Supreme Court voids a land transfer agreement with County Council as ultra vires due to lack of statutory power.

THE SUPREME COURT

Murray C.J. 73/06

Denham J.

Hardiman J.

Geoghegan J.

Fennelly J.

CHARLES McHUGH

Plaintiff/Appellant

and

THE COUNTY COUNCIL OF KILDARE

Defendant/Respondent

JUDGMENT of Mr. Justice Hardiman delivered the 24th day of February, 2009.

This is the plaintiff’s appeal against the judgment and order of the High Court (Gilligan J.) made the 5th day of November,

2005 wherein it was held that a purported agreement between the parties of the 13th May, 1999 was valid and enforceable,

so that the plaintiff was obliged to carry out his obligations under it. The principal obligation was to transfer, free of charge,

certain lands to the defendant in the event that the defendant rezoned another part of the lands on the plaintiff’s application.

Facts.

In the 1990s the plaintiff was the owner of some forty-seven acres of land in Co. Kildare. It was near a main road, and an

interchange on that road, and appeared to the plaintiff to be land suitable to be zoned for industrial use. Other landowners

took the same view of their own lands in the same general location. It may be important to recall that the learned trial judge

held that “It is clear from the submissions which were made on the plaintiff’s behalf in respect of the rezoning that there are

a number of valid reasons as to why the relevant lands should have been rezoned.”

The plaintiff therefore applied to the defendant, which is the Planning Authority for the County of Kildare, responsible for

the preparation and modification or amendment of the County Development Plan, for an amendment to the said plan

whereby his lands would be zoned for industrial use. This took place in or about October 1998.

It appears that some discussions took place between the plaintiff, who was advised by a solicitor and an engineer at all

material times, and the defendant. An arrangement of some sort was entered into between the plaintiff and the defendant.

The latter in its pleadings described this arrangement as being “… to the effect that the plaintiff would cede to the defendant

20% of the lands in question, should the defendant rezone the said lands in the defendant’s County development plan”.

It is pleaded by the defendant that this agreement was made between the plaintiff and the defendant and was lawfully made

pursuant to s.38 of the Local Government Planning and Development Act, 1963.

The agreement was as follows:

CONFIRMATION UNDERTAKING AND AGREEMENT

APPLICATION FOR REZONING OF THE UNDERMENTIONED LANDS

_________________

I CHARLES McHUGH of Jigginstown, Naas:

in the County of Kildare hereby

(1) Refer to the Application which I have made to Kildare County Council for the rezoning of lands in my ownership situate

at JIGGINSTOWN, NAAS in the County of Kildare part of which lands are bounded in red on the Plan attached hereto and

which part is hereinafter referred to as “the lands”.

(2) Confirm and certify that I am the sole and absolute owner with freehold title of the said lands,

(3) That for the purpose of regulating the development of the said lands and other lands adjoining and adjacent to same and

in accordance with the provisions of Section 38 of the Local Government (Planning and Development) Act, 1963 as same

has and may be further amended hereby irrevocably covenant and agree with the said Council that in the event of the lands

the subject matter of my above application being rezoned for development for such purpose or purposes as may be decided

I covenant and agree with the said Council immediately on the lands being rezoned as aforesaid that I will transfer to the

Council free of charge or expense the lands (same being the lands bounded in red on a Plan annexed hereto) and for use by

the said Council for such its Statutory purposes and as it may decide.

(4) I further acknowledge and agree that the foregoing covenant and agreement on my part is a matter incidental to the grant

of my Application for rezoning of my said lands.

(5) I confirm that I have been independently advised before signing this Agreement:

Dated this 13th day of May 1999

SIGNED by the above named Charles McHugh

Landowner in the presence of:-

Aisling Lipton

NAAS,

Co. Kildare

Solicitor

It was common case on the hearing of this appeal that though the proposal for an agreement had come from the plaintiff the

actual agreement in the form in which it now exists was the work of the defendant and was prepared by it. It was however

signed by the plaintiff when he was accompanied by his solicitor, who witnessed his signature. It was not signed, sealed or in

any way authenticated by or on behalf of the defendant, but is relied upon by it.

The plaintiff’s case.

The plaintiff’s case on the hearing of this appeal, and, it would appear, in the High Court, was strikingly different to that

pleaded. In his Statement of Claim delivered on the 26th April, 2001, the plaintiff pleaded as follows at paragraph 4:

“In purported reliance upon s.38 of the said Act of 1963, the defendant before exercising its statutory

functions in relation to the County Development Plan, insofar as it might have related to the plaintiff’s

said lands, required that the plaintiff sign a letter of “confirmation undertaking and agreement” that in

the event of the plaintiff’s land being rezoned for such purpose or purposes as the defendant may

decide, that the plaintiff will be obliged certain lands verged in red on the Plan annexed [to the] said

agreement, to the defendant for such of its statutory purposes as it may decide”. (Emphasis added)

Once the matter proceeded to oral hearing, however, no suggestion of coercion was made. Rather, the plaintiff contented

himself with the allegation, which was sufficient for his purposes, that the agreement set out above was not and was not

capable of being an agreement within the meaning of s.38 of the Act of 1963, and was therefore not enforceable against

him.

