Durham County Council v Darlington Borough Council

Under regulation 5(6)(b)(i) of the Local Government Changes for England (Property Transfer and Transitional Payments) Regulations 1995, property is transferred only if it is objectively required by the acquiring authority for an identifiable function exercised on or after the reorganisation date. The test looks forward, not back to the purpose for which the relinquishing authority acquired the property.

The word “required” imposes a relatively strict objective test. Ownership or lawful acquisition of land does not itself make the land necessary for the authority’s functions. Where land cannot be used for the statutory waste-disposal activities in question, it is surplus land. Interest under the Regulations accrues only after the notice following the arbitration and the expiry of the prescribed payment period. The arbitrator had no power to award interest for the preceding period.

Durham County Council appealed against two statutory arbitration awards arising from the reorganisation of local government in Darlington under the Local Government Act 1992, the Darlington Order and the 1995 Regulations.

The first appeal concerned Creebeck landfill site, which Durham owned in Darlington and which had continuing gas and leachate problems. The arbitrator held that Darlington did not require the site for its functions and that it was surplus land.

The second appeal concerned an award of interest on a transitional payment. The arbitrator had awarded interest from 1997, relying on the Regulations or, alternatively, section 49 of the Arbitration Act 1996. The issues were whether Creebeck was transferred property and whether interest could be awarded before service of the post-arbitration calculation notice.

1. Creebeck. Durham’s appeal against the Spence award was dismissed. Regulation 5(6)(b)(i) requires identification of the acquiring authority’s function and asks whether the property is objectively necessary for that function on and after the reorganisation date. The purpose for which Durham acquired the site was relevant only as evidence of Darlington’s later requirement.
2. The phrase “in connection with” is wide, but “required” imposes a relatively strict objective test. It is insufficient to refer generally to a “waste function”. The relevant function had to be identified by reference to the statutory scheme.
3. Under section 51 of the Environmental Protection Act 1990, the relevant waste-disposal activities included arranging disposal and making land available to contractors for treating, keeping or disposing of waste. Creebeck was full and lacked a waste-management licence. None of those activities could therefore be carried out there after the reorganisation date. The site was not required by Darlington for its section 51 functions.
4. Durham’s reliance on section 120 of the Local Government Act 1972 could not establish an error of law. That provision had not been relied on before the arbitrator, who had made no relevant factual finding or decision.
5. The site could be surplus land despite its negative value. Regulation 10 permitted disposal without consideration with the Secretary of State’s consent, and expenditure incurred in putting the land into saleable condition could be apportioned under regulation 10(5).
6. Interest. Durham’s appeal against the Cochrane award succeeded and paragraph 6.2 was set aside. The notice which gave rise to liability for the principal sum was the regulation 16 notice served after the arbitration, not the original regulation 14 notice. Interest under regulation 18 could therefore not accrue before that notice and the expiry of the regulation 17 payment period.
7. Sections 94 and 95 of the Arbitration Act 1996 did not preserve a power under section 49 to award interest for the earlier period. The Regulations either provided otherwise or were inconsistent with such an award. Even if the statutory power existed, awarding interest before the principal sum became payable was an error of principle.

Two appeals under section 69(3) of the Arbitration Act 1996 were brought against statutory arbitration awards by Mr Malcolm Spence QC and Mr Christopher Cochrane QC. The High Court dismissed the first appeal and allowed the second, setting aside paragraph 6.2 of the Cochrane award.