Case No: C1/2008/0233
Neutral Citation Number: [2008] EWCA Civ 328
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN’S BENCH DIVISION
(MR JUSTICE WILKIE)
Royal Courts of Justice
Strand, London, WC2A 2LL

Date: Thursday, 6th March 2008

Before:

LORD JUSTICE PILL
and
LORD JUSTICE KEENE

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Between:

	WALKER & ANR	Appellant
	
	- and -		
	THE SECRETARY OF STATE FOR COMMUNITIES
AND LOCAL GOVERNMENT & ANR	
Respondent

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Mr G Nardell (instructed by Messrs Davies Gore Lomax) appeared on behalf of the Appellant.

Mr J Litton (instructed by Treasury Solicitors) appeared on behalf of the Respondent Secretary of State.

Mr D Elvin QC and Mr G Keen (instructed by Blackburn with Darwen Borough Council) appeared on behalf of the Respondent Council.
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Judgment 
Lord Justice Keene:

1.	This is a renewed application for permission to appeal from a decision of Wilkie J dated 24 January 2008, permission having been refused on the papers by my Lord, Lord Justice Pill. 

2.	It arises out of a compulsory purchase order made under section 226(1)(a) of the Town and Country Planning Act 1990, which broadly speaking empowers a local authority, if authorised by the Secretary of State, to acquire land compulsorily to facilitate the carrying out of development or redevelopment or improvement of land in their area so long as that is likely to contribute to one or more of the objects set out in section 226(1A) for the promotion or improvement of the economic social or environmental wellbeing of their area.  

3.	The Blackburn with Darwen Borough Council made such an order on 24 October 2006.  Objections were lodged by a number of people, including the present applicants.  A public inquiry was then held, after which the Inspector recommended confirmation of the CPO, which the Secretary of State duly did by her decision letter dated 3 October 2007.  

4.	The applicants applied under section 23 of the Acquisition of Land Act 1981 to quash the CPO on a number of grounds.  Wilkie J was unpersuaded by any of those grounds and dismissed the application along with an associated claim for judicial review.  

5.	Only one ground is now relied upon in this renewed application, that being one shortly described as the “Funding Point”.  It is a point which arises in this way.  The underlying purpose of the CPO was to provide a site adjacent to Darwen Town Centre for the establishment of a city academy, for which planning permission had already been granted.  The capital for the construction of the academy itself was and is to be provided partly by a charitable trust and partly by the Department for Education and Skills but this was dependent upon the Borough Council acquiring the buildings within the CPO and demolishing them so as to deliver a cleared site for the proposed academy.  

6.	The funding for that stage of the process was to be provided under an agreement dated 25 March 2004 entitled a “Market Restructuring (Implementation) Agreement”, which I will refer to henceforth simply as “The Agreement.”  That agreement was entered into by the Secretary of State’s predecessor and a number of local authorities in the East Lancashire area, including the Blackburn with Darwen Borough Council.  The funding, as I understand the position, comes from the Secretary of State but is channelled through a consortium of local authorities in the area.  

7.	The argument was raised at the public inquiry and before Wilkie J that the terms of the agreement did not authorise the provision of funding unless the end result would be the provision of housing, either exclusively or as part of a mixed development on the cleared land, and that the city academy scheme did not achieve any such end result.  That argument failed in the court below.  In his judgment Wilkie J referred to the first two recitals to the agreement which read as follows:

“(A) The first Secretary of State and the Office wish to deliver thriving, inclusive and sustainable communities in all regions, are committed to achieving a balance between housing availability and demand in all English regions, and in particular, to addressing the problems of low demand for and abandonment of housing in the North and Midlands; 

(B) The Office has, for these purposes, initiated the creation of partnerships of local authorities and other stakeholders (“Pathfinders”) to carry out the regeneration and development of the Pathfinder Area with specific reference to the problems of low demand for and abandonment of housing, and the Office has confirmed the establishment of the Pathfinder”

I shall come back later in this judgment to another of the recitals.  

