Dudley Muslim Association v Dudley Metropolitan Borough Council

A public body’s status does not, by itself, convert enforcement of a contract into a public-law dispute. Where a commercial bargain has been freely made, legitimate expectation or general abuse of power cannot ordinarily be used to alter its legal effect; the appropriate defences are found in private law. A promise to transfer land falls within section 2(1) of the Law of Property (Miscellaneous Provisions) Act 1989, and promissory estoppel cannot informally vary it where no statutory exception applies. Specific representations must be assessed objectively and in their full context. A later unequivocal refusal may displace any earlier expectation. Abuse of power is not freestanding, and fairness is context-sensitive. On an appeal from summary judgment, a pleaded point raising no new facts may be added to the grounds, but a late re-amendment requires a real prospect of success.

The Dudley Muslim Association acquired a freehold site from the Council for a proposed mosque, subject to covenants requiring completion by 31 December 2008 and retransfer if the development was not completed. Planning permission was delayed, refused and later allowed on appeal, but the contractual deadline passed. The Council sought specific performance of the retransfer covenant.

The Association relied on legitimate expectation and abuse of power, alleging that Council communications and conduct justified a further period for development. Master Marsh granted summary judgment. Mr David Halpern QC, sitting as a deputy High Court judge, dismissed the Association’s appeal, although he considered that one letter was arguably sufficiently clear. The central issues were whether public-law defences could resist enforcement of the contract, whether the land formalities legislation prevented reliance on promissory estoppel, and whether the grounds of appeal should be amended.

Disposition. Lewison LJ delivered the judgment, with Treacy LJ and Gloster LJ agreeing. The order refusing permission to amend the grounds of appeal was discharged. The appeal was otherwise dismissed, and permission to re-amend the defence was refused.

1. Public and private law. Although section 120 of the Local Government Act 1972 supplied the Council’s statutory authority to acquire land, the dispute concerned enforcement of a commercial bargain rather than unilateral exercise of statutory power. Following Hampshire County Council v Supportway Community Services Ltd [2006] EWCA Civ 1035, Mercury Energy Ltd v Electricity Corp of New Zealand Ltd [1994] 1 WLR 521 and Krebs v NHS Commissioning Board [2014] EWCA Civ 1540, the Association could not use legitimate expectation or a general appeal to abuse of power to change the contractual obligation. Wandsworth LBC v Winder [1985] 1 AC 461 was distinguishable because it concerned the forum for challenging a unilateral, borough-wide statutory rent power.
2. Land formalities. The obligation to retransfer the freehold was an executory contract for disposition of an interest in land. Any variation therefore had to comply with section 2 of the Law of Property (Miscellaneous Provisions) Act 1989. Promissory estoppel could not circumvent section 2(1), since no constructive trust arose and allowing the defence would effectively repeal the statute judicially. The court assumed for present purposes that proprietary estoppel might fall within section 2(5), but that did not assist the pleaded defence.
3. Legitimate expectation. A specific representation must be assessed by reading the whole course of communication objectively and in context. The 2006 letter did not promise an open-ended extension, and the Council’s 2007 letter unequivocally refused the requested extension before the Association incurred the cost of the planning appeal. Any earlier expectation therefore could not survive. The court did not decide the general question whether detrimental reliance is always necessary.
4. Abuse of power. Abuse of power is not a freestanding ground absent unlawful action. The court must identify the power said to be abused. Statutory powers may be reviewed for proper purpose and proportionality, but contractual rights freely conferred are not ordinarily abusive merely because enforcement is harsh. The Council’s planning and landowning capacities were distinct. Its planning obligations did not prevent it enforcing contractual rights as landowner, even if it considered the site unsuitable as a mosque.
5. Amendments. The judge had taken too hard a line in refusing amendment of the grounds: the abuse-of-power point had been pleaded, had been argued before the Master, raised no new facts and arose before trial. The proposed re-amendment was different. Its lateness, the Association’s tactical decision not to rely on it earlier and its insufficient merits justified refusal, applying the sliding-scale approach in Savings & Investment Bank Ltd (in liquidation) v Fincken [2003] EWCA Civ 1630.

• Court of Appeal (Civil Division). In [2015] EWCA Civ 1123, the court discharged the order refusing amendment of the grounds of appeal, but otherwise dismissed the appeal and refused permission to re-amend.
• High Court, Chancery Division. Master Marsh granted summary judgment for the Council. Mr David Halpern QC, sitting as a deputy High Court judge, dismissed the Association’s appeal, while holding that the 2006 letter was arguably sufficiently clear to found a legitimate-expectation case.