R (Derwent Holdings Ltd) v Trafford Borough Council

(As approved)

THE DEPUTY JUDGE: Railway Street Altrincham runs roughly north—south. The odd numbered properties are on the west. Between Goose Green in the north and Lloyd Street in the south they are or were numbered 15 to 59. Behind them there was a back street or service road which in the past provided access to the back of each of the properties. The back street is apparently a highway and probably each of the properties also had a private right of way over the whole of it.

The present position is that the southern block, numbers 43 to 59, was developed by the claimant, Derwent Holdings Limited (“Derwent”), in 2006. The building or its boundary walls block the service road. There is a new service road further back for the new building but I have not heard of any public or private rights over the new road. But as freehold owner of the properties at the southern end of the block Derwent has the private rights of way over the part of the block behind the other properties.

The northern block, numbers 15 to 41, (“the site”), belongs to the interested party, Manchester Syndicates Limited (“MSL”). They wish to develop it. In order to do so they will need to build over the service road. Planning consent for a development, which would, if carried out, obliterate the service road, was granted by the defendant, Trafford Borough Council (“Trafford”), on 1 August 2008. That is the decision under challenge in these proceedings. This is a renewed oral application for permission to apply for judicial review of that decision following refusal on the papers by Collins J.

If the site is developed as proposed, the physical position will obviously be that the service road cannot be used any more. Members of the public will not be able to use it as a highway and Derwent, or their successors in title, will not be able to access their private right of way.

The legal position is, of course, a little more complex. In general terms it as set out by Nicholls LJ in Vasiliou v Secretary of State for Transport and another [1991] 61 P&CR 507 at 510 as follows:

“It is axiomatic that a planning permission does not of itself affect or override any existing rights of property. A grant of planning permission sanctions the carrying out of a development which otherwise would be in contravention of the statutory inhibition against, in general, the carrying out of any development of land without planning permission. But if carrying out a development from which permission is granted would, for instance, be in breach of a restrictive covenant affecting the freehold, or in breach of a covenant in a lease, or infringe rights of way or rights of light of adjoining owners, the existing legal rights of those entitled to enforce the covenant or entitled to the benefit of the easement are not overridden by the grant of planning permission. This is so whether the development comprises the carrying out of building or other operations on land or the making of a material change in the use of land.”

Those observations were made in the context of distinguishing the consequences of a grant of planning permission from the consequences of an order stopping up a right of way. I shall return to that aspect both of Vasiliou and of the present case. But so far as rights of way are concerned, the position is that the grant of planning permission has no effect on them. The developer will need to see what arrangements he can make with those who have such rights and buying them off will often be one of the costs of the development.

Clearly that may cause difficulties. The owners of rights may not be traceable, or they may not be willing to have them extinguished even for payment, or they may not be legally able to do so, or not without disproportionate expense. In those circumstances, a highly desirable development might be unable to take place. So statute provides a solution. It is in section 237 of the Town and Country Planning Act 1990. Subsection (1) reads as follows:

“(1) Subject to subsection (3), the erection, construction or carrying out or maintenance of any building or work on land which has been acquired or appropriated by a local authority for planning purposes (whether done by the local authority or by a person deriving title under them) is authorised by virtue of this section if it is done in accordance with planning permission, notwithstanding that it involves—

(a) interference with an interest or right to which this section applies, or

(b) a breach of a restriction as to the user of land arising by virtue of a contract.”

Subsection (4) provides for compensation to be payable to persons whose rights are affected and subsection (5) provides that if a person deriving title from the local authority fails to pay the compensation the local authority has to pay it. So if the local authority buy for planning purposes the land over which a private right of way runs and a development interferes with that right, then, provided the development is undertaken in accordance with planning permission, the right is essentially extinguished: it is reduced to a right to compensation.

In the present case Derwent say there is an ambiguity in section 237. They say that the words “erection or construction” apply only to the actual acts of erecting or constructing and not to the building as erected or constructed. The statute might, they say, therefore authorise interference by a scaffolding but not by the finished permanent product of the building works. It might be thought that that is very unlikely to be right for the blight reason that I have just given, but Mr Fraser QC relies on Thames Water Utilities v Oxford City Council[1999] EGLR 167, a decision of Judge Rich QC sitting as a deputy High Court judge. His judgment in that case supporting Mr Fraser's interpretation might be read as applicable generally and there have been suggestions that it should be overruled by a statutory change. But it must be remembered that the fact situation there was rather different in that the right that way to be overridden was a right under a restrictive covenant entered into by the council itself in purchasing the land from the claimant. The narrow construction of section 237 adumbrated by the learned judge in that case might not apply in a different factual matrix. But I do not need to decide that issue here.

As I shall explain, the whole of the service road behind the two blocks has been the subject of purchases by the council under section 237. In 2006 the land comprising the road behind the site, that is to say the northern section of the road, belonged to MSL. Following a decision of the management executive of the council on 5 September 2006, Trafford bought the land from MSL on 19 December 2006 in order to facilitate the development of the site. On 20 February 2007 Trafford reconveyed it to MSL. Thus section 237 is brought into operation. There is no immediate effect on any private rights, but if development in accordance with planning permission interferes with private rights, the interference has the statutory authority of section 237.

There are further observations that need to be made on section 237 and its application to the present case. First, Derwent says that it had no knowledge of the transaction between MSL and Trafford until it was revealed to them in correspondence in 2008 in connection with the decision now under challenge. Assuming for present purposes that is right, it is not said that that can render the transaction ineffective to confer the result section 237 provides for. If the transaction had needed a Compulsory Purchase Order publicity would have been necessary, but as it was a private sale there was no publicity. That is the case whoever the previous owner had been.

In fact the transaction was a purchase and reconveyance to the developer. However regularly that type of transaction might occur in the lead up to developments it might at first glance appear to be unfair on Derwent to provide the basis for extinguishing their rights by a device of this sort of which they had no notice. Any such feelings of sympathy are, however, moderated when one knows that Derwent, or an associated company, had the benefit of an exactly similar transaction relating to the southern section of the road in 2000 when they were developing their neighbouring block. The difference in their case is that it appears that their development was constructed without planning permission: so section 237 has not yet become effective in relation to the southern part of the road.

The second observation is that whatever public law issues might arise from the transaction in 2006, the sale and reconveyance, it is now much too late to challenge it. There was no challenge at the time, and, even if that was because Derwent did not know of it, there is no explicit challenge to it in these proceedings, nor could there be without an extension of time. So far as that is concerned, Derwent knew of the transaction by the end of May 2008 at the latest and these proceedings were not issued until the end of October.