This contention is, as the plaintiff admitted on the hearing of this appeal, a somewhat unattractive one because he has taken

the benefit of the rezoning on the balance of the lands and has sold them on. He now advances, against that background, the

contention that the agreement on his part to transfer lands to the Local Authority if the balance were rezoned, as expressed

in the written document of the 13th May, 1999, is unenforceable, thereby allowing him to retain the lands whose transfer he

himself suggested.

The defendant’s case is also a simple one: it says that the written agreement set out above is lawful valid and enforceable

because it is an agreement within s.38 of the Act of 1963. It makes no other case: if it fails on that proposition the transfer

of the lands cannot be compelled.

It may be relevant to note that the plaintiff’s proceedings were commenced in the year 2001: we were told on the hearing of

the appeal that the defendant commenced proceedings for the transfer of the lands (presumably specific performance

proceedings) in 2005 but has not apparently progressed them beyond the stage of issuing a summons.

In these circumstances, it is clear to the Court that there is a good deal of factual background to the dealings between the

two parties which neither plaintiff nor defendant has thought necessary to put before the Court. Instead, by their conduct of

the case, the parties have so arranged matters that the issue between them will be decided on a very narrow technical issue.

The plaintiff has in effect abandoned the question of coercion and, just as surprisingly, the defendant has omitted to

counterclaim in these proceedings for the transfer of the land to it. The Court has seen in the minutes of certain meetings of

the Council which have been produced that all the landowners who sought rezoning of their lands offered, co-incidentally or

otherwise, to cede some of them to the Council in the event of the rezoning being approved. It is not clear to the Court

whether a purported s.38 written agreement was created in each case, or how, or even if, the ceding proposals were to be

given binding effect. Nor is it clear why the landowners thought it necessary or advisable to offer to cede part of their lands

when seeking rezoning of the balance.

The Court has not been invited to consider the validity in administrative law of an arrangement whereby a statutory decision

maker will derive a benefit if he, she, or it decides in one way rather than another and it may be important to stress that that

issue simply does not arise in the present proceedings.

The learned trial judge held that “the defendant clearly conferred a benefit on the plaintiff and that consideration moved

from the defendants to the plaintiff” (he does not expressly identify what the consideration which moved from the County

Council to Mr. McHugh was but in the circumstances it appears that the learned trial judge regarded the rezoning of the

lands as a consideration). On the hearing of this appeal, however, the council strongly deny that this was a consideration

which moved from it to the plaintiff. The Council did not find it at all easy to indicate what the consideration actually was:

its submissions on this point are discussed below.

Section 38.

Section 38 of the Local Government (Planning and Development) Act, 1963 as amended by the Local Government

(Planning and Development) Act, 1976 provides as follows:

“38(1) A Planning Authority may enter into an agreement with any person interested in land in their area for the purpose of

restricting or regulating the development or use of the land, either permanently or during such period as may be specified by

the agreement, and any such agreement may contain such incidental and consequential provisions (including provisions of a

financial character) as appeared to the Planning Authority to be necessary or expedient for the Purposes of the agreement.

(1A) A Planning Authority in entering into an agreement under this Section may join with any body which is a prescribed

authority for the purposes of s.21 of

this Act.

(2) An agreement made under this Section with any person interested in land may be enforced by the Planning Authority or

any body joined with them

Against persons deriving title under that person in respect of that land as if the Planning Authority or such body as may be

appropriate were possessed

of adjacent land and as if the agreement had been expressly made for the benefit of that land.

(3) Nothing in this Section or in any agreement made thereunder shall be construed as restricting the exercise, in relation to

land which is the subject of

any such agreement, of any powers exercisable by the Minister, the Board, or the Planning Authority under this Act so long

as those powers are not exercisable

so as to contravene materially the provisions of the development plan, or as requiring the exercise of any such powers so as

to contravene materially those

provisions.

(4) Particulars of an agreement made under this Section

shall be entered in the register.”

It will be observed that the purported agreement of the 13th May, 1999, has as its substance Mr. McHugh’s statement that

he:

“… hereby irrevocably covenant [s] and agree[s] with the said Council that in the event of the lands

the subject matter of my above application being rezoned for development for such purpose or

purposes as may be decided I covenant and agree with the said Council immediately on the lands

being rezoned as aforesaid that I will transfer to the Council free of charge or expense the lands (same

being the lands bounded in red on a plan annexed hereto) and for use by the Council of such of its

statutory purposes as it may decide.”

This is clearly on its face a covenant to transfer lands. Section 38 relates to agreements “for the purpose of restricting or

regulating the development or use of the land either permanently or during such period as may be specified…”. On the

hearing of this appeal we were informed by counsel for the defendants that s.38 agreements were sometimes entered into as

a condition of a grant of planning permission for the purpose effectively of sterilising lands in the same ownership as the

lands to which the permission relates.

