One of the most famous tenets of English property law is "Caveat Emptor" or "Buyer Beware", which means that the onus is on a buyer of a property to investigate it before purchasing it (or before it becomes contractually obliged to purchase the property). This rule applies whether the property being purchased is a flat, a house, a single commercial property, a large office building or retail park, or even open land; and no matter who is selling the property, including public bodies. In fact, buyers should be especially diligent when buying property from local authorities, who may need to comply with additional requirements before the property can be sold free from certain encumbrances.
The above points were most recently highlighted in the case of R(Day) v Shropshire Council [2023] UKSC 8, where the Supreme Court considered whether a statutory trust created in 1926 gave residents rights of recreation over a piece of land, even after the land had been sold by Shrewsbury Town Council ("the Council").
When local authorities are disposing of public land held under a statutory trust, they must follow the procedure set out in Section 123 of the Local Government Act 1972, which includes advertising their intention to dispose of the relevant open space in the local newspaper for two consecutive weeks. Any objections to the proposed disposal must then be considered. As long as local authorities comply with the statutory procedure then the land can be sold free of any public trust which may exist.
The Council sold a piece of open land to a developer, with neither party being aware that the land was subject to a statutory trust in favour of the public. The Council had originally held the land subject to a statutory trust for recreational purposes under Section 10 of the Open Spaces Act 1910. However, the land in question had not been used as public open land since the Second World War. As the Council were unaware of the trust they did not comply with the statutory notice procedure before the sale. Following the sale of the land, Shropshire Council granted planning permission to the purchasing developer to build houses on the land.
The grant of the planning permission was challenged via Judicial Review, on the ground that the Council had not complied with its statutory notice provisions prior to the sale of the land, and therefore, public rights still existed over the land, which bound the developer preventing them building on the land.
The Supreme Court held that a buyer who acquired open space acquired good title, but was still subject to statutory trusts imposed by Section 10 of the Open Spaces Act 1906, which led the planning permission to be quashed. The Supreme Court stated that:
- Section 28(2) of the Local Government Act 1972 is not designed to free land from public trusts when that land is sold, and should not be read as having accidentally done so; and
- the public recreation rights over the land were material considerations that should have been taken into account when determining the planning application in favour of a housing development.
This case has raised important points and stressed the need for local authority sellers, and those buying from them, to undertake thorough due diligence on the history of the land and to raise additional enquiries on the existence of any statutory public trusts.
