Council chiefs in Wandsworth have attacked Government Ministers after a court ruling which could see local council tax payers paying £1.6m in compensation to property developers for a piece of open space they bought for just £30,000.
The land, known locally as Fred Wells Gardens, had previously belonged to the Greater London Council which designated it as a green space in 1979 following the removal of prefabricated buildings. These had been erected when the last of the original war bombed housing had been removed.
When the GLC was abolished, its assets, including Fred Wells Gardens, were disposed of by the London Residuary Body which sold the land to a private developer in 1988. The developer tried to obtain permission for housing but was refused by Wandsworth Council which wanted to see the land remain as a park for residents.
The developer then sold the land in 2001 to Greenweb for £30,000 who also unsuccessfully sought planning permission. The decision to refuse permission to Greenweb led to the company applying to the Land Tribunal in September 2007 for compensation under the Land Compensation Act 1961.
The tribunal ruled that as planning permission had once existed for the site the council must compensate the developers for the value of the homes they wanted to build on it.
Last week the Court of Appeal “reluctantly” ruled in favour of the developers following a legal challenge by the Council. In their verdict the three Judges expressed regret for an “inevitable” outcome which could have been avoided had Ministers acted on a previous recommendation of the Law Commission to change the law.
Lord Justice Stanley Burnton said: “This is a conclusion I feel compelled to reach, and I do so most reluctantly.” This stance was supported by Lord Justice Thomas who said the “conclusion is inevitable given the wording of the Act. It is, however….. a highly regrettable conclusion for the tax payers of the London Borough of Wandsworth.”
“Those taxpayers, not, it seems, the Government in Whitehall, must now fund a payment of over 100 times the value of the land under legislation which should have been amended through the initiative of the relevant Department in Whitehall in accordance with the recommendations of the Law Commission and the observations of Lord Oliver.”
Lord Justice Buxton also agreed and said he found the outcome “utterly deplorable” adding “the recommendation of the Law Commission…might on one view have been seen as something of a tidying-up provision. The Law Commission was not faced with, and did not set out, the possibly dire consequences of this legislation, which are demonstrated in practice in this case. That may be why the recommendation has not been acted on. But another very weighty authority has also urged the review of these provisions….Lord Oliver, speaking for a unanimous House of Lords, described the provisions as an anachronistic relic, and urged their reconsideration. That was fifteen years ago. Lord Oliver’s call has not been heeded.”
Lord Justice Buxton said the need to change the law “must be heeded now” and told local authorities that if Government failed to act they “must exert political pressure to achieve the correction of the anomaly.”
Commenting after the ruling Wandsworth’s cabinet member for corporate resources Cllr Maurice Heaster said: “All three judges have recognised that this is a deeply unsatisfactory outcome for tax payers, who will now have to pay a firm of property developers compensation worth more than 50 times what they originally paid for it and more than 100 times its current market value.”
“This could all have been avoided. Civil servants and ministers have been warned on numerous occasions that this piece of legislation was a ticking timebomb that should be ditched, but they have done nothing and local residents will now have to pay the price for their inaction.
Cllr Heaster said the council “will now have to consider whether to try and take this case to the House of Lords to see if there is any chance whatsoever of having the tribunal’s ruling overturned.”