The authority agreed to sell part of a housing estate. It proposed to enter into restrictive covenants for the retained parts of the estate to prevent the letting of any vacant flat except by way of a long lease at a premium. The decision was challenged on the basis that this would be an unlawful fetter upon the authority powers for the use of its housing stock, namely the retained land.
Held: Since the Council’s policy, albeit designed to produce owner occupancy rather than rental occupancy, was consistent with the purpose of using the estate for housing accommodation in the district, the submission to the proposed restrictive covenants would not be an unlawful fetter on the Council’s powers.
Fox LJ: ‘The attack as developed on the appeal is, as I have indicated, really based upon the contention that the covenants fetter the council’s discretion to deal with the retained land and are bad accordingly.
The first question, I think, in relation to that contention is whether the council is entitled to impose on its retained land covenants which were restrictive of its user of that land. In my opinion it is.
In general, I do not understand it to be disputed that there was power in the council (as the judge held) to create restrictive covenants under the Housing Acts, or otherwise. Power to create restrictive covenants does not, however, resolve the question whether the covenants constitute an unlawful fetter . . . It is clear that a local authority cannot, in general, make declarations of policy which are binding in future on the council for the time being. A council cannot extinguish statutory powers in that way. But it may be able to do so by the valid exercise of other statutory powers. If a statutory power is lawfully exercised so as to create legal rights and obligations between the council and third parties, the result will be that the council for the time being is bound, even though that hinders or prevents the exercise of other statutory powers.
What we are concerned with in the present case are overlapping or conflicting powers. There is a power to create covenants restrictive use of the retained land; and there are powers in relation to the user of the retained land for housing purposes. In these circumstances, it is necessary to ascertain for what purpose the retained land is held. All other powers are subordinate to the main power to carry out the primary purpose . . . Now the purpose for which the Fulham Court estate is held by the council must be the provision of housing accommodation in the district. The council’s policy in relation to the estate, as I have set it out above, seems to me to be consistent with that purpose. . . The policy, it is true, is designed to produce owner-occupancy and not rented accommodation. Historically, local authority housing has been rented. But a substantial inroad upon that was made by Part 1 of the Housing Act 1980, which gave municipal tenants the right to purchase their dwellings. In the circumstances it does not seem to me that a policy which is designed to produce good accommodation for owner-occupiers is now any less within the purposes of the Housing Acts than the provision of rented housing.
It seems to me that if the purpose for which the power to create restrictive covenants is being exercised can reasonably be regarded as the furtherance of the statutory object, then the creation of the covenants is not an unlawful fetter. All the powers are exercisable for the achieving of the statutory objects in relation to the land, and the honest and reasonable exercise of a power for that purpose cannot properly be regarded as a fetter upon another power given for the same purpose.
We were referred to the decision in Ayr Harbour Trustees . . But that was a case where the trustees simply ‘renounced part of their statutory birthright.’ There was an incompatibility between what they were proposing to do and the actual statutory purpose. In the present case, as it seems to me, the purpose of the contract is the same as the statutory purpose. ‘
After citing Devlin LJ in Blake v Hendon:”For example, a man selling a part of his land might object to a refreshment pavilion on his boundary. Provided that the erection of a refreshment pavilion on that spot was not essential to the use of the land as a pleasure ground, the local authority could properly covenant not to erect one, notwithstanding that it had statutory power to do so. This illustrates the proper application of the principle in the Ayr case’ and
‘I can see that there is something to be said for the view that so long as the council retains Part V land it should retain all the powers which the statute gives in relation to that land. That is simple and logical. But I think it is too inflexible and takes insufficient account of the practical difficulties of administering such an estate as Fulham Court. To bring it up to standard, money has to be found and compromises have to be made. It is not practicable to sell the whole estate at once. It has to be phased in order to prevent excessive voids and high loss of income. On 21 March 1986 only Block A (32 flats) was totally empty. But the scheme was quite far advanced. Out of a total of 372 flats, 189 were empty. The policy having been decided upon, it was necessary to press ahead with it’.
Sir Denys Buckley: ‘I am clearly of the opinion that, if a statutory authority acting in good faith in the proper and reasonable exercise of its statutory powers undertakes some binding obligation, the fact that such obligation may thereafter preclude the authority from exercising its statutory powers in some other way, cannot constitute an impermissible fetter on its powers. Any other view would involve that the doctrine against fettering itself would involve a fetter on the authority’s capacity to exercise its powers properly and reasonably as it thinks fit from time to time. So, in my view the decision of the present case depends primarily upon whether the council was acting properly and reasonably in proposing to covenant with Barratts in the terms of the second schedule covenants. For the reasons indicated by Fox L.J., I think this was so.’
Judges:
Fox LJ, Sir Denys Buckley
Citations:
[1987] 1 QB 1050
Jurisdiction:
England and Wales
Citing:
Cited – Blake v Hendon Corporation CA 1962
Devlin LJ said: ‘For example, a man selling a part of his land might object to a refreshment pavilion on his boundary. Provided that the erection of a refreshment pavilion on that spot was not essential to the use of the land as a pleasure ground, . .
Cited by:
Cited – Kilby v Basildon District Council Admn 26-Jul-2006
Tenants complained that the authority landlord had purported to vary a clause in his secure tenancy agreement which gave certain management rights to tenants.
Held: The powers to let on secure tenancies were governed by statute. The clause . .
Lists of cited by and citing cases may be incomplete.
Local Government
Updated: 28 July 2022; Ref: scu.244730