Developers beware – a warning when dealing with land subject to a public trust

The case

A recreation area in Shropshire used by the public and subject to a public trust under s10 of the Open Spaces Act 1906 was sold by Shropshire Council in 2017.  The Council subsequently granted planning permission to the purchaser developer to build houses on the land. Under s123 of the Local Government Act 1972, the Council should have undertaken a consultation with the public prior to the sale.  It had not, in fact, carried out the consultation as required.  A member of the public (Mr Day) subsequently started judicial review proceedings to have the planning permission quashed. The original claim was unsuccessful, as was the subsequent appeal at the Court of Appeal.

The Supreme Court disagreed with the earlier decisions, particularly the Court of Appeal’s view that the statutory trust would be lost with the sale of the land. The Supreme Court’s view was that the public’s rights will not be extinguished on a sale where the local authority fails to comply with the required consultation process.

The takeaway

The Supreme Court quashed the planning permission already obtained by the purchasers of the land.  It is not yet fully clear where this decision leaves the parties, but it seems likely from the statements made by the Council that it will re-acquire the land.

The case serves as a warning to both developers and local authorities. Where a public trust is created, a lack of compliance will now likely invalidate any planning permission. It is therefore important for developers to elevate their due diligence to include specifically asking relevant questions of the local authority and requesting proof of compliance with the requirements of s123 of the Local Government Act 1972.

The local authority, in turn, must consider whether any statutory public trusts have been created over land it is planning to sell. Failure to do this may result in financial claims made against them by disgruntled purchasers left with an undevelopable (and highly likely, less valuable) piece of land.