Middlesbrough Borough Council (17 014 424)

Category : Other Categories > Land

Decision : Upheld

Decision date : 22 Jan 2019

The Ombudsman's final decision:

Summary: It was not fault for the Council to seek to register its ownership of a piece of land between Mr X’s property and land leased to Mr X by the Council. There were faults by the Council in the Land Registry and Tribunal processes which caused avoidable delay, time and trouble to Mr X, which require a remedy. There was no Council fault by officers not applying its ‘Asset Disposal Policy’ when discussing the sale of land to Mr X.

The complaint

  1. Mr X complains the Council has:
      1. inappropriately sought to register ownership and control over a ‘ransom strip’ of land (Land D) to the rear of Property A, his business premises;
      2. misled Mr X about the deadlines for his submissions to the Land Registry Tribunal;
      3. failed to apply its policy on the sale of assets during negotiations with Mr X regarding the possible purchase of land he currently leases from the Council (Land B).
  2. Mr X says the Council withdrew its ownership claim, but in seeking to register its ownership with the Land Registry, acted to the detriment of his business and his employees. Mr X says his need to contest the Council’s claim to the land led to avoidable use of his time, anxiety, worry and stress, as well as significant expense.
  3. Mr X has now secured ownership of the land at court, by making an ‘Adverse Possession’ application. Mr X proved to a sufficient standard that he had controlled and maintained the land as his own for over 12 years.

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The Ombudsman’s role and powers

  1. We investigate complaints about ‘maladministration’ and ‘service failure’. In this statement, I have used the word fault to refer to these. We must also consider whether any fault has had an adverse impact on the person making the complaint. I refer to this as ‘injustice’. If there has been fault which has caused an injustice, we may suggest a remedy. (Local Government Act 1974, sections 26(1) and 26A(1), as amended)
  2. We cannot question whether a council’s decision is right or wrong simply because the complainant disagrees with it. We must consider whether there was fault in the way the decision was reached. (Local Government Act 1974, section 34(3), as amended)
  3. If we are satisfied with a council’s actions or proposed actions, we can complete our investigation and issue a decision statement. (Local Government Act 1974, section 30(1B) and 34H(i), as amended)

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How I considered this complaint

  1. As part of the investigation, I have:
    • considered the complaint and the documents provided by Mr X;
    • made enquiries of the Council and considered the comments and documents the Council provided;
    • issued two draft decisions, inviting comments from Mr X and the Council, and considered replies received.

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What I found

  1. Section 123 of the Local Government Act 1972 says councils have a right to dispose of their assets, including land or buildings, in any manner they wish, subject to certain conditions. However, councils have a duty to achieve the best consideration that can reasonably be obtained.
  2. Circular 06/03: Local Government Act 1972 General Disposal Consent (England) 2003 gives councils the power to dispose of assets for market value, or for less than the market value for the following reasons:
    • promotion or improvement of economic well-being;
    • promotion or improvement of social well-being; and/or
    • promotion or improvement of environmental well-being.

Background – relevant land and properties

  1. Mr X owns a long L-shaped building, Property A, with its longest front elevation facing a street to the north. National government used to own Property A but sold it to Mr X, who now runs a business there. To the south of Property A is Land B. Mr X leases Land B from the Council. The land provides outside amenity space for his business.
  2. Mr X and the Council have had disputes about Mr X’s use of the leasehold land, and some adjacent highways land. The Council considers some of Mr X’s uses, such as additional parking spaces, have breached the terms of his lease.
  3. To the west of Property A and Land B is Property C, a smaller building Mr X used to own. Mr X sold Property C to Organisation C. They knocked down the previous building and replaced it with residential units and a small office.
  4. Along the west, north and east boundaries of Land B, and bordering both Properties A and C, is a 1.7 metre-wide U‑shaped strip of land, Land D. Ownership of this land was never recorded with the Land Registry.

