Town and country planning — Developer offering new road link funding as planning obligation — Whether offer a material consideration — Whether refusal of planning permission valid
Three
companies applied to the local planning authority for planning permission to
build a retail food superstore on the outskirts of a town, each on a different
site, of which those proposed by Tesco and Tarmac remained relevant. The
inspector who conducted the local plan inquiry recommended that the development
of a retail store on only one of the sites would be beneficial; he also
recommended a policy statement be prepared to include reference to the district
council’s intention to negotiate with developers funding for a new link road to
relieve traffic congestion. At the inquiry into the three planning
applications, the county council contended that there was a fundamental
constraint on the development of a retail store without the link road and that
private funding of £6.6m must be provided. Tesco offered to provide the
funding, entering into a planning obligation under section 106 of the Town and
Country Planning Act 1990, and the inspector recommended that its application
should be granted and a development proposed by Tarmac be refused. On April 16
1993 the Secretary of State rejected the inspector’s recommendations, dismissed
Tesco’s appeal and granted planning permission for Tarmac’s proposal. He
concluded that the relationship between the funding of the link road and the
development of a superstore was tenuous and that the link road was not needed
to enable any of the superstore proposals to go ahead; Tesco’s funding offer
could not be treated either as a reason for granting planning permission to
Tesco or for dismissing the appeals relating to the other two sites. Tesco
applied under section 288 of the 1990 Act to quash the decision letter
contending, inter alia, that the Secretary of State had failed to take
into account a material consideration in discounting Tesco’s offer of funding.
The Court of Appeal held that the Secretary of State had not regarded the
funding offer as immaterial, but was entitled not to give it any or any significant
weight. Tesco appealed.
matter is a relevant consideration; but it is entirely for the decision maker
to attribute to the relevant considerations such weight as he thinks fit. The
courts will not interfere unless the decision maker acts unreasonably in the Wednesbury
sense. An offered planning obligation which has nothing to do with the proposed
development will plainly not be a material consideration; if not de minimis,
then regard must be had to it. The Secretary of State had had regard to the
funding obligation and was entitled to give it appropriate weight.
The following
cases are referred to in this report.
Associated
Provincial Picture Houses Ltd v Wednesbury
Corporation [1948] 1 KB 223; [1947] 2 All ER 680; (1947) 45 LGR 635, CA
Bradford
City Metropolitan Council v Secretary of State
for the Environment (1986) 53 P&CR 55; [1986] 1 EGLR 199; 278 EG 1473;
[1986] JPL 598, CA
Good v Epping Forest District Council [1994] 1 WLR 376; [1994] 2
EGLR 190; [1994] 27 EG 135; [1993] 3 PLR 135, CA
Hall
& Co Ltd v Shoreham-by-Sea Urban District
Council [1964] 1 WLR 240; [1964] 1 All ER 1; (1963) 62 LGR 206; 15 P&CR
119; [1963] EGD 638; 188 EG 873; [1964] JPL 316, CA
Newbury
District Council v Secretary of State for the
Environment [1981] AC 578; [1980] 2 WLR 379; [1980] 1 All ER 731; (1980) 78
LGR 306; 40 P&CR 148; [1980] JPL 325, HL
Nollan v California Coastal Commission (1987) 483 US 825
Pyx
Granite Co Ltd v Ministry of Housing and Local Government
[1958] 1 QB 554; [1958] 2 WLR 371; [1958] 1 All ER 625; (1958) LGR 171; 9
P&CR 204, CA
R v Plymouth City Council, ex parte Plymouth & South Devon
Co-operative Society Ltd (1993) 67 P&CR 78; [1993] 2 EGLR 206; [1993]
36 EG 135; [1993] 2 PLR 75
R v South Northamptonshire District Council, ex parte Crest Homes
plc [1994] 3 PLR 47
Safeway
Properties Ltd v Secretary of State for the
Environment (1991) 63 P&CR 73; [1991] 3 PLR 91; [1991] JPL 966, CA
This was an
appeal by Tesco Stores Ltd against the decision of the Court of Appeal ([1994]
1 PLR 97) which allowed the appeals of the first respondent, the Secretary of
State for the Environment, and the third respondent, Tarmac Provincial
Properties Ltd, from the decision of Mr Nigel MacLeod QC, sitting as a deputy
judge of the Queen’s Bench Division, whereby he refused Tesco’s application by
judicial review for certiorari to quash a decision of the first
respondent granting planning permission for a superstore: [1993] 2 PLR 108.
