CASE OF PINE VALLEY DEVELOPMENTS LTD AND OTHERS v. IRELAND
Preliminary objection rejected (victim);Preliminary objection rejected (non-exhaustion);No violation of P1-1;No violation of Art. 14+P1-1;Violation of Art. 14+P1-1;No violation of Art. 13;Just satisfaction reserved
C. Russo
8. The first and second applicants, Pine Valley and Healy Holdings, used to have as their principal business the purchase and development of land. The first of these companies, which was a wholly-owned subsidiary of the second, was struck off the register of companies on 26 October 1990 and dissolved on 6 November 1990, for failure to file annual returns for more than eight years. Since 1981 Healy Holdings too has filed no annual returns; on 14 October and 29 November 1985 a receiver to this company was appointed by two secured creditors. The third applicant, Mr Daniel Healy, is the managing director of Healy Holdings and its sole beneficial shareholder; on 19 July 1990, by order of an English court, he was adjudged bankrupt. 9. On 15 November 1978 Pine Valley had agreed to purchase for IR £550,000 21½ acres of land at Clondalkin, County Dublin. It did so in reliance on an outline planning permission (see paragraph 29 below) for industrial warehouse and office development on the site. This permission, which was recorded in the official planning register (see paragraph 31 below), had been granted on 10 March 1977 by the Minister for Local Government to the then owner, Mr Patrick Thornton, on his appeal against the refusal, on 26 April 1976, by the planning authority (Dublin County Council) of full planning permission. One of the grounds for that refusal was that the site was in an area zoned for the further development of agriculture so as to preserve a green belt. 10. On 15 September 1980 Dublin County Council refused the detailed planning approval (see paragraph 29 below) for which Pine Valley had applied on 16 July 1980 in reliance on the outline permission. Pine Valley thereupon sought a conditional order of mandamus, directing the council to grant such approval; such an order was granted on 8 December 1980 and was made absolute by the High Court by a decision of 27 May 1981. 11. On 17 July 1981 Pine Valley sold the land to Healy Holdings for IR £550,000. 12. On 5 February 1982, on appeal by Dublin County Council against the High Court’s decision, the Supreme Court held that the grant of outline planning permission had been ultra vires and was therefore a nullity. It found that the relevant statutory provision (section 26 of the Local Government (Planning and Development) Act 1963) did not empower the Minister for Local Government to make, on an appeal against a refusal by a planning authority, a decision which - as in the present case - contravened the development plan (see paragraph 9 above). 13. As a result of this decision the land could not be developed and its value was therefore substantially reduced. In June 1988 it was sold in the open market by the receiver of Healy Holdings for IR £50,000. 14. With a view to validating planning permissions and approvals the validity of which came into question as a result of the Supreme Court’s decision, the Local Government (Planning and Development) Act 1982 ("the 1982 Act") was enacted. It entered into force on 28 July 1982. 15. Section 6 of the 1982 Act provided as follows: "(1) A permission or approval granted on appeal ... prior to the 15th day of March, 1977, shall not be, and shall not be regarded as ever having been, invalid by reason only of the fact that the development concerned contravened, or would contravene, materially the development plan relating to the area of the planning authority to whose decision the appeal related. (2) If, because of any or all of its provisions, subsection (1) of this section would, but for this subsection, conflict with a constitutional right of any person, the provisions of that subsection shall be subject to such limitation as is necessary to secure that they do not so conflict but shall be otherwise of full force and effect." The date of 15 March 1977 was that of the establishment of the Planning Board (An Bord Pleanála), to which body the appeal functions formerly entrusted to the Minister for Local Government had been transferred by the Local Government (Planning and Development) Act 1976. 16. The 1982 Act also dealt, in section 2, with the duration of the validity of certain permissions. Its effect was that one granted on 10 March 1977, as was the outline permission in the present case, expired on 10 March 1984. Under section 4, however, the planning authority could extend the period of validity of a permission provided, inter alia, that substantial works had already been carried out before it expired. 