Public open space: Risks for developers

The recent case of R (on the application of Day) v Shropshire Council [2023] UKSC 8 reminds developers of the importance of thorough due diligence regarding public rights of recreation over open land and gives rise to concerns about how far unsuspecting purchasers of that land are actually protected.

Background

A local authority acquiring land comprising an open space holds that land subject to a statutory trust pursuant to the Open Spaces Act 1906. That Act defines open space as “land… on which there are no buildings or of which not more than one-twentieth part is covered with buildings, and the whole or the remainder of which is laid out as a garden or is used for purposes of recreation, or lies waste and unoccupied.”

The statutory trust requires the land to be held and administered for the enjoyment of it by the public as open space and for no other purpose. Members of the public have a right to go onto that land for the purpose of recreation.

However, clearly, the desired use of land changes over time. There is therefore a mechanism in the Local Government Act 1972 for land to be sold by a local authority free of a statutory trust. Under sections 124-127 of the 1972 Act, a local authority can dispose of land, freeing it from the statutory trust in the process, if it does so:

• at the best price which can reasonably be obtained;
• having advertised its intention to dispose of the land in a local newspaper for at least two consecutive weeks; and
• having considered any objections to that disposal.

If this procedure is not complied with, the land is not freed from the statutory trust. However, in those circumstances, a buyer which does not know about the statutory trust is protected by section 128(2) of the 1972 Act: under that provision the disposal to the buyer remains valid.

The recent case

In R (on the application of Day) v Shropshire Council [2023] UKSC 8, land in Shrewsbury had been acquired in around 1926 for public recreation by the then local authority. The original use of that land changed several times over the years and eventually became disused. In 2016, outline planning permission was obtained by a successor body, Shrewsbury Town Council, for development of the land, and it was sold to a developer without the Town Council having first complied with the required procedure under Sections 124-127: it appears to have been unaware that the land was public open space subject to a statutory trust, but it was common ground by the time the dispute got to Court that this was the case. The developer, also unaware of the trust, then obtained a further permission to erect 15 units on the land it had acquired. The grant of that planning permission by Shropshire Council was challenged by a local resident via judicial review on the grounds that because Shrewsbury Town Council had not followed the statutory procedure on disposal, public rights protected by a statutory trust still existed over the land, which rights had not, but should have, been taken into account by Shropshire Council when considering the planning application.

The Court of Appeal was asked to consider whether the effect of section 128(2) of the 1972 Act (which meant that the disposal to the developer, who did not know about the trust, was valid) also meant that the land was released from the public rights protected by the statutory trust. It decided that it did.

On appeal, the Supreme Court disagreed. In its view, the effect of section 128(2) was merely to ensure that a purchaser’s legal title was not invalidated by a failure of the selling local authority to follow the relevant procedure. It did not operate to bypass the public statutory trust affecting the land: the only way to do that was the very clear procedure set out in the 1972 Act. In this case that procedure had not been followed and so the statutory public trust continued to apply to the land in the ownership of the developer. The Supreme Court therefore quashed the grant of the developer’s planning permission.

It is not clear where this leaves the developer, which is holding land which cannot be developed due to the existence of the statutory trust. It is presumably exploring whether it has a remedy against the Town Council for breach of contract.

What are the implications?

The decision of the Supreme Court (from which there is no further appeal) means that the developer, who did not have notice of the defect, has acquired good title to the land but it is unusable for its intended purpose. It is clear from the judgment that there were issues with the Town Council’s record-keeping and that insufficient investigations had been carried out by it to establish the legal status of the land and whether it had done everything required to give it the legal power to dispose of it; the developer appears, therefore, to have been unlucky to have ended up with this outcome.

Nevertheless, there are lessons to be learned for developer buyers and their lawyers.

For buyers purchasing from a local authority

The case is a reminder generally for buyers of land from a local authority to take great care to ensure that land being acquired is not subject to public rights which prevent its intended use. Unlike with town and village greens, there is no register of open land, and nor is there a standard enquiry in a local search which would reveal land which might be subject to a statutory trust because of the Open Spaces Act 1906. Appropriate enquiries should therefore be raised with the local authority on:

• past uses of the land;
• the statutory powers used by the local authority for the initial acquisition of the land and any appropriation to a different use; and
• the steps it has taken internally to establish the legal status of the land.

Specific searches are also available which reveal historic uses of land which solicitors might now consider using more regularly, particularly when purchasing from a local authority or purchasing land where there is any concern that it may once have been public open space or used for recreation.

If there is any evidence that a selling local authority has at some time in the past held the land for open space, a purchaser should consider insisting that the statutory disposal procedure is followed. In most cases, the advantage that the land will be sold free of any trust will outweigh the disadvantage of any delay to the sale timetable.

Another option is for a contract to be entered into which is conditional on planning, containing provisions extending the unconditional date if there is a planning inquiry or appeal. Another possibility is to include in a contract a requirement for the local authority to buy back the land at the option of the developer, in case of any such issue arising. Finally, the availability of title indemnity insurance could be investigated.

For buyers purchasing land which was once held by a local authority but not directly from one

The more concerning issue for developers and their conveyancers is the position of a subsequent buyer of the land (so in the case of the land in Shrewsbury, a purchaser from the original developer). If the original developer took subject to the trust, we can only assume that a purchaser from the developer would also take subject to it and that the statutory trust would in fact survive multiple sales on. It will be much less likely that a buyer further down the chain would be in a position to learn of the fact that the land was formerly open space owned by a local authority and subject to statutory trusts. It would not appear that anyone other than a local authority can follow the statutory procedure to free land from a statutory trust once it is in place and so the question must arise how it is possible to achieve this in these circumstances. It would seem likely that we will see further litigation on these questions.