Harlow District Council v Powerrapid Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Choudhury |
| Judgment Date | 17 March 2023 |
| Neutral Citation | [2023] EWHC 586 (KB) |
| Court | King's Bench Division |
| Docket Number | Case No: QA-2022-000009 |
[2023] EWHC 586 (KB)
Mr Justice Choudhury
sitting with
Costs Judge Rowley
Case No: QA-2022-000009
IN THE HIGH COURT OF JUSTICE
KING'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Rupert Cohen (instructed by Trowers & Hamlins) for the Appellant
Mr Jamie Carpenter KC and Mr Nick Grant (instructed by BDB Pitmans) for the Respondent
Hearing dates: 4 October 2022
APPROVED JUDGMENT
This judgment was handed down remotely at 10.30am on 17 March 2023 by circulation to the parties' representatives by e-mail and by release to the National Archives.
Introduction
Powerrapid Limited (“ the Claimant”) is the owner of a piece of land in Harlow. Harlow District Council (“ the Defendant”) made a Compulsory Purchase Order (“ CPO”) in respect of the land (“ the Order Land”). The Claimant successfully resisted the CPO and sought its costs. On 16 October 2019 the Secretary of State made that award of costs, which was made as an Order of the High Court on 3 March 2020. By an ex-tempore judgment dated 6 October 2021 (“ the October 2021 judgment”) and a reserved written judgment dated 7 December 2021 (“ the December 2021 judgment”), Costs Judge Leonard (“ the Judge”) decided which categories of costs, in principle, fell within the scope of that award and made a preliminary assessment as to the applicable hourly rates. This is the Defendant's appeal against those two judgments. There are two grounds of appeal, although Ground 1 comprises four sub-grounds, (i) to (iv). Permission to appeal was granted by the Judge in respect of Grounds 1(i) to (iii) but refused in respect of Grounds 1(iv) and 2. The Defendant pursues all grounds of appeal, seeking permission to do so in respect of Grounds 1(iv) and 2.
Background
The background to this matter is succinctly stated in the December 2021 judgment as follows:
“12. The Claimant is the proprietor of a piece of land (“the Land”) which is part of the Nortel Complex at London Road in Harlow. The Nortel Complex was purchased in 1995 by BNR Europe Ltd from the New Town Commission (“NTC”), which in 2008 was replaced by the Homes and Communities Agency, which now trades under the name of Homes England (“HE”).
13. The Land was subject to a Deed of Covenant dating from the 1995 purchase. The covenant embodies what is commonly referred to (and to which I shall refer) as an “overage clause”. The Nortel Complex was purchased at a price reflecting its then current use. The overage clause addressed the possibility that at some point in the future the Land would be suitable for different use, with an attendant higher value. It provided a mechanism for the NTC (now HE) to receive an additional payment as and when development for such use commenced.
14. The Claimant and HE disagreed as to the effect of the overage clause. On its face, it required the Claimant to pay to HE a sum equal to 51% of the uplift in the value of the Land, subject to a reduction of 5% for every year since 2015. That was the Claimant's interpretation. HE argued that the clause specifying the 51% figure contained a typographical error and that the figure should be 100%. The Defendant adopted HE's position on the interpretation of the overage clause.
15. The issue of the correct interpretation of the overage clause had an obvious bearing on the value of the Land. If the Defendant were to acquire the Land through a CPO, the Claimant would be entitled to compensation for the value of its freehold interest, subject to the overage clause, at open market value (without a CPO). If not agreed, the value would fall to be determined by the Upper Tribunal (Lands Chamber).
16. The parties have for some years (including throughout the CPO process briefly described below) engaged in negotiations for the use and development of the land, including I understand discussions about a possible “friendly” CPO and leaseback arrangement, but they have foundered in particular on the overage clause issue (I understand that access issues may also have had some bearing).
17. On 22 June 2017, the Defendant presented a report to Cabinet supporting the acquisition of the Land through a CPO, with a view to developing it as a continuation of the Harlow Science Park, currently being developed to the north of the Land.
18. On the same date, the Defendant delegated authority to its Head of Governance to commence CPO proceedings to acquire the Land. Valuers for the parties sought to agree a value for the Land, an obstacle to agreement being their difference on the correct application of the overage clause. At a meeting on 17 January 2018, the Defendant confirmed that it would pursue a contested CPO.