It appears to me that s.38 simply does not contemplate an agreement for the transfer of lands at all. Restricting or regulating

the development or use of lands is something of a quite different nature to transferring their ownership. The recitation, in the

purported agreement, of s.38 of the Act of 1963 cannot in and of itself make the purported agreement of the 13th May,

1999, an agreement of the sort envisaged by s.38.

On behalf of the defendant Council, it was not argued that the agreement could be enforced other than by reference to s.38.

Indeed Mr. Patrick Butler S.C., for the defendants conceded expressly that “If the agreement is not an agreement within the

meaning of s.38, I can’t enforce it.”

He argued that it was an agreement within the meaning of s.38 for two reasons. These were, firstly, that “the whole

transaction occurred in the context of a proposed zoning for industrial use” and, secondly, the proposed transferee under the

agreement was a Local Authority and, having regard to subsection (3) of s.38 a Local Authority could only use the land in

accordance with the development plan. In this, admittedly somewhat oblique, way it was contended that the agreement was

an agreement to regulate or restrict development.

I cannot see that either of these matters had the effect of converting the purported agreement into an agreement within the

meaning of s.38. Both points reduce themselves to this argument: the zoning of the land will be industrial no matter who

owns them and this zoning will restrict the development of the lands by precluding a planning permission for any other use.

Furthermore, the transfer of the land is to the Council which, it is to be presumed, will operate within the zoning contained

in the draft development plan, and that, too, will restrict their use.

This seems to me to be no more than saying that the zoning of the land by the Planning Authority will affect any potential

development of it. This of course is so, but that is a result of the general law to which any owner of the land, including a

statutory body, is subject. Section 38 clearly envisages an agreement “regulated or restricting” the development of land,

which would be unnecessary if such development would in any case be contrary to the general law. Moreover, the purpose

of an agreement under Article 38 is to arrange that the land’s development be regulated or restricted while the land remains

in the ownership of the person who arrives at the agreement, or someone to whom he may sell the land. It is not for the

purpose of permitting an agreement to transfer the land to the Council itself, whether “in the event of” the Council’s making

a decision favourable to the landowner or otherwise. If a gratuitous transfer of the relevant land to the local authority could

be procured under s.38, it would be unnecessary, from the authority’s point of view, to restrict its development, which the

authority could control as owner.

Having regard to the concession on the part of the Council recited above, if the agreement is not an agreement within the

meaning of s.38 it appears to be ultra vires the Council, which has not been given a power to acquire land by the means

envisaged in the agreement. Since the Council had no power to enter the agreement, the said purported agreement of the

13th May, 1999 appears to me to be void and unenforceable.

I am fully aware that the claimed effect of this decision is to permit the plaintiff, as it was put by Mr. Butler, “to refuse to

stick to his “bargain”. But counsel had great difficulty in articulating what exactly that bargain was. As it was eventually

proclaimed by Mr. Butler (after he had prescinded from two previous formulations), it was merely an entirely voluntary

statement that the plaintiff would cede some land to the County Council in the event of their rezoning (said Mr. Butler) the

balance of his lands at Jigginstown. But Mr. Butler emphasised that the transfer was not in consideration of such rezoning

but was in consideration merely of the fact that the Senior Planning Officer with whom he was dealing, Mr. Jones, would

place his proposal before the councillors. I do not quite understand this: it appears to me that the Council were in any event

(that is, in the absence of any promise of benefit) obliged to consider the plaintiff’s application for rezoning and anything he

might urge in support of it so that, on their own showing, they are at no loss of any cognisable kind. They have not of

course contended that they would not have rezoned the plaintiff’s land but for a promise of a benefit to themselves.

I do not consider it realistic or credible that Mr. McHugh and the Council entered into a “bargain”, to use Mr. Butler’s word,

simply on the basis that Mr. Butler would transfer lands merely in consideration of the fact that Mr. Jones, a council official,

placed his proposal before the councillors. Firstly, Mr. McHugh could have placed his proposal before councillors without

the intervention of Mr. Jones either directly or through his personal advisers. Secondly, Mr. Butler’s formulation of the

“bargain” involves the proposition that Mr. McHugh would have transferred lands to the council simply in consideration of

Mr. Jones putting his proposal before the members, and without regard to whether the latter acceded to his proposal or

not. This makes nonsense of the wording to the effect that the transfer would take place “in the event of the lands … being

rezoned…”. If, as the learned trial judge seems to have thought, the consideration moving from the council was the rezoning

of the land, that would give rise to another legal issue, as mentioned above. But the plaintiff has not been concerned to

advance that case, preferring to argue a technical ground only, on which in my view he is entitled to succeed, while the

defendant has flatly denied that rezoning was the consideration.

I would allow the appeal and declare the agreement of 13th May, 1999 to be void.