Reid v IDA: IDA acted ultra vires in deciding to compulsorily purchase property to hold in a land bank

Judge_at_desk

A MATTER OF INTERPRETATION

In its judgment in this case (here), the Court held that: (1) s 16 of the Industrial Development Act 1986 (here) does not specifically confer power on the IDA to compulsorily purchase property to hold in a land bank, and such a power cannot be implied on any public authority–that would require a clear statutory provision; (2) given the connection of the IDA Chairman to the consultant group that recommended the purchase of Reid’s land, and of his role in the decision to make a compulsory purchase, a reasonable observer would have an apprehension of bias; and (3) the Court stated, obiter, that there may be a constitutional or Convention (ECHR) requirement that decisions such as that made by the IDA in this case are referred to an independent adjudicator.

Background

This case relates to the IDA’s first exercise of its statutory power under s 16 of the Industrial Development Act 1986 to compulsorily acquire land. Reid’s home is a 250 year old protected structure which has been in his family’s ownership for over 100 years and is situated on 72 acres of farmland bordering a Special Area of Conservation. However, the land is situated close to the Intel complex in Leixlip, County Kildare, and although it is not zoned for industrial development, and there was land in the area which was zoned for industrial use, the IDA identified it as suitable for the provision of sites for advanced manufacturing. The IDA approached Reid with an offer to purchase the house and land. When he refused, the IDA began the CPO process. It appointed a consultant group, PM, to prepare a report, which identified Reid’s land as the most appropriate in the area (the IDA Chairman is a director of PM). It held an open five day hearing, presided over by a Senior Counsel, at which Reid was allowed legal representation and to make submissions and objections. The SC submitted a report to the IDA based on that. The IDA decided to make the CPO. On notification of the decision, Reid applied to the High Court for an order of certiorari quashing that decision. He challenged the the decision on a number of grounds, including:

  • that s 16 was unconstitutional under Article 40.3, 40.5 and 43;
  • that it breached his Article 8 ECHR rights;
  • that, as the land was zoned agricultural and beside an SAC, the IDA had not demonstrated the development was likely to proceed;
  • that the IDA was acting as judge in its own case; and,
  • objective bias by the decision maker.

Hedigan J ruled against him on all grounds. Reid appealed to the Supreme Court.

Supreme Court

A five judge panel heard this appeal. McKechnie J wrote the decision for the Court; Denham CJ, O’Donnell J, Laffoy J and Charleton J concurred. The Court allowed the appeal on grounds that the IDA acted ultra vires s 16 of the 1986 Act and on grounds of objective bias.

Ultra Vires

S 16 of the 1986 Act authorises the IDA to acquire land either by agreement or compulsorily

if the Authority—

(i) considers that industrial development will or is likely to occur as a result, and

(ii) is satisfied that the undertaking conforms or will conform to the criteria set out in subsections (3) and (4) of section 21 or section 25 (2).

S 21(3) restricts the use of compulsorily purchased land to specific industries, and s 21(4) restricts such land use to businesses which need financial investment, will be financially viable, have an adequate equity base, have prepared a suitable business plan, can sustain employment without additional financial assistance and will add value to the economy.

On review of the case law on the right of public bodies to compulsorily purchase property, the Court determined that a number of principles apply:

  1. the exercise of such power “must accord with the Constitution and must respect and implement the principles of both natural and constitutional justice”;
  2. the impact on the property rights must be justified or necessitated by the exigencies of the common good, and must have regard to the principles of social justice;
  3. “the interference must be the least possible consistent with the advancement of the authorised aim which underlines the power”;
  4. the power must be expressly conferred by statute, and where constitutional rights are abrogated the statutory provision must be construed to give effect to the above principles;
  5. for post-constitutional statutes, there is a presumption that steps taken in the compulsory purchase process will be compliant with the above principles; and,
  6. the courts must ensure that conditions imposed before the exercise of such powers can be validly exercised are strictly met.

For assistance, the Court examined the powers conferred on local authorities to purchase property under the Planning and Development Act 2000 (here). The 2000 Act confers a power on local authorities to compulsorily purchase property where it is required for a particular purpose which is disclosed by the authority. However, the 2000 Act does not confer power on a local authority to compulsorily purchase property for future use. This, the Court outlined, facilitates the orderly function of a local authority while “reflecting due respect for a landowner’s property rights  … the enactment of a specific provision dealing with future use is significant” [51]. The Court determined that the 1986 Act does not confer a power on the IDA to acquire land not required for immediate use. Therefore the decision to compulsorily purchase Reid’s land was ultra vires [52]. The Court set the IDA’s decision aside on that issue.

Consistent with that, it was also the Court’s view that the provisions required to be satisfied under subsections (3) and (4) of sections 21 and 25 of the 1986 Act could not be met where a particular undertaking had not been identified [62-63]. The Court would have set the IDA’s decision aside on that issue also.

Objective Bias

On this issue, the Court determined that an objective observer would have full knowledge of the case, including the fact that Mr O’Mahony was Chairman of the IDA while also a director the consultant firm, PM, that prepared the report recommending Reid’s land as the most appropriate. And given the influential role likely to be played by the Chairman in the meeting where the decision to compulsorily purchase Reid’s land was made, an objective observer would have a reasonable apprehension of bias on the part of the IDA. The Court would have set the decision aside on that issue also.

Constitution/Convention

The Court remarked, obiter, that it is desirable that decisions which will significantly effect the constitutional and Convention property rights of individuals should be made by an independent adjudicator.

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