Roy Vandermeer
QC and Christopher Katkowski (instructed by Berwin Leighton) appeared for Tesco
Stores Ltd; Duncan Ouseley QC and John Hobson (instructed by the Treasury
Solicitor) represented the Secretary of State for the Environment; Christopher
Lockart-Mummery QC and Richard Drabble (instructed by McKenna & Co)
represented Tarmac Provincial Properties Ltd.
Giving the
first speech, LORD KEITH OF KINDEL said: At the end of the judgments of
the Court of Appeal in this case Sir Thomas Bingham MR said that it involved:
a question of
unusual public importance bearing on the conditions which can be imposed, and
the obligations which can be accepted, on the grant of planning permission and
the point at which the imposition of conditions, and the acceptance of
obligations, overlaps into the buying and selling of planning permission, which
are always agreed to be unacceptable.
Three
companies applied to the local planning authority for planning permission to
build a retail food superstore in the town of Witney, in Oxfordshire, each on a
different site. Tesco’s site was described as the Henry Box site, and that of
Tarmac (which was associated with Sainsburys) as the Mount Mills Site. The
third company’s site does not figure in these proceedings and can be
ignored. There had previously been a local plan inquiry into certain proposed
alterations to the development plan. One of these related to a proposed new
road to the west of the town of Witney. The town straddles the River Windrush.
There is only one bridge over this river, and as a result there is severe
traffic congestion in the centre of the town, which is a conservation area. The
proposed new road known as the West End Link (WEL for short) included a new
river crossing, and the purpose of it was to relieve the traffic congestion.
Another proposed alteration to the plan was to provide for a major retail food
superstore in the town centre. The inspector who conducted the inquiry issued a
report approving the WEL and rejecting the proposal for a retail food
superstore in the town centre. Tesco, Tarmac and other developers had taken
part in the inquiry, opposing the town centre superstore and promoting the
merits of their own sites for such a store, these sites being, a considerable
distance from the town centre. The inspector did not make any formal
recommendations about these sites, but he held that development of a retail
food superstore on one only of these sites would be beneficial, and he
expressed a preference for Tesco’s Henry Box site. Further, he expressed the
view that funding for the WEL was unlikely to come from the highway authority
and he recommended a policy statement including reference to the district
council’s intention to negotiate with developers funding for the WEL or a major
contribution to it, before a superstore went ahead.
Tarmac’s
application for planning, permission was not determined by the local planning
authority within the statutory period and so became the subject of an appeal to
the Secretary of State, who then called in Tesco’s application for the Henry
Box site.
In July 1992
an inquiry into Tarmac’s appeal and Tesco’s application and another appeal not
now relevant was held by Mrs S E Hesketh. At the inquiry Oxfordshire County
Council contended that without the construction of the WEL there was a fundamental
constraint to the development of a superstore on any site because of the
traffic congestion situation, and that full private funding at a cost of £6.6m
must be provided. West Oxfordshire District Council supported this contention,
as did Tesco, which offered to provide the full funding for the WEL itself.