17. In the course of the debate on the 1982 Act before Seanad Éireann (Upper House of Parliament) the Minister of State at the Department of the Environment was asked the following question: "I understand that certain planning permissions were declared to be null and void by the Supreme Court. I agree the law has to be put right, but who is going to declare under subsection (2) whether a person’s constitutional rights are going to be interfered with? Does it mean another trip to the Supreme Court? What is the position? The Minister might tell us exactly what is in his mind." The Minister replied: "It would be agreed by the court. Subsection (2) has been included by the parliamentary draftsman, with the agreement of the Attorney General, so as to preserve the rights of parties to any proceedings now before the courts and to assure that no court is deprived of jurisdiction regarding an issue raised in such proceedings. This subsection is also designed to meet the case of any unconstitutional interference with a property right." (Official report of the Parliamentary Debates of Seanad Éireann for 22 July 1982, columns 1411-1435) 18. On 4 August 1982 Pine Valley applied to Dublin County Council for planning approval (see paragraph 29 below) on the basis of the outline permission granted in 1977; its application contained no reference to the 1982 Act. Approval was refused on 10 December on the ground that the Supreme Court had held in the first Pine Valley case that the outline permission was not valid and on four other grounds related to technical planning matters. No appeal was made to the Planning Board against this decision nor was it the subject of any other legal challenge; the applicants claimed that an appeal would have been to no avail since the Board had to confine itself to matters of proper planning and development (see paragraph 30 below) and could not give an authoritative interpretation of section 6 of the 1982 Act. 19. A few months after the Council’s decision, the applicants set in motion the second Pine Valley case (see paragraphs 20-27 below). Whilst it was pending, the following steps were taken on their behalf. First, on 27 April 1983 their architect wrote to the Planning Board asserting that Pine Valley was excluded from the benefit of section 6(1) of the 1982 Act and asking that the applicants’ position be reconsidered in the light of "the injustice of the situation". The Board replied on 2 May, regretting that it could not be of assistance. Secondly, on 7 September 1984 the applicants’ solicitors wrote to the Board, requesting it to deal with the outstanding appeal which had originally been dealt with by the Minister for Local Government in March 1977 (see paragraph 9 above) in a manner subsequently found invalid. The Board replied on 23 November that the appeal in question "does not remain to be determined by the Board". The solicitors asked the Board to indicate the reasons for this decision, but its reply of 8 January 1985 was confined to saying that the legal advice it had received was confidential and that it could not assist any further than by stating its position. 20. On 11 March 1983 Pine Valley brought proceedings - in which Healy Holdings and Mr Healy were joined as plaintiffs on 25 January 1985 - against the Minister for the Environment (as the successor to the Minister for Local Government), seeking damages for breach of statutory duty, for negligent misrepresentation and for negligence. The plaintiffs later amended their pleadings to include a claim for damages against the State for breach of their constitutional rights of property. With the consent of the parties the High Court directed on 28 January 1985 that the question whether the plaintiffs had a cause of action be tried as a preliminary issue and that the following points of law fell to be determined in this connection: (a) whether an action in damages for (i) breach of statutory duty; (ii) negligence; and/or (iii) negligent misrepresentation lay at the suit of the plaintiffs against the Minister for the Environment for granting on legal advice the outline planning permission to Mr Thornton; (b) whether in the circumstances pleaded the State (i) had failed to vindicate the property rights of the plaintiffs and, if so, whether an action for damages lay against it; (ii) had in its laws respected and as far as practicable by its laws defended and vindicated the property rights of the plaintiffs and, if it had not, whether an action for damages lay against it. On 28 June 1985 the High Court held that no cause of action lay, whereupon the plaintiffs appealed to the Supreme Court. On 22 July they entered into an agreement amongst themselves in which Pine Valley and Healy Holdings assigned to Mr Healy, on his undertaking to pay the costs, their entire interest in the proceedings and acknowledged that any benefit resulting therefrom would accrue to him free of any claim by them. 21. On 30 July 1986 the Supreme Court unanimously dismissed the appeal ([1987] Irish Law Reports Monthly, pp. 753-768). 