The recent case of HXRUK 2 (CHC) Limited –v- Heaney has taken the development community by surprise. As a result, Local Authorities may be called upon by Developers to exercise their powers under Section 237 of the Town & Country Planning Act 1990 more frequently to protect a developer from the unfortunate impact of Heaney.
However, surprisingly, the Heaney case did not establish new law. It concerned the redevelopment of a building in Leeds which included the construction of a new sixth and seventh floor to provide office accommodation. By the time the case was brought before the Court, offices on the seventh floor had already been let. Opposite the development stood the former Yorkshire Penny Bank Building, a Victorian, Grade II listed building of architectural significance. Mr Heaney had spent a good deal of money renovating this building and had therefore objected to the development opposite from the outset. Negotiations had taken place over many months but were never resolved. The matter came before the Court at the instigation of the developer because prospective tenants were being deterred by the ongoing dispute with Mr Heaney. Whilst with hindsight the developer's decision to initiate proceedings resulted in a massive own goal, the original object was to obtain a court declaration that Mr Heaney should be deprived of his right to an injunction. The developer argued that Mr Heaney had delayed (he had taken no action whilst the development proceeded) and that there had been only a modest infringement of his right to light which did not justify the granting of a mandatory injunction.
The decision of the Judge therefore to grant an injunction requiring the developer to pull down the newly constructed top floors was unsurprising given that he followed the case of Shelfer a long-established authority on the criteria to be taken into account in granting injunctions. The Judge decided on the facts that the injury to Mr Heaney had not been small and could not, therefore, be compensated in damages, that the infringement had been committed with a view to profit and that, therefore, that the granting of an injunction would not be oppressive.
This decision served as a reminder to developers that potential claims for rights of light should be disposed of before starting any construction work. However, dealing with unco-operative neighbours has the potential for delaying the commencement of works and can prove to be expensive. As a result, many developers may look to persuade Local Authorities to invoke the provisions of Section 237 to remove these obstacles. A further compelling factor for developers is that a well advised Claimant will be seeking compensation for the infringement of his rights based on common law principles and these will be assessed on a percentage of the profit of the development. This can impact significantly on a developer's ultimate profit margin. The successful operation of Section 237 will ensure that compensation is assessed on the less generous basis set out in the Compulsory Purchase Code which provides that the owner is entitled to damages based on the diminution in the value of his property as a result of the works.
Therefore, what should a Local Authority do when faced with a request from a developer for assistance and when does s237 apply?
Section 237 applies to Local Authorities who own or appropriate land for planning purposes. Therefore, a developer may be seeking to persuade Local Authorities to either acquire or appropriate land for development purposes, following which it will be sold on to the Developer to commence work.
For Section 237 to apply the criteria in Section 237(1) must be followed:
1. There must be is the erection, construction or carrying out or maintenance of any building or work on land.
2. The land concerned must have been acquired or appropriated by a Local Authority.
3. That acquisition or appropriation must have been done for planning purposes.
4. The work done must have been authorised by planning permission.
Once the criteria in Section 237(1) are fulfilled, that enables the works concerned to proceed even though it may involve an interference with any rights listed in Section 237(2) which include any easement, privileges, rights or advantages including any natural right to support. Therefore, Section 273(2) applies to rights of light.
However, given that it would be the Local Authority which will be the subject of any challenge to the exercise of its powers under Section 237, it is important that the statutory objective is followed. Work should be done in accordance with the terms of the planning permission, it should be serve the public interest and compensation should be paid to those whose rights had been infringed. It is this balance between an individual third party's rights and the public interest which is of crucial importance to a Local Authority. In order for the Local Authority to avoid any challenge to the exercise of its powers, the public interest factor must outweigh those private rights. By "private rights" these are largely Human Rights concerns which stem out of the provisions of Article 1 of Protocol 1 of the Universal Declaration on Human Rights and, in the case of residential property, Article 8.
Additionally, under the legislation, Local Authorities are able to appropriate existing land for development use (subject to restrictions on appropriating common land and open spaces). The power of appropriation stems from the powers set out in Section 122 of the Local Government Act 1972 and applies where that land is not required for its original purpose. "Not required" in this context has been defined as meaning not needed in the public interest for the original purpose.
Local Authorities therefore should consider if land should be appropriated for planning purposes. Amongst the factors to be taken into account in making this decision is whether such redevelopment would contribute to the promotion of either economic, social or environmental wellbeing and if it is in the public interest that development be carried out. If there are individual rights likely to be infringed, Authorities should consider whether it is necessary to interfere with those rights to enable the development to proceed or whether there is any alternative scheme which may avoid that interference. Consideration should also be given to whether any unavoidable interference is likely to amount to a breach of Articles 1 and 8. Furthermore, Authorities should take a similar approach to that of CPOs and should try to negotiate with the parties concerned as regards release of the rights before Section 237 is invoked. Given that any decision to invoke Section 237 may be subject to the Judicial Review by those affected, it is crucial that these considerations are carefully documented. In this respect, invoking the powers under Section 237 for the sole purpose of assisting a developer to minimise the compensation claims from affected third parties is not likely to be regarded as a good enough reason for invoking the powers under Section 237 unless a Local Authority can at the same time establish the necessity of the underlying purpose of the development.
In summary, therefore, Section 237 may therefore present a solution to the problem highlighted by the Heaney case but should nonetheless be used with great care.
This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.