The inspector
recommended that Tesco’s application should be granted and Tarmac’s appeal
dismissed. She first addressed the question whether there was a fundamental
constraint to the development of a food superstore in the absence of funding
for the WEL and rejected that proposition. Having referred to the traffic
problem in Witney, she said:
7.2 … It is clear that a new foodstore would result
in additional traffic on the local road network, and Bridge Street in
particular. However, whilst a store would generate more traffic at peak times,
particularly the Friday evening and Saturday morning peaks, even the worst
estimates indicate the increase in traffic at Bridge Street would be well below
10% over and above that which would be generated by B1 office development, for
which planning permission exists …
The inspector
went on to refer to Department of the Environment Circular 16/91, dealing with
planning obligations under section 106 of the Town and Country Planning Act
1990 (as substituted by section 12 of the Planning and Compensation Act 1991),
and observed that such obligations could relate to land, roads, etc other than
those covered by the planning permission provided there was a direct relationship
between the two. She went on to say:
7.4 … In this case there is some relationship
between the funding of the WEL and a proposed store in that a store would
slightly worsen traffic conditions in the town over and above the existing
planning permission. The relationship is however tenuous. Any superstore site
would be a considerable distance from the WEL and Bridge Street and the
development proposed would not generate a great deal more traffic than the
other permitted uses of the sites …
Having further
observed that the circular stated that the extent of what is required should be
fairly and reasonably related in scale to the proposed development, she said:
7.5 … In the case of Witney, the WEL is necessary
to ameliorate existing traffic conditions and to assist in bringing forward the
development of Policy Areas 1–3, I take the view therefore that the full
funding of the road is not fairly and reasonably related in scale to this
proposed development …
The inspector
took the view that it would be unreasonable to require a developer of a
previously approved development site to fully fund a major road proposal
because his development would marginally increase traffic over and above that
already permitted, but concluded:
7.6 However,
no such requirement is being made by the Council. The Proposed Modifications of
the Local Plan Alterations provide an upper case policy relating to the
provision of the WEL and a lower case statement to the effect that it will be
the Council’s intention to negotiate funding or a major contribution to funding
the WEL. The Local Plan Inspector also stated that the superstore may
contribute ‘all or most’ of this funding. If the Council negotiations result in
the offer of a full contribution to the cost of the WEL from the developer of a
site preferred by the Council following a lengthy Local Plan inquiry, then it
would be perverse to turn away the offer. The Council therefore finds itself in
the somewhat surprising but felicitous position of the first major developer
since the Local Plan inquiry responding to the Council’s offer to negotiate on
WEL funding by a full funding proposal. This seems to me to be a perfectly
proper outcome of negotiations provided that the agreement entered into is
sufficiently robust to achieve the benefits promised.
The inspector
went on to consider the merits from the planning points of view of the
competing sites, upon the basis, which she found proper, that only one site
should be approved. She found those merits to be finely balanced, but having
regard to the informal preference for Tesco’s Henry Box site expressed by the
local plan inspector she came down in favour of that one.
Though the
matter is not directly alluded to in the inspector’s report, it is relevant to
notice that on July 28 1992, the third last day of the inquiry, Tesco entered
into an agreement with Oxfordshire County Council containing a planning
obligation under section 106 of the 1990 Act. The obligation was to pay the
council the sum of £6.6m if planning permission for the development of the
Henry Box site were granted.
On April 16
1993 the Secretary of State issued a decision letter in which he rejected the
inspector’s recommendation. He allowed Tarmac’s appeal regarding the Mount
Mills site and dismissed Tesco’s application for the Henry Box site. I will
have occasion to consider the decision letter in some detail later, but his
reasons in brief were: (1) that he held Tesco’s offer of funding not to be a
good ground either for granting planning permission to Tesco or for dismissing
Tarmac’s appeal; (2) that the local plan inspector’s informal preference for
the Henry Box site should receive only limited weight; and (3) that on planning
grounds the Mount Mills site was to be preferred.