Assessment

Council decisions on registering Land D

  1. To run his business, Mr X needs constant access across Land D as it sits between Property A and Land B. Mr X says the Council’s decision to seek to register Land D as its own was inappropriate. He considers officers’ actions were ill-intentioned and designed to cause him trouble for his business by creating a ‘ransom strip’.
  2. I asked the Council about its decision to register ownership of Land D. The evidence shows Organisation C contacted the Council in 2015 to ask about using some of Land B, and neighbouring land, as parking for its staff. On investigating that query, the Council noticed Land D had never been registered and nobody formally owned it. In September 2016, Organisation C asked the Council if they could fence off and gate Land D, which they thought was necessary to comply with planning and Building Control requirements for their new building. The Council says this spurred them to investigate applying to register Land D, as they could not control what happened on the land if they did not own it. Officers sent the application to the Land Registry in November 2016.
  3. The Council sought to register its ownership of Land D to protect its position as the owner of adjacent Land B, and as the local authority. It was not fault for the Council to do this.
  4. Mr X disputes the Council’s reasons for seeking to register its ownership of Land D. He believes the Council intentionally sought to cause disruption and uncertainty to his business. This perception perhaps stems from earlier issues with the Council about Mr X’s use of Land B. But I have not seen evidence which supports Mr X’s belief. There are no grounds for the Ombudsman to prefer Mr X’s views on why the Council sought to register the land.
  5. Mr X has concerns about the evidence the Council gave to the Land Registry to support its claim of ownership over Land D. The Council submitted deeds which officers considered may relate to Land D, but they have acknowledged they were ‘indecipherable’. That was a matter for the Land Registry and any relevant Tribunal to consider. That consideration did not happen because the Council decided to withdraw its Land Registry application for Land D. It is not for the Ombudsman to determine the strength of the Council’s evidence in their registration application, or to reach a view on whether the application would have succeeded.
  6. I asked the Council to explain why officers decided to withdraw the application. Officers took their decision after weighing up the evidence, the circumstances with Mr X’s later ‘Adverse Possession’ application, and on its own legal advice. The decision to withdraw was a professional judgement officers were entitled to make. They took account of the relevant information, and sought appropriate advice when making that decision. There are no grounds for the Ombudsman to criticise the officers’ decision.
  7. The Council’s decision to withdraw does not mean it was fault to make the application in the first place. I cannot say whether the Council’s application would have succeeded or failed. Only the Land Registry or Tribunal could have made that determination, if they had considered the evidence.

Land Registry and Tribunal process

  1. The Council proceeded with its Land Registry application for Land D longer than it might have done. The evidence shows changes of staff dealing with the case contributed to miscommunication about the legal department’s instructions to officers. I find this was fault.
  2. This fault led to officers, in July 2017, formally declining the option to negotiate with Mr X before their application went further along the Tribunal process. This meant the Council had to seek Mr X’s agreement to withdraw its application, and then seek to negotiate with Mr X.
  3. By October 2017, the Council had explained to Mr X that officers intended to not proceed with the Tribunal hearing for their application. They sought his agreement for the Tribunal process to be voided. On 17 October 2017, the Council told Mr X he had until 23 October to provide his statement to the Tribunal that he agreed to the Council’s withdrawal. The officer asked Mr X to send it in sooner if he could, by 19 October. The 23 October deadline was the Council’s. Mr X’s statutory deadline was later. Mr X completed and submitted his Tribunal statement by 20 October.
  4. The Council says Mr X should have sought his own legal advice about the relevant submission dates during the Tribunal process. I agree Mr X may have protected his own position in this way, or by checking the deadlines in some other way. But if a council officer decides to give information about deadlines for a formal Tribunal process, the onus is on the officer to give correct information. A council officer giving out incorrect information, as happened here, is fault.
  5. This fault follows on from the Council’s earlier error of formally asking the Land Registry to proceed with its application to Tribunal. If officers had not done that, Mr X would not have needed to contact the Land Registry to confirm his agreement to stop the Council’s application.
  6. I have considered the impact of the Council’s faults on Mr X. The Council and Mr X reached the same position they would have even with the fault, because they later entered discussions about Land D, outside the Tribunal process. But the faults added 10 weeks to that process. Negotiations could have started that much sooner without the fault, and Mr X could have proceeded sooner with his ‘Adverse Possession’ application. Mr X would also not have been put to the avoidable time and trouble of sending his statement to the Tribunal to agree to the withdrawal of the Council’s application. This was injustice to Mr X. I make a recommendation below to remedy this.
  7. Mr X says his ‘Adverse Possession’ application was held up for almost a year due to the Council’s application. He says Council fault required him to spend 30 hours preparing his claim for ownership, against the Council’s claim. He considers the recommended remedy does not provide a fair outcome.
  8. But Mr X initially prepared his ‘Adverse Possession’ application while unaware of the Council’s Land Registry application. And once the Council withdrew its application, it was Mr X’s decision to incur the further costs of pursuing his own application. So Mr X would have spent those parts of his costs in any event.
  9. For the Ombudsman to recommend a remedy for injustice caused by the Council applying for ownership of Land D, we would have to find that action was fault. I recognise Mr X’s view is that it was fault, but for the reasons set out above, I do not agree. So no further remedy is required. I find Council fault during its application caused 10 weeks of delay, and that delay is the only injustice to Mr X requiring a remedy here.

