McHugh -v- Kildare County Council.
Judgment was given by Mr Justice Adrian Hardiman on February 24th, 2009, the Chief Justice, Mr Justice John Murray, Mrs Justice Susan Denham, Mr Justice Hugh Geoghegan and Mr Justice Nial Fennelly concurring.
An agreement on the part of Kildare County Council and the plaintiff that he would transfer some land to the council in the event of other land being rezoned was not an agreement within the meaning of section 38 of the Local Government (Planning and Development) Act 1963, as amended by the Act of 1976, and was ultra vires the council. It was therefore void.
In the late 1990s, Mr McHugh was the owner of 47 acres of land in Co Kildare, near an interchange on the main road. He considered it suitable for zoning for industrial use and he applied to Kildare County Council, the planning authority for the area, for such zoning. Discussions on the matter took place between him, his solicitor and engineer, and the council.
As a result, an agreement was entered into to the effect that he would cede to the council 20 per cent of the land if his land was rezoned for industrial use. The agreement also stated that this assertion was a matter incidental to the grant of rezoning.
It was common case that the form of the agreement came from the defendant (the county council) although the suggestion came from the plaintiff, who signed it. No one signed it on behalf of the defendant, though the council relies on it.
In the case in the High Court, the plaintiff said he had been required to sign the letter. However, in the Supreme Court appeal against the High Court order in favour of the council, the plaintiff did not suggest any coercion and instead argued that the agreement was not capable of being an agreement within the meaning of section 38 of the 1963 Act and was unenforceable, even though he had benefited from the rezoning.
The county council insisted that the agreement was enforceable under section 38 of the Act.
It had begun proceedings for the transfer of the lands in 2005, but had not progressed them and they formed no part of this case, even though minutes of council meetings showed that all the landowners who sought rezoning of their lands “coincidentally or otherwise” agreed to cede some of their lands in the event of rezoning being approved.
The issue in this case was therefore a very narrow technical issue – whether the agreement was enforceable under the Act or not.
“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,” Mr Justice Hardiman said.
The trial judge in the High Court had found that a consideration moved from the council to the plaintiff and it appeared he considered this to have been the rezoning. However, in the appeal, the council strongly denied that this was a consideration which moved from it to the plaintiff.
Mr Justice Hardiman examined section 38 of the 1963 Act, as amended, which states that a planning authority may enter into an agreement with any person “for the purpose of restricting or regulating the development or use of the land either permanently or during such period as may be specified”.
The purported agreement with Mr McHugh stated 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 . . . I will transfer to the council free of charge or expense the lands [as indicated on a plan]”.
This was clearly a covenant to transfer lands, he said.
“It seems to me that section 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 section 38 of the Act of 1963 cannot in and of itself make the purported agreement of 13th May 1999 an agreement of the sort envisaged by section 38.”
Counsel for the defendant had argued that because the whole transaction had taken place within the context of a proposed rezoning for industrial use and because the local authority could only use the land in accordance with the development plan to be amended by the rezoning, this was an agreement to “regulate or restrict development”.
Mr Justice Hardiman said that the purpose of an agreement under section 38 was to regulate the use of land while it remained in the ownership of the person who arrived at the agreement or anyone to whom he sold the land, not to allow the transfer of the land to the council itself.
If it was transferred to the council there would be no need for an agreement to restrict its use, which the council could do as owner.
If the agreement was not an agreement within the meaning of section 38 it appeared to be ultra vires the council, which had not been given a power to acquire land by the means envisaged in the purported agreement.
Counsel for the defendant had said this decision would allow Mr McHugh to refuse to “stick to his bargain”. Counsel however had great difficulty in articulating what this bargain was and had said that the transfer was not in consideration of rezoning, but of his proposal being placed before the councillors.
The councillors would have been obliged to consider the application anyway.
The judge in the High Court case had understood that the consideration for the land transfer was the rezoning, but the defendant had flatly denied this. Mr Justice Hardiman allowed the appeal and declared the agreement to be void.
The full judgment is on www.courts.ie
Gavin Ralston SC, Eamon Galligan SC and Mark Dunne BL, instructed by Coughlan, White O’Toole, Newbridge, for the appellant; Pat Butler SC and John Doherty BL, instructed by R A Osbourne, Athy, for the respondent.