Tesco took
proceedings against the Secretary of State, under section 288 of the 1990 Act,
to quash the decision letter. The grounds of the application were that: (1) the
Secretary of State had wrongly discounted the preference of the local plan
inspector for the Henry Box site and the local planning authority’s acceptance
of that; and (2) the Secretary of State by discounting Tesco’s offer of funding
for the WEL had failed to take account of a material consideration. Tarmac and
West Oxfordshire District Council, in addition to the Secretary of State, were called
as respondents to the application, but the council took no part in the
proceedings. The matter came before Mr Nigel Macleod QC, sitting as a deputy
High Court judge in the Queen’s Bench Division, who on July 7 1993 gave
judgment in favour of Tesco quashing the decision letter*. He rejected the
first ground of application but accepted the second, holding that the Secretary
of State had wrongly failed to treat Tesco’s offer of finding as a material
consideration. Tarmac appealed, and on May 25 1994 the Court of Appeal (Sir
Thomas Bingham MR, Beldam and Steyn LJJ) allowed the appeal and reinstated the
decision of the Secretary of State (unreported); Court of Appeal (Civil
Division) transcript no 736 of 1994† . Sir Thomas Bingham MR and Beidarn LJ
held that the Secretary of State had not failed to have regard to Tesco’s offer
of
any significant weight, as he was entitled to do. Steyn LJ went somewhat
further.
*Editor’s
note: Reported at [1993] 2 PLR 108.
† Editor’s
note: Reported at [1994] 1 PLR 97.
He held that
the Secretary of State, in announcing and applying a policy to the effect that
planning obligations should only be sought where they were necessary to the
grant of planning permission, had acted lawfully, and was entitled to take the
view that in the light of that policy Tesco’s offer of funding was immaterial.
All three lord justices rejected a respondent’s notice by Tesco directed to Mr
Macleod’s refusal of the first ground of application to him. Tesco now appeals
to your lordship’s House. The only matter now at issue is concerned with
Tesco’s offer of funding for the WEL.
The thrust of
Tesco’s argument is that the offer of funding was a material consideration and
that the Secretary of State failed to have regard to it. The argument relies on
section 70 of the Act of 1990 which, so far as material, provides:
(1) Where an
application is made to a local planning authority for planning permission —
(a) subject
to sections 91 and 92, they may grant planning permission, either
unconditionally or subject to such conditions as they think fit; or
(b) they may
refuse planning permission.
(2) In
dealing with such an application the authority shall have regard to the
provisions of the development plan, so far as material to the application, and
to any other material considerations.
By virtue of
sections 77(4) and 79(4), section 70 applies to the Secretary of State when he
is determining an application or an appeal.
The Master of
the Rolls in the course of his judgment in this case said that ‘material’ in
subsection (2) meant ‘relevant’ and, in my opinion, he was correct in this. It
is for the courts, if the matter is brought before them, to decide what is a
relevant consideration. If the decision maker wrongly takes the view that some
consideration is not relevant, and therefore has no regard to it, his decision
cannot stand and he must be required to think again. But it is entirely for the
decision maker to attribute to the relevant considerations such weight as he
thinks fit, and the courts will not interfere unless he has acted unreasonably
in the Wednesbury sense (Associated Provincial Picture Houses Ltd
v Wednesbury Corporation [1948] 1 KB 223). In assessing whether or not
the Secretary of State in the instant case wrongly treated Tesco’s offer of
funding for the WEL as not being a material consideration in determining the
competing applications for planning permission it is necessary to examine both
the published policy of the Secretary of State in regard to planning
obligations and the terms of his decision letter.
Section 12 of
the Planning and Compensation Act 1991 introduced a new section 106 to the Act
of 1990 making provisions with regard to planning obligations. The first three
subsections of it are in these terms:
106.–(1) Any
person interested in land in the area of a local planning authority may, by
agreement or otherwise, enter into an obligation (referred to in this section
and sections 106A and 106B as ‘a planning obligation’), enforceable to the
extent mentioned in subsection (3) —
(a)
restricting the development or use of the land in any specified way:
(b) requiring
specified operations or activities to be carried out in, on, under or over the
land:
(c) requiring
the land to be used in any specified way; or
(d) requiring
a sum or sums to be paid to the authority on a specified date or dates or
periodically.
