The Crichel Down Rules and subsequent disposals

Introduction

The Crichel Down Rules (CDR) are “non-statutory arrangements” (Rule 1) published by the Department for Levelling Up, Housing & Communities, these are contained in “Guidance on Compulsory purchase process and The Crichel Down Rules” (July 2019). 

Local authorities with compulsory purchase powers are not required to follow the CDR, but “are recommended to follow the Rules” (Rule 4 and paragraph 2 of the Annex to the CDR). In R. (on the application of Denton) v Secretary of State for Defence [2002] EWHC 1043 (Admin), however, it was emphasised that the CDR “give rise to a legitimate expectation that they will be followed”. A local authority would therefore be well advised to follow the CDR to avoid a potential judicial review challenge and / or a breach of Article 1 of the First Protocol of the Human Rights Act 1998. 

The basic premise of the CDR is that where land has been compulsorily acquired, and is now sought to be disposed of, “former owners will, as a general rule, be given a first opportunity to repurchase the land previously in their ownership, provided that its character has not materially changed since acquisition” (Rule 10).

There are various exceptions from the general obligation to offer land back. These exceptions are contained in (inter alia) Rule 15. One such exception at Rule 15(2) provides as follows:

“where it is decided on specific ministerial authority that for reasons of public interest the land should be disposed of as soon as practicable to a local authority or other body with compulsory purchase powers. However, transfers of land between bodies with compulsory purchase powers will not be regarded as exceptions unless at the time of transfer the receiving body could have bought the land compulsorily if it had been in private ownership. Appropriations of land within bodies such as local authorities for purposes different to that for which the land was acquired are exceptions if the body has compulsory purchase powers to acquire land for the new purpose.”

The guidance in the Annex to the CDR relating to Rule 15(2) provides as follows:

“What are ‘reasons of public interest’? (Rule 15(2)) 

11. The courts have held that rule 15(2) (formerly 14(2)) does not require these to be matters where life or limb are at risk. In practice, this exception may be invoked where the body to which the land is to be sold could have made a compulsory purchase order to obtain it had it been owned by a third party (See R-v-Secretary of State for the Environment, Transport and the Regions ex p. Wheeler, The Times 4 August 2000).”

What Rule 15(2) means is that there is no requirement for an acquiring authority to offer back to former owners surplus land that was compulsorily acquired from them, where that land is to be transferred to another body with compulsory purchase powers, who could have exercised such powers to acquire the land, and that transfer has specific ministerial approval. The question which arises, is whether the body to whom the land is transferred is itself bound by the CDR when the land later becomes surplus to its own requirements. 

Subsequent transfers and the obligation to offer back

The CDR are clear that the first transfer to another body with compulsory purchase powers (the other body) on ministerial approval is an exception from the obligation to offer back, but the CDR are silent on whether subsequent transfers from that body are subject to the obligation to offer back. This question has not been (directly) determined by the courts.

It is therefore necessary to carefully consider the CDR, its purpose, and relevant case law. The following are material considerations in seeking to determine the answer:

Is the other body a body to whom the CDR apply? If the other body is a local authority then yes the CDR will apply to them, see paragraph 1.2 above. 

Is the surplus land land to which the CDR applies? If it was “acquired by or under the threat of compulsion” or “under the statutory bight provisions” (Rules 7 and 8) then yes it is land to which the CDR applies. The CDR make no distinction in relation to which body acquired the land, or for what purpose, its focus in on the land itself, and how it was acquired from the former owner. As Rule 4 makes clear, if public sector land was transferred to the private sector on privatisation then the CDR are “commended” to such bodies i.e. notwithstanding that there was a transfer from the original acquiring authority to another body then the CDR are suggested as being applicable. 

What is the purpose of the CDR? The purpose of the CDR is to ensure justice and fairness, to acknowledge that although former owners may have been compensated for the acquisition of their land, that nonetheless, fairness requires that former owners are given a right of first refusal to re-acquire their land. In a House of Commons debate on the first version of the CDR in 1954, the Home Secretary, Maxwell Fyfe said  

“…When that purpose is exhausted, when that need is past, what is wrong, on any consideration of morality or justice, in allowing the person from whom the land was taken the chance of getting it back.” (HC Deb, vol 530, 1292 (June 1954)). 