Land B – asset disposal

  1. Mr X owns a portion of Land B, which is behind the easternmost part of Property A, where it is closest to Property C. But the Council retains the leasehold for that portion, and owns the rest of the land to the west, stretching along the rear boundary with Property A. Mr X uses the part of Land B he leases but does not own as exterior amenity space for his business.
  2. Mr X has previously complained to the Ombudsman about the Council’s actions during discussions on the sale of Land B. The Ombudsman closed the file at the end of July 2017. We do not entertain complaints about matters we have already decided, so I have not considered anything which happened before July 2017. However, I asked the Council what discussions, if any, Mr X and the Council had engaged in about the sale of Land B after July 2017.
  3. In December 2017, the Council wrote to Mr X to advise him of the amount of money it would require from him to consider selling him Land B. The Council valued Land B at a sale price of £69,000. They calculated this sum by multiplying the lease revenue from Mr X of £4,600 per year by 15. The Council says it is its policy to apply this calculation, to offset the loss of lease revenue.
  4. Mr X also wants to buy the highway land next to Land B, which he has been using as additional parking for his business. The Council determined that if Mr X were paying to lease that land for parking, it would be charging him £3,250 per year. Using the same formula, the Council valued Land B at £48,750.
  5. Mr X initially offered £65,000 for the two plots. A surveyor he employed then valued Land B, and the adjacent highway land, at £45,000 in total. Mr X considers the Council’s valuations are too high, particularly when recent low-cost sales of land in the area by the Council are taken into account.
  6. In December 2016, the Council introduced its ‘Estates Strategy and Assets Disposal Policy’. Mr X says the Council should have applied this policy when considering his offers for Land B.
  7. The policy says the Council must be clear about the purpose of the disposal, and complete a disposal business case. This should consider regeneration plans for the area, the market value of the property and any other outcomes required such as the potential social value offered by any sale, such as job creation and community benefits. Where appropriate, the Council may seek a professional market valuation of the property.
  8. The policy says the Council may then assess how much potential capital receipt would need to be sacrificed to achieve any desirable social, economic or environmental outcomes. The policy also says the Council should consider future revenue streams such as council tax, ‘New Homes Bonus’ and business rates, when assessing the potential benefit to the Council of any transaction.
  9. Rental and sale values of Council assets are determined by several factors including relevant comparable transactions, and the benefits gained from the transactions by any of the parties involved. The Council calculates the capital value of its land using the rental values and a yield rate based on the sale of other Council ground leases.
  10. The Council says the ‘Asset Disposal Policy’ is not relevant to its discussions with Mr X over Land B because it is intended to govern how the Council disposes of an asset, not whether to dispose of an asset. Officers quote paragraph seven of the policy which states:

‘This policy applies where a business case for disposal of asset is approved by the Head of Asset Management as it is no longer required by the organisation for operational purposes and disposal is recommended based on consideration of the Estate Strategy aims’.

  1. The Council says:

‘Throughout the entire course of the discussions the Council has never come to the decision that it wishes to dispose of [Land B, or the adjacent highways land]’.

  1. The Council says this is because the discussions with Mr X have never agreed a high enough price to trigger such a decision.
  2. Mr X considers the policy should apply to his approaches to buy Land B. He was engaged in correspondence with officers about the land and they have never told him it was not the Council’s intention to sell it.
  3. But I find the policy does not apply to the Council’s discussions with Mr X over Land B. Paragraph seven indicates the policy would only have applied if the intention to sell the land had come from the Council, not from Mr X’s approach to buy it.
  4. Mr X refers to the Ombudsman’s decision on his previous complaint. He considers the Council failed to recognise the Ombudsman’s guidance on the use of its asset disposal policy. Our final decision says:

The Council may wish to consider how it should apply its [asset disposal] policy to future unsolicited requests to buy the freehold interest in leased land.

  1. This is a suggestion to the Council. It is not a formal recommendation the Ombudsman required the Council to act on. It was for the Council to decide whether to follow the suggestion. The Ombudsman found no fault by the Council in Mr X’s previous complaint. So there were no grounds to make formal recommendations.
  2. Similarly, I have not found it fault for the Council not to apply its ‘Asset Disposal Policy’ to its later dealings with Mr X about Land B and the adjacent highway land. So I make no recommendation to the Council on this part of the complaint.
  3. The Council has offered to apply its ‘Estates Strategy’ policy, to consider Mr X’s offer to buy Land B. Mr X has previously made various offers, but it is not clear from his evidence what he now considers a fair price. If he wishes to take up the Council’s offer to reconsider his request, applying the ‘Estates Strategy’ policy, he should contact the Council.

Land B highway

  1. Mr X says the Council was wrong to lease Land B to him because it includes highway land. I do not consider this issue causes Mr X any significant personal injustice. The Council’s decision to tolerate Mr X’s use of this land, without the requirement to alter its designation as highway land has been, and continues to be, a benefit to Mr X.

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Agreed action

  1. I recommended the Council apologise to Mr X for:
    • avoidably prolonging their Land Registry application process by 10 weeks by declining to negotiate before proceeding to the Tribunal; and
    • the avoidable time and trouble caused to Mr X when submitting further papers, after the Council erroneously progressed their Land Registry application to the Tribunal.
  2. The Council should send that apology within one month of the date of my final decision statement.
  3. The Council has agreed to take these actions.

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Final decision

  1. It was not fault for the Council to seek to register its ownership of land between Mr X’s property, and land leased to Mr X by the Council.
  2. There was no fault by officers not applying the ‘Asset Disposal Policy’ when discussing the sale of land to Mr X.
  3. There was fault by the Council causing injustice to Mr X during its application to register Land D in its ownership. I consider the Council’s agreement to the recommended actions resolves the complaint.

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Investigator's decision on behalf of the Ombudsman

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