19. The Defendant authorised the making of a CPO on 25 January 2018. The order itself was made on 24 September 2018 and formal notice given on 27 September 2018. The Claimant submitted a detailed objection to the Secretary of State, who held a public inquiry to decide whether to confirm the CPO.”
It can be seen from that summary that the parties had been in negotiation for some time over the purchase (in fact since 2014), and that these negotiations had stalled as a result of, amongst other matters, the dispute between the Claimant and Homes England (“ HE”) as to the correct interpretation of the overage provision in the deed (“ the Overage Clause”). HE's position in that dispute was supported by the Defendant. The Defendant resolved in June 2017 to pursue the CPO route to secure the purchase, although the CPO was not made until 24 September 2018.
The Claimant's objections to the CPO were upheld by the Planning Inspector (“ the Inspector”). The Inspector's decision dated 18 June 2019 was issued after a 3-day inquiry (including a site visit) at which both sides were represented by Leading Counsel. The Inspector, having set out the background, went on to consider whether the CPO was (as asserted by the Claimant) premature. In considering the role played by the dispute over the Overage Clause, the Inspector said as follows:
“17. Whether or not the covenant has been the main reason for development not progressing, there now appears to be a way forward through a dispute resolution mechanism contained within Section 10 of the covenant. That mechanism was triggered whilst the Inquiry sat and would require the parties to refer the matter to an expert whose decision would be final and binding. The AA [Acquiring Authority] has expressed surprise that the dispute resolution mechanism has not been tried before and concern that it cannot be invoked before the liability to make the ‘additional’ payment’ has been triggered. Again, it is not for me to reach a finding on the interpretation of the covenant. However, the dispute resolution mechanism provides a hitherto untried means of moving forward and the objector's willingness to be bound by the outcome of the process would, at least, resolve the uncertainty which it says is its prime concern.”
At [27] of the Inspector's reasons, the Inspector considered whether a compelling case for the development of the Order Land in the short term had been made out and said:
“25 I also give significant weight to the availability of the significant amount of undeveloped land in reserve in the AA's ownership. As such, a compelling case for development of the Order land in the short term has not been made out. Whilst the AA has taken reasonable steps to acquire the land by means other than compulsory purchase, other options remain to be explored. Compulsory purchase has yet to become the last resort. An alternative to compulsory acquisition exists since there is a reasonable prospect that the objector will develop the land itself for the purposes set out in the Order in response to occupier demand. In these circumstances, it would be premature to use CPO powers to acquire the Order land at this time.”
Accordingly, the CPO was not confirmed. That decision of the Inspector entitled the Claimant to seek its costs, which it did by way of an application dated 9 July 2019 to the Secretary of State (“ SoS”). The Defendant resisted that application, seeking to argue that the Claimant should not be entitled to its costs on the grounds of unreasonable conduct, namely the invoking of the dispute resolution mechanism in the deed (“ DRM”) at a very late stage in proceedings.
The SoS's Order as to Costs was made on 16 October 2019 (“ the SoS's Costs Order”). The SoS noted that the Inspector had not concluded that there had been any unreasonable conduct and considered that there were “no exceptional circumstances to justify not making a full award for costs”. The SoS accordingly accepted the Claimant's application and granted a “full award” of costs. It was not within the SoS's remit to decide the amount of the costs award, which was left to negotiation between the parties, in accordance with the relevant terms of the “ Guidance on Planning Appeals and the award of costs”, issued in 2014. This guidance has been referred to in this appeal as the Planning Practice Guidance or “ PPG” for short. The terms of the SoS's Costs Order were that the SoS:
“…in exercise of his powers under section 5(4) of the Acquisition of Land Act 1981, section 250(5) of the Local Government Act 1972 and of all other enabling powers.
HEREBY ORDERS that Harlow District Council shall pay to Powerrapid Limited their costs of the Inquiry, such costs to be taxed in default of agreement as to the amount thereof.”
The parties were not able to agree the amount of costs. The Claimant's Solicitors, BDB Pitmans, then wrote to the High Court for the SoS's Costs Order to be converted to an order of the Court. This is required before there can be a detailed assessment.
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