Introduction

The case of Day, R (On the Application Of) v. Shropshire Council [2020] EWCA Civ 1751 addresses pivotal issues surrounding the disposal of land subject to statutory trusts by local authorities. The central legal question examines whether such a trust continues post-disposal when statutory requirements are not fulfilled, and the subsequent legal ramifications for both the disposing authority and the purchaser. This appeal was initiated by a local resident challenging the Shropshire Council's decision to grant planning permission for the development of land previously held for public recreational purposes.

Summary of the Judgment

The Court of Appeal dismissed the appellant's grounds of appeal, thereby upholding the initial decision by Lang J to refuse judicial review. The key findings included:

• The disposal of land subject to a statutory trust without complying with mandatory advertising requirements does not extinguish the trust if the purchaser lacks actual knowledge of the non-compliance.
• The statutory scheme, particularly sections 123(2A) and 128(2) of the Local Government Act 1972, ensures that purchasers obtain valid title free from the trust unless they are aware of the failure to comply with statutory requirements.
• The public recreation rights under the statutory trust did not constitute a material consideration in the planning decision since the trust was deemed not to subsist post-disposal.
• The appeal related to cost orders was also dismissed, maintaining that each party should bear its own costs.

Analysis

Precedents Cited

The judgment references several key cases to interpret the statutory provisions governing public trusts and land disposal:

• Attorney General v Sunderland Corporation (1876): Established that land held under statutory trusts must be used for public enjoyment.
• R (Friends of Finsbury Park) v Haringey London Borough Council [2017]: Reinforced principles regarding statutory trusts for public spaces.
• Laverstoke Property Company Limited v Peterborough Corporation [1972]: Addressed issues related to land disposal under statutory trusts.
• Other cases such as Freeman, Coker, and Structadene were discussed but found not directly applicable to the current statutory framework.

These precedents collectively underscore the judiciary's approach to upholding statutory obligations tied to land held for public purposes and clarifying the limits of such trusts upon disposal.

Legal Reasoning

The court meticulously analyzed the statutory provisions governing the disposal of land under a section 10 trust, primarily focusing on sections 123(2A), 123(2B), and 128(2) of the Local Government Act 1972. The crux of the reasoning was:

• Section 123(2A): Mandates that any disposal of land under a section 10 trust must be advertised in a local newspaper for two consecutive weeks, with consideration of any objections.
• Section 123(2B): Specifies that compliance with 123(2A) leads to the extinguishment of the trust upon disposal.
• Section 128(2): Ensures that disposals are valid despite non-compliance with 123(2A), protecting purchasers from the effects of such non-compliance unless they have actual knowledge of it.

The court concluded that since the Developer did not have actual knowledge of the non-compliance with statutory requirements, the trust did not continue post-disposal. Consequently, the public recreation rights were not enforceable against the Developer, and thus, were not a material consideration in granting planning permission.

Impact

This judgment clarifies the boundaries of statutory trusts in land disposal by local authorities, particularly emphasizing the importance of procedural compliance in disposing of land subject to such trusts. The decision has significant implications:

• For Local Authorities: Highlights the necessity of adhering strictly to statutory procedures when disposing of land under public trusts to avoid unintended legal consequences.
• For Developers: Reinforces the protection of bona fide purchasers who acquire land without knowledge of procedural lapses, ensuring they are not unduly burdened by extinguished or unenforceable trusts.
• For Future Litigation: Establishes that non-compliance with statutory requirements can invalidate the enforceability of trusts against purchasers who lack actual knowledge of such non-compliance.

Complex Concepts Simplified

Statutory Trust

A statutory trust is a legal arrangement created by legislation where land or property is held by a local authority for a specific public purpose, such as recreation. Unlike private trusts, statutory trusts do not have identifiable beneficiaries but are established to benefit the public at large.

Section 10 Trust

Under section 10 of the Open Spaces Act 1906, a local authority can hold land in trust for public recreation. This imposes obligations on the authority to maintain and allow public access to the land.

Disposal of Land

Disposal refers to the act of transferring ownership or interest in land from one party to another. When land subject to a statutory trust is disposed of, specific legal requirements must be met to ensure that the trust is either appropriately extinguished or remains enforceable.

Actual vs. Constructive Knowledge

Actual Knowledge implies that the purchaser is explicitly aware of certain facts. Constructive Knowledge means that the purchaser should have known the facts through due diligence, even if they were not explicitly informed.

Conclusion

The Court of Appeal's decision in Day v Shropshire Council clarifies the legal landscape surrounding the disposal of land held under statutory trusts. By affirming that trusts do not automatically persist post-disposal in the absence of compliance with statutory requirements, unless the purchaser has actual knowledge of non-compliance, the judgment reinforces the importance of procedural adherence for local authorities. This ensures that legitimate public purposes are respected while protecting purchasers from unintended legal encumbrances. The ruling serves as a crucial precedent for future cases involving land disposal and statutory trusts, balancing the interests of public authorities and private developers within the statutory framework.