Warehouse club for sale of goods — Only members allowed to participate in scheme — General policy that no retail shops allowed on proposed site — Whether granting of permission was irrational in light of general policy — High court holding that warehouse club was not development for sale to general public and was not a shop — Council were entitled to grant permission
Costco Europe (UK) Ltd was part of an American chain whose aim was to undercut rivals by restricting its customers to those likely to make bulk purchases, keeping a low number of lines in stock and excluding those likely to shoplift. To achieve that aim they operated warehouses from which goods, ranging from minced meat to desktop computers, could be bought only by members of a club, who paid an annual subscription and were either a business or belonged to a specified employment group. The council granted planning permission to Costco to open such a warehouse club on land described in the Thurrock Borough local plan as a “primary industrial and commercial area”.
The permission was subject to conditions contained in a section 106 agreement under the Town and Country Planning Act 1990, restricting the use and operation of the premises, particularly to non-retail use. The agreement contained a clause which acknowledged that the use of the club as a shop, within Class A1 of the Town and Country Planning (Use Classes) Order 1987 (ie for the retail sale of goods to visiting members of the public) would amount to a development, consisting of a change of use, requiring planning permission. Three supermarket chains, Tesco Stores Ltd, J Sainsbury plc and Safeway Stores plc applied for judicial review of the council’s decision. They argued that the council purported to give planning permission for a use which had no retail element whereas what Costco proposed to do included a retail element. Alternatively, there was no reasonable basis for distinguishing Costco’s operation from retail use for planning purposes.
Held The application refused.
1. There was nothing irrational in the council granting permission for the development while operating a general policy to exclude from the site a development of retail shops falling within use Class A1. As there was a restriction on those who could come and buy, the premises were not prima facie for the sale of goods to “visiting members of the public” and did not fall within Class A1 use.
2. In the case of Lewis v Rogers (1984) 82 LGR 670 it had been decided that members of a shopping club were still members of the public. However, that did not apply in the present case, because there the club had clearly been a sham designed to circumvent the Sunday trading laws, which was not the case here.
3. The council had been conscious of the “thin end of the wedge” problem and sought to meet it by requiring the execution of the section 106 agreement. The authority were only prepared to grant planning permission if there was first signed an effective agreement to achieve the aim of preventing a change of use to an ordinary Class A1 retail use.
David Pannick QC, Timothy Corner, Russell Harris and Peter Village (instructed by Berwin Leighton and Lovell White Durrant) appeared for the applicant stores; Richard Humphreys (instructed by the solicitor to Thurrock Borough Council) appeared for the council; Anthony Scrivener QC and Brian Ash QC (instructed by Nabarro Nathanson) appeared for Costco.
