Durand Education Trust, R (On the Application Of) v Secretary of State for Education

Factual and Procedural Background

This case concerns land at Hackford Road in Stockwell, London ("the Hackford Road Site") where a school called Van Gogh Primary is now based. Title to the Hackford Road Site was formerly vested in the claimant, Durand Education Trust ("DET"), but it was transferred to the London Borough of Lambeth ("Lambeth") without payment of any consideration pursuant to directions made by the defendant, the Secretary of State for Education, under the Academies Act 2010 ("the AA 2010"). DET does not challenge the transfers as such, but alleges that the decision not to pay compensation for part of the property, known as "the Leisure Centre Land," was unlawful. DET claims breaches of article 1 of the First Protocol to the European Convention on Human Rights ("the Convention"), article 14 of the Convention, and the public sector equality duty ("the PSED") under section 149 of the Equality Act 2010.

Historically, a school has existed on the Hackford Road Site since the 1880s, evolving into Durand Primary School until its conversion to an academy in 2010. The land was held and transferred through various public bodies and school governors over decades, often without payment of consideration. From 1995, the Governors incorporated a company limited by guarantee, London Horizons Limited ("LHL"), to undertake trading activities on their behalf. DET became LHL's sole member in 2015.

After changes in school status and governance, DET was incorporated in 2010 as a trust holding the Hackford Road Site on trust for the school. Durand Primary School converted into Durand Academy in 2010, with DET retaining title but leasing the land to Durand Academy Trust. Durand Academy ceased operation in 2018, succeeded immediately by Van Gogh Primary, operated by Dunraven Educational Trust.

In 2018 and 2019, the Secretary of State, via the Education and Skills Funding Agency ("ESFA"), issued directions transferring parts of the Hackford Road Site to Lambeth without payment of compensation, including the Leisure Centre Land. DET challenged the decision not to pay compensation, leading to judicial review proceedings. Permission to apply for judicial review was ultimately granted by the Court of Appeal, and the present application concerns DET's judicial review claim.

Legal Issues Presented

1. Does the transfer of the Leisure Centre Land without compensation breach article 1 of the First Protocol ("A1P1") because it is disproportionate?
2. Is the transfer in breach of A1P1 due to an absence of guidance on the payment of compensation?
3. Does the transfer breach article 14 of the Convention read with A1P1?
4. Should relief for breach of the public sector equality duty (PSED), which the Secretary of State admits, be denied pursuant to section 31(2A) of the Senior Courts Act 1981?

Arguments of the Parties

Appellant's Arguments

• DET contends there were no exceptional circumstances justifying the failure to pay compensation for the Leisure Centre Land, which it claims it held with unencumbered title.
• It argues that compensation should reflect either the land’s value at transfer in 1995 or the value added through DET's efforts and investment.
• DET submits that the Secretary of State failed to consider Convention rights when making the decision and that the Secretary of State accepted the land had been "privately enhanced by DET".
• DET asserts that the absence of a formal procedure or guidance on compensation breaches A1P1’s requirement that deprivation of possessions be "subject to the conditions provided for by law".
• On article 14, DET argues it has been treated less favourably compared to foundations for foundation schools, which benefit from statutory compensation schemes.
• DET criticizes the post-decision equality impact analysis ("EIA") as flawed and an attempt at ex post facto justification, contending it failed to properly assess the compensation amount or how DET would use it.

Respondent's Arguments

• The Secretary of State contends that paragraph 15 of schedule 1 to the AA 2010 authorizes the directions made, including the decision not to pay compensation.
• It argues that DET never had unencumbered title as the land was held on trust for the school purposes, and if that trust ended, a cy-près scheme would apply maintaining the trust for successor schools.
• The Secretary of State denies that DET’s conduct or expenditure enhanced the value of the Leisure Centre Land, noting that no works were carried out during DET’s ownership since it only came into existence in 2010.
• It submits that no private funds were invested in the land, as LHL’s profits derived from exploiting land held by the Governors/DET, essentially an arm of the school.
• The Secretary of State asserts that Lambeth is a custodian of the land for the school’s benefit and would not profit, so no windfall arises from the transfer without compensation.
• Regarding A1P1 procedural requirements, the Secretary of State maintains that the discretion to pay compensation is constrained by public law principles and A1P1, and that a fair procedure was followed with extensive correspondence and consultation with DET.
• On article 14, it argues that the statutory compensation scheme for foundation schools does not apply to DET’s position and that DET’s claim of less favourable treatment is unfounded.
• Concerning the PSED breach, the Secretary of State accepts the failure but contends relief should be refused under section 31(2A) of the Senior Courts Act 1981 because the outcome would not have been different.
• The Secretary of State relies on the EIA and the decision-maker’s evidence that compensation would have been an unjustified windfall, supporting refusal of relief despite the PSED breach.

Table of Precedents Cited

Court's Reasoning and Analysis

The court began by examining whether the transfer of the Leisure Centre Land without compensation breached article 1 of the First Protocol ("A1P1") on grounds of disproportionality. Drawing on the European Court of Human Rights ("ECtHR") decisions in Jahn v Germany and Vistin v Latvia, the court acknowledged that deprivation of property without compensation generally requires exceptional justification. However, it found that exceptional circumstances existed here, justifying the absence of compensation.

The court reasoned that DET never held unencumbered title to the Leisure Centre Land, as it was held on trust for school purposes, which likely continued through successor schools or would have been subject to a cy-près scheme. Further, no works or investments enhancing the land’s value were made by DET during its ownership, which only commenced in 2010, after the leisure centre and other facilities were constructed. The profits of London Horizons Limited ("LHL") were derived from exploiting land held by the Governors/DET, and no private capital was invested in the land. Additionally, any non-financial contributions were well remunerated.

The court rejected the notion that Lambeth received a windfall, emphasizing that Lambeth holds the land as custodian for the school’s benefit and that requiring payment would impose a significant financial burden on Lambeth, to the detriment of public services and taxpayers.

On the issue of procedural fairness and legality under A1P1, the court acknowledged that while the statutory discretion to pay compensation was broad, it was constrained by public law principles and A1P1 itself. The Secretary of State had adopted a fair procedure involving extensive consultation with DET, allowing full consideration of representations. Thus, the absence of formal regulations or guidance did not constitute a breach of A1P1.

Regarding article 14, the court analyzed DET’s claim of less favourable treatment compared to foundations for foundation schools. It concluded that the statutory compensation regime applicable to foundations did not apply to DET’s position and that DET’s claim of discrimination was unfounded. The definitions and statutory provisions demonstrated that the entire proceeds of disposal would be attributable to publicly funded land, negating DET’s argument.

On the PSED breach, the Secretary of State conceded non-compliance but contended relief should be refused under section 31(2A) of the Senior Courts Act 1981 because the outcome would not have differed. The court considered the evidence, including the equality impact analysis ("EIA") and the decision-maker’s witness statement, finding it highly likely that compliance with the PSED would not have altered the decision not to pay compensation. The court was satisfied that the decision-maker would have viewed compensation as an unjustified windfall, and no significant adverse equality impacts arose from the decision.

Holding and Implications

The court’s final decision is to DISMISS the claim for judicial review.

This means that the transfer of the Leisure Centre Land without payment of compensation was lawful and did not breach article 1 of the First Protocol, article 14 of the Convention, or the public sector equality duty in a manner warranting relief. The Secretary of State’s decision and the procedural approach taken were upheld. No new precedent was established beyond the application of existing legal principles to the facts of this case. The direct effect is that DET will not receive compensation for the Leisure Centre Land, and the land remains held by Lambeth for the benefit of the school now operating on the site.