22. In rejecting the claim for damages based on breach of statutory duty, Mr Justice Finlay CJ (with whose judgment Mr Justice Griffin agreed and Mr Justice Hederman concurred) found that the Minister’s decision to grant outline planning permission contravening the development plan did not fall into any of the categories of ultra vires decisions that would found an action for damages; in particular, there was no evidence that he had been aware that he did not possess the power he was purporting to exercise. 23. Mr Justice Finlay CJ based his dismissal of the claims for alleged negligence and negligent misrepresentation essentially on the ground that, when granting the permission, the Minister had acted bona fide and in accordance with the advice he had obtained from his department’s legal advisers. 24. As regards the claim for damages for breach of the plaintiffs’ constitutional rights of property, Mr Justice Finlay CJ stated: "With regard to this submission the first enquiry must, it seems to me, be as to whether there has been an unjust attack on the plaintiffs’ property rights or whether an injustice has been done to them. What the Minister was doing in making his decision in 1977 to grant outline planning permission to the then owner of these lands was not intended as any form of delimitation or invasion of the rights of the owner of those lands but was rather intended as an enlargement and enhancement of those rights. The purchase of land for development purposes is manifestly a major example of a speculative or risky commercial enterprise. Changes in market values or economic forces, changes in decisions of planning authorities and the rescission of them, and many other factors, indeed, may make the land more or less valuable in the hands of its purchasers. I am prepared to accept that prima facie in this instance the fact that the Minister’s decision was ultimately found by this Court to have been a nullity, probably contributed towards a diminution in the value of the land in the plaintiffs’ hands. That fact, itself, however, does not, in my view, necessarily mean that an injustice was done to the plaintiffs and I am certain that that does not constitute an unjust attack on the plaintiffs’ property rights. The obligation of the State in Article 40.3.1o and Article 40.3.2o [of the Constitution of Ireland] is in the first instance, as far as practicable by its laws to defend and vindicate the personal rights of the citizen and, in the second instance, to protect as best it may from unjust attack, and in the case of injustice done, vindicate the property rights of every citizen. In its decision in the case of Moynihan v. Greensmyth [1977] Irish Reports 55, this Court in its judgment delivered by O’Higgins CJ, stated as follows: ‘It is noted that the guarantee of protection given by Article 40.3.2o of the Constitution is qualified by the words "as best may be". This implies circumstances in which the State may have to balance its protection of the right as against other obligations arising from regard for the common good.’ I am satisfied that it would be reasonable to regard as a requirement of the common good an immunity to persons in whom are vested statutory powers of decision from claims for compensation where they act without negligence and bona fide. Such an immunity would contribute to the efficient and decisive exercise of such statutory powers and would, it seems to me, tend to avoid indecisiveness and delay, which might otherwise be involved. I am, therefore, satisfied that there cannot be, on the facts of this case, any question of there being a clearcut obligation imposed on the State to provide compensation for the plaintiffs in the circumstances which have arisen. I am, therefore, satisfied that the submissions made with regard to a claim for damages for breach of constitutional rights must also fail. It is not necessary for me to decide, and I express no opinion, on the question as to whether an action does lie for failure on the part of the Oireachtas to legislate in protection of personal rights, as distinct from the action to set aside or invalidate legislation which fails adequately to protect or vindicate them." 25. In their judgments some members of the Supreme Court addressed the question whether the retrospective validation of planning permissions effected by section 6 of the 1982 Act (see paragraphs 14-15 above) covered the outline permission granted to Mr Thornton in 1977. This question was not expressly mentioned in the agreed points of law to be determined (see paragraph 20 above), nor did the pleadings in the case make it a contentious issue: the plaintiffs’ plea in their statement of claim that they could not "by operation of law avail of the retrospective validity afforded by the provisions" of that section was not denied by the State in its defence. Mr Justice Finlay CJ stated that the 1982 Act contained a "saver for cases involving constitutional rights of other persons, which would appear to exclude the plaintiffs from the benefit of such retrospective validation". Mr Justice Henchy (with whom Mr Justice Griffin agreed) said that section 6 of the 1982 Act effected a retrospective validation, save where