957. They only have legal effect in relation to local inquiries held under the Acquisition of Land (Authorisation Procedure) Act 1946 and no similar rules have been made in relation to acquisitions under Part III. Nevertheless we were told that in practice local authorities seeking to acquire under Part III have regard to them.


They embody certain recommendations of the Franks Committee designed to secure fairness and natural justice. Under them an acquiring authority has to serve on "statutory objectors", who include the owners of the land affected, a written statement of their reasons for making the order (Rule 4(4)) and the inspector appointed to hold the inquiry can allow the reasons stated to be altered and added to "but shall (if necessary by adjourning the inquiry) give "every statutory objector an adequate opportunity of considering any fresh reason …" (Rule 7(5)).


Similar provisions are cointained in the Town and Country Planning (Inquiries Procedure) Rules 1974 ( S.I. 1974 No. 419).


Their object clearly was to ensure that the requirements of natural justice were met, and that an objector knew what case he had to meet.


In the present case no criticism can be made of the conduct of the Borough Council in relation to the inquiry but to decide whether or not there was a failure to comply with the requirements of natural justice, one must consider what was their case and the case the appellants had to meet.


The appellants were served with a summary of the principal grounds on which the council based its opinion that the houses were unfit for human habitation. It included the following:—


External: Settlement with some bulged and fractured walls

Internal: Uneven settlement in floors."


In compliance with Schedule 3(4) the Housing Act 1957 they were also served with a document in relation to each house in the area, including, it appears, houses which they did not own, stating in detail the defects in the house. All these documents mentioned settlement but only in one, and that not one of the appellants' houses, was there said to be "Progressive Settlement". In houses of this type built in the 1880's some settlement is perhaps to be expected. From these documents it might be inferred that, save in respect of that one house, it was not suggested that the settlement was continuing and that the case the appellants had to meet was that the settlement which had occurred together with the other defects rendered the houses unfit for habitation and led to the conclusion that the best way of dealing with the area was to demolish them.


What is significant is that in none of these documents was there any reference to foundations. It was not suggested that the foundations were so defective as to rule out any question of rehabilitation. Indeed such a suggestion would have been inconsistent with the council's surveyor's statement that after careful consideration he saw no reason why the appellants' improvement scheme should not be adopted, and inconsistent too, if the foundations of the appellants' other houses "almost identical … in design and condition" were similar, with the council's action in seeking to acquire them to improve them.


At the inquiry the appellants put forward two contentions, first that the houses were not unfit, and, secondly, that if they were, their demolition was not the best way of dealing with the conditions in the area as they were capable of rehabilitation. They put forward proposals for that directed to showing that, taking into account improvement grants, rehabilitation was an economic proposition.


A surveyor gave evidence on their behalf at the hearing. He testified that there was no evidence of instability which would constitute a threat to the occupants of any house and that "The existence of...

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