And, Bingham LJ observed in Tomkins v Commission for the New Towns (1988) 87 L.G.R. 207:

“When land is compulsorily purchased the coercive power of the state is used to deprive a citizen of his property against his will. He is obliged to take its assessed value whether he wants it or not. This exercise is justified by the public intention to develop the land in the wider interests of the community of which the citizen is part. If, however, that intention is not for any reason fulfilled, and the land becomes available for disposal, common fairness demands that the former owner should have a preferential claim to buy back the land which he had been compelled to sell, provided he is able and willing to pay the full market price at the time of repurchase, that price reflecting the development potential of the land. The name Crichel Down by which this policy is known adequately conveys the public sense of what fairness ordinarily demands in this situation.”

What does case law indicate? In Tomkins v Commission for the New Towns (1988) 87 L.G.R. 207 land had been compulsorily acquired by the Northampton Development Corporation, on the dissolution of that body it was transferred to the Commission, and was subsequently identified as surplus. The statutory regime applicable to the Commission required the disposal to be at market value. The CDR required the land to be offered back to the former owners. The question in that case related to identifying its market value in a volatile market where it was almost impossible to establish such value without putting the land on the open market and inviting competitive bids. Although the Court of Appeal determined that that was the correct approach in the circumstances of that case, there was no debate as to the applicability of the CDR per se to the land in question. The land had been transferred to another body (the Commission), but the CDR still applied. 

The above considerations would suggest that a disposal of surplus land by the other body is likely to be subject to the CDR. The risk of not applying the CDR to the disposal is of course one of judicial review of that decision and / or breach of Article 1 of the First Protocol. 

Other considerations

Whilst outside the scope of this article, the following matters should also be considered in relation to any disposal of surplus land by the other body: 

Some bodies have adopted supplementary guidance on disposals of land, see for example the Department of Health (DoH) guidance on disposals from the NHS estate guidance (Health Building Note 00-08 Part B: Supplementary information for Part A). Is there any bespoke internal guidance relevant here? If so former owners may well have a legitimate expectation that it will be followed.

Do any of the other exceptions apply? For example has the character of the land materially changed (Rule 10), has the time horizon for the general obligation to offer land back expired (Rule 14), do any of the other exceptions in Rule 15 apply, is the land the subject of a PPP or PFI scheme (Rule 5), or was it acquired by the Environment Agency or water and sewage companies under certain powers (Rule 6)?

Does the local authority have a requirement under other legislation to obtain “best consideration” for the land in question e.g. s.123 Local Government Act 1972? Does the  Local Government Act 1972: General Disposal Consent 2003 apply to the disposal (see the Annex to the MHCLG Circular 06/03)? Is the market so volatile as in Tomkins that it is impossible to identify what that best consideration is without the open marketing of the land?

Is there a “sufficiently good reason” for not applying the CDR? In Denton Richards J stated:
“…the rules are not to be regarded as inflexible, mandatory requirements. Moreover, even the basic obligation in [rule 10] to offer land back to former owners is qualified by the words ‘as a general rule’, and in my judgment the rules are not to be applied on the basis that the only possible exceptions are those listed in the rules themselves. It seems to me that it must, in principle, be possible to depart from, the strict application of the rules where there is a sufficiently good reason for doing so…”. 

Did the minister’s consent when approving the initial transfer to the other body pursuant to Rule 15(2) contain any conditions or limitations on subsequent disposal of the land? 

Conclusion

A robust and cautious approach would suggest that the surplus land ought to be offered back to the former owners if none of the other considerations indicated above suggest a different and defensible outcome. The cost, delay and inconvenience of a possible judicial review and / or Human Rights challenge should of course be weighed in the balance. Whilst it is acknowledged that tracing former owners (or their heirs) can be a burden on local authorities, and attract cost, the CDR does set out at Rules 21-25 pragmatic steps for authorities to take when the former owners cannot be traced, or their address is unknown. As the steps to a disposal of surplus land which was formerly compulsorily acquired can be easy to get wrong, as is recommended in the DoH guidance, legal professionals or suitably qualified surveyors “should be consulted to determine whether the Crichel Down rules apply” (paragraph 4.19) and help thereafter to guide the disposal process to ensure that it is both just and fair.