8.	Expenditure which is eligible for grant under the agreement is defined by Clause 8.1.  The relevant part of that reads as follows:

“Eligible Expenditure shall consist of payments made by any of the Participating Authorities during the Agreement Term towards implementing the Scheme which are made in the following categories: 

(i) Physical implementation consisting of:

(a) in relation to land, its acquisition, reclamation, improvement or refurbishment for the purpose of redevelopment for residential or mixed use

(b) in relation to buildings intended for residential or mixed use, their acquisition, demolition, conversion or improvement”

9.	The essence of the argument advanced by Mr Nardell on behalf of the applicants is that sub-clause (i)(b) there only relates to the acquisition, demolition, conversion or improvement of buildings when the purpose is to achieve a residential or mixed use including residential.  He emphasises the use of the word “intended” in the description of the buildings in question and he also refers to material from the Audit Commission dealing with the objectives of the Government’s housing market renewal programme.  It is submitted that limbs (a) and (b) of clause 8.1 are intended to achieve similar things.  Limb (a) is clear in the end result; the same end result is contemplated by limb (b).  Mr Nardell points to the references in limb (b) to “conversion” and “improvement”.  The use of those phrases, he submits, tends to suggest a residential or mixed end use of the buildings in question.  The reference to the intended character of the buildings in limb (b), he submits, cannot satisfactorily be taken to be dealing with the original intended use of the buildings as some historical characteristic, particularly in the absence of any specific time at which that historic intention is to be ascertained.  He submits that normally, as is indeed the case, intention goes to the future, not to the past.  He also refers to a number of policy documents, which he submits support the particular interpretation which he canvasses.

10.	Wilkie J dealt with this argument at paragraph 61 of his judgment, saying this in relation, in particular, to limb (a) and limb (b): 

“The former concerned the acquisition of land, its reclamation, improvement or refurbishment, for a purpose, namely: redevelopment for residential or mixed use.  The latter provides for the acquisition of buildings and their demolition, conversion or improvement.  Buildings are described as ‘intended for residential or mixed use’.  The Inspector concluded, correctly in my judgment, that the word ‘intended’ must refer to the buildings already in existence which are acquired and which are either demolished, converted or improved.  Thus, expenditure on buildings is limited to those buildings which were intended for residential or mixed use.  That would include buildings currently used for such purposes or buildings which at one stage had been but had ceased to be so used.  That would be consistent with the preamble to the agreement.  The Inspector concluded that expenditure pursuant to Clause 8 would be eligible if it were for the purpose of acquisition and demolition of houses or abandoned houses.  There was no further requirement that the land thus cleared should be used for residential or mixed use.  In my judgment that was a correct interpretation of the words of the clause.  Furthermore, such interpretation chimes with the preamble to the scheme and the provisions for targets for housing demolition.”

11.	The points made by the judge below seem to me to be sound ones.  While the word “intended” in sub-clause (i)(b) is not perhaps the happiest of choices, the structure of both that sub-clause and the preceding one shows that the opening words are describing the buildings which are to be acquired, demolished etc just as the “land” is referred to in the opening words of sub-clause (i)(a).  That, to my mind, is confirmed by the use of the word “their” before the phrase “acquisition, demolition” etc.  The word “intended” is to my mind clearly not dealing with the ultimate purpose of the acquisition, demolition and so forth in terms of land use.  Where this Clause 8.1 seeks to spell out the ultimate land use which is intended to be achieved, as in sub-clause (i)(a), it says so through the use of the words “for the purpose of redevelopment for residential or mixed use”.  That is patently not the way sub-clause (i)(b) has been formulated.  It also makes good sense when clearance is aimed principally at getting rid of poor quality housing or buildings partly used or last used for such purposes.  In other words these words “intended for” etcetera are defining the buildings which can be acquired, demolished, cleared etc.  