it "would conflict with a constitutional right of any person. This meant that Pine Valley were excluded from the benefit of the section, for they had exercised their constitutional right to litigate the validity of the planning permission in the Courts". Mr Justice Lardner stated: "No doubt it was apprehended that s. 6(1) of the [1982 Act] might operate to reverse retrospectively this Court’s decision [in the first Pine Valley case] and that this might constitute an unwarrantable interference by the legislature in a decision of the courts. It seems probable that it was in these cicumstances that s. 6(2) was enacted with a view to avoiding such interference. And this subsection has been accepted by counsel for both sides in the present case as excluding the appellants from the benefit of s. 6(1)." 26. Certain views were also expressed as to the effects of the plaintiffs’ being excluded from the benefit of the retrospective validation. Mr Justice Henchy said: "[The] exclusion has been attacked by counsel for Pine Valley as being unfairly discriminatory as far as they are concerned, but in my view, while a discrimination has resulted, the primary and overriding purpose of the section was to avoid an unconstitutional invasion of the judicial domain by attempting to give validity to any planning permission which the Courts may have held to be lacking in validity. It would follow that no injustice has been done to Pine Valley by s. 6 of the 1982 Act." Mr Justice Lardner stated: "... the appellants contend that to exclude them from the benefit of s. 6(1) constitutes (a) an unjust attack on their property rights or an injustice done which affects their property rights and (b) discriminates unfairly as between them and other persons who had received permissions or approvals of the Minister on appeal under Part IV of the 1963 Act and who were given the benefit of s. 6(1). In regard to the first contention it seems to me that s. 6(2) was included by the Oireachtas for the purpose of respecting and not interfering with the determination by the courts of the justiciable controversy which constituted the proceedings in [the first Pine Valley case] and of respecting the constitutional rights of the parties, both plaintiffs and defendants in that action, to have their controversy determined by the courts rather than by the Oireachtas. It may be that there is to some extent a conflict here between the right of the parties to have their controversy judicially determined by the courts and the present appellants’ property interest. That fact in itself, however, does not in my view, necessarily mean that an injustice was done to the appellants and I am satisfied that it does not constitute an unjust attack on the appellants’ property rights or an unlawful discrimination against them. Those persons (such as the appellants) who were excluded from the benefits of s. 6(1) by s. 6(2) and the other recipients of planning approval or permission on appeal from the Minister who benefited from s. 6(1) and fall outside the ambit of s. 6(2) constitute two groups who were and are differently situated and a valid and substantial reason for the discrimination which has been made by these sections has always existed." 27. Mr Justice Henchy added that when the outline planning permission in respect of the land was declared invalid, there would have been a breach of the vendor’s covenant for title, which would have given Pine Valley a cause of action for damages against him. Alternatively, it could have recovered from him, in an action for unjust enrichment, so much of the purchase price as was attributable to the permission. Since Pine Valley had not shown that its loss could not be recovered in that way, it had failed to prove that an injustice had been done to it for the purposes of Article 40.3.2o of the Constitution. 28. The Constitution of Ireland contains the following provisions: "1. All citizens shall, as human persons, be held equal before the law. This shall not be held to mean that the State shall not in its enactments have due regard to differences of capacity, physical and moral, and of social function. ... 3. 1o The State guarantees in its laws to respect, and as far as practicable, by its laws to defend and vindicate the personal rights of the citizen. 2o The State shall, in particular, by its laws protect as best it may from unjust attack and, in the case of injustice done, vindicate the life, person, good name and property rights of every citizen." "1. 1o The State acknowledges that man, in virtue of his rational being, has the natural right, antecedent to positive law, to the private ownership of external goods. 2o The State accordingly guarantees to pass no law attempting to abolish the right of private ownership or the general right to transfer, bequeath and inherit property. 2. 1o The State recognises, however, that the exercise of the rights mentioned in the foregoing provisions of this Article ought, in civil society, to be regulated by the principles of social justice. 