12.	Nor can I see anything in policy terms to suggest that the power to fund the acquisition and demolition of buildings should be limited to cases where residential use is in whole or part the intended outcome.  The policy documents confirm what is said in the recitals to this agreement, which Wilkie J was right to refer to as part of the context and as an aid to construction of Clause 8.1.  Part of the problem being tackled by this agreement was an oversupply of housing, particularly poor quality housing, in parts of this country and the need to regenerate the areas in question so as to make them more attractive for people to live there.  Part of such regeneration is to involve uses other than housing, as one would expect as a matter of common sense.  Better educational facilities can properly form part of that regeneration so as to make the areas in question more attractive. 

13.	This is borne out by several references, the first of those takes me back to the recitals and to recital (C).  I do not quote the entirety of it but it reads in part as follows: 

“The first Secretary of State [then I omit the reference to the statute] offers financial assistance in accordance with the terms of this agreement for expenditure incurred in connection with activities which contribute to such regeneration and development of the Pathfinder Area.”

That is not phraseology which seeks to confine those activities to simply new housing or to mixed uses which inevitably have within them an element of housing.  Secondly, the Office of the Deputy Prime Minister’s Housing Market Assessment Manual refers at paragraph 9.43 and 9.44 to various non-residential land uses which may be achieved through demolition of poor quality housing.  Thirdly, a National Audit Office report, which is one of the documents on which Mr Nardell has placed reliance, makes the same point about the wide range of factors involved in regenerating such areas, including ensuring good quality public services and amenities “such as good schools and transport links”.

14.	In my view the applicant’s construction of this agreement would impose a surprising and damaging constraint upon the uses to which cleared land could be put in these areas.  It is not one which accords with the wording of the agreement.  In short I see no realistic prospect of a successful appeal and for my part I would dismiss this renewed application.

Lord Justice Pill:

15.	Clause 8.1 is a key provision in the Market Restructuring (Implementation) Agreement for East Lancashire dated 25 March 2004.  The clause is headed “Eligible Expenditure” and Mr Nardell’s submission on behalf of the applicants is that the project approved by the Secretary of State is outside the powers of the paragraph.  The point was argued before the Inspector, who decided, as a point of contractual construction, in favour of the proposed respondents.  

16.	Clause 8 is curiously worded. The opening words are “physical implementation” and they are followed in sub-paragraph (a) by the expression “in relation to land” and sub-paragraph (b) “in relation to buildings”.  On that approach one would expect future use to be under consideration and the use of the word “intended” in sub-paragraph (b) to be used in that sense.  It has to be accepted, however, and Mr Litton does so, that grammatically the sub-paragraph is capable of being read in the way found by the Inspector and approved by the judge.  The presence of the word “demolition” in sub  paragraph (b) cannot be ignored.  

17.	Having that in mind, what Mr Nardell then sought in his written submissions, developed orally, to have regard to the factual matrix in which the 2004 agreement was made.  One can draw the inference that the intention in the clause was in relation to land which was to be used for new or improved housing, it is submitted.  We have had the opportunity now, by considering the written submissions and oral submissions on behalf of the proposed respondents, to consider that policy background and the other documents against the background of which the 2004 agreement was made.  Once one does that, it far from assists the case initially put forward that the housing context of the 2004 agreement made the construction favoured by the Inspector the wrong one. 

18.	Keene LJ has referred to the policy background, to the broad approach to regeneration which, as one would expect, is contained within those documents.  Mr Nardell made the point initially that this particular agreement was confined to housing.  That submission might be strong if it could be shown that there were other agreements which related to community uses but it appears that no such agreements were made.  

19.	In my judgment in that context the agreement should be read grammatically and the presence of the word “demolition” means that the present project is within the powers of the agreement.  In reply Mr Nardell made the further point that the construction favoured by the Inspector is in fact a limiting construction because, once one takes the word “intended” as meaning originally intended for current use, then outwith the clause would be a project which would involve the demolition of a building not in residential use for community or other purposes.  That argument may fall for another day.  It does not, in my judgment, render arguable the submission that the Inspector was not entitled to construe the clause as he did.

20.	For those reasons and the reasons given by Keene LJ I too would refuse this application for permission.

Order: Application refused.