2o The State, accordingly, may as occasion requires delimit by law the exercise of the said rights with a view to reconciling their exercise with the exigencies of the common good." 29. In addition to the 1982 Act (see paragraphs 14-16 above), the principal legislation pertinent to this case was the Local Government (Planning and Development) Act 1963, as amended by the 1976 Act of the same title ("the 1963 Act"). The 1963 Act and regulations made thereunder provided for the grant by planning authorities of "permissions" and "outline permissions" for the development of land. Permissions were complete in themselves. Outline permissions amounted to a favourable decision as to the principle of the proposed development but were granted subject to the subsequent approval, by the authority or on appeal, of detailed plans, without which approval work could not be commenced. The authority had to examine an application for such approval within the parameters set by the outline permission and could not reopen the question of principle. Outline planning permissions could be revoked but only in the event of a change in circumstances relating to the proper planning and development of the area. 30. In dealing with any application for permission or approval a planning authority was restricted, by section 26(1) of the 1963 Act, to considering "the proper planning and development of [its] area". An appeal against a decision of a planning authority lay to the Minister for Local Government or, after 15 March 1977 (see paragraph 15 above), to the Planning Board. Under section 26(5)(b) of the 1963 Act, the provisions of section 26(1) applied, subject to any necessary modifications, to the determination of any such appeal. If a question of law arose on an appeal, the Minister or the Board could refer it to the High Court for decision (section 82(3)). 31. Under the 1963 Act, planning permissions, which had to be recorded in a register kept by the planning authority, enured for the benefit of the land in question and of "all persons for the time being interested therein" (sections 8 and 28(5)). 32. Subject to a number of exceptions set out in section 56, section 55(1) of the 1963 Act gave a right to compensation in the following terms: "If, on a claim made to the planning authority, it is shown that, as a result of a decision under Part IV of this Act involving a refusal of permission to develop land ... the value of an interest of any person existing in the land to which the decision relates at the time of the decision is reduced, such person shall, subject to the provisions of this Part of this Act, be entitled to be paid by the planning authority by way of compensation the amount of such reduction in value and, in the case of the occupier of the land, the damage (if any) to his trade, business or profession carried on on the land." Claims for compensation under this section had to be made within six months of notification of the decision, unless the Circuit Court accepted an application for an extension of this period (section 55(6)). 33. Under section 29(1) of the 1963 Act: "Where, in a case determined on an appeal under this Part of this Act, permission to develop any land has been refused or has been granted subject to conditions, then, if the owner of the land claims (a) that the land has become incapable of reasonably beneficial use in its existing state, and (b) that the land cannot be rendered capable of reasonably beneficial use by the carrying out of any other development for which permission has been granted under this Part of this Act, or for which the planning authority have undertaken to grant such permission, and (c) in a case where permission to develop the land was granted as aforesaid subject to conditions, that the land cannot be rendered capable of reasonably beneficial use by the carrying out of the permitted development in accordance with those conditions, he may, at any time within the period of six months after the decision (or such longer period as the Minister may allow), serve on the planning authority a [purchase notice] requiring the planning authority to purchase his interest in the land in accordance with the provisions of this section." The value of land which was the subject of such a purchase notice was to be taken to be "the amount which the land if sold in the open market by a willing seller might be expected to realise". 34. It was established by the Supreme Court in Buckley and others (Sinn Fein) v. Attorney General [1950] Irish Reports 67 that the legislature cannot intervene in respect of cases pending before the courts. On the other hand, it appears that the legislature may validly reverse the decision of the courts with retrospective effect once the proceedings are terminated, without thereby infringing the principle of judicial independence (see, for example, the Garda Siochána Act 1979, reversing the Supreme Court decision in Garvey and others v. Ireland [1981] Irish Reports 75).