(2) A
planning obligation may —
(a) be
unconditional or subject to conditions;
(b) impose
any restriction or requirement mentioned in subsection (1)(a) to (c) either
indefinitely or for such period or periods as may be specified: and
(c) if it
requires a sum or sums to be paid, require the payment of a specified amount or
an amount determined in accordance with the instrument by which the obligation
is entered into and, if it requires the payment of periodical sums, require
them to be paid indefinitely or for a specified period.
(3) Subject
to subsection (4) a planning obligation is enforceable by the authority
identified in accordance with subsection (9)(d) —
(a) against
the person entering into the obligation; and
(b) against
any person deriving title from that person.
Just before
the section came into force, on October 25 1991 the Secretary of State issued a
circular, 16/91, giving guidance on the proper use of planning obligations
under it. Annex B to the circular commenced by observing that, rightly used,
planning obligations might facilitate and enhance development proposals, but
that they should not be used to extract from developers payments in cash or in
kind for purposes that were not directly related to the development proposed
but were sought as ‘the price of planning permission’. That no doubt reflected
the dictum of Lloyd LJ in Bradford City Metropolitan Council v Secretary
of State for the Environment (1986) 53 P&CR 55*, at p64, to the effect
that it has usually been regarded as axiomatic that planning consent cannot be
bought or sold.
*Editor’s
note: Also reported at [1986] 1 EGLR 199.
The circular
continued, under the heading General Policy:
B5. The
following paragraphs set out the circumstances in which certain types of
benefit can reasonably be sought in connection with a grant of planning
permission. They are the circumstances to which the Secretary of State and his
inspectors will have regard in determining applications or appeals. They may be
briefly stated as those circumstances where the benefit sought is related to
the development and necessary to the grant of permission. Local planning
authorities should ensure that the presence or absence of extraneous
inducements or benefits does not influence their decision on the planning
application. Authorities should bear in mind that their decision may be
challenged in the courts if it is suspected of having been improperly
influenced.
B6. Planning
applications should be considered on their merits and determined in accordance
with the provisions of the development plan unless material considerations
indicate otherwise. It may be reasonable, depending on the circumstances,
either to impose conditions on the grant of planning permission, or (where the
planning objection to a development proposal cannot be overcome by means of a
condition) to seek to enter a planning obligation by agreement with the
applicant which would be associated with any permission granted. If there is a
choice between imposing conditions and entering into a planning obligation, the
imposition of a condition is preferable because it enables a developer to
appeal to the Secretary of State. The terms of conditions imposed on a planning
permission should not be re-stated in a planning obligation, because that would
entail nugatory duplication and frustrate a developer’s right of appeal.
B7. As with
conditions (see DOE Circular 1/85, Welsh Office Circular 1/85), planning
obligations should only be sought where they are necessary to the granting of
permission, relevant to planning, and relevant to the development to be
permitted. Unacceptable development should never be permitted because of
unrelated benefits offered by the applicant, nor should an acceptable
development be refused permission simply because the applicant is unable or
unwilling to offer such unrelated benefits.
B8. The test
of the reasonableness of seeking a planning obligation from an applicant for
planning permission depends on whether what is required:
(1) is needed
to enable the development to go ahead, for example the provision of adequate
access or car parking; or
(2) in the
case of financial payment will contribute to meeting the cost of providing such
facilities in the near future: or
(3) is
otherwise so directly related to the proposed development and to the use of the
land after its completion, that the development ought not to be permitted
without it, eg the provision, whether by the applicant or by the authority at
the applicant’s expense, of car parking in or near the development, of
reasonable amounts of open space related to the development, or of social,
educational, recreational, sporting or other community provision the need for
which arises from the development: or
(4) is designed
in the case of mixed development to secure an acceptable balance of uses; or to
secure the implementation of local plan policies for a particular area, or type
of development (eg the inclusion of an element of affordable housing in a
larger residential development); or
(5) is
intended to offset the loss of or impact on any amenity or resource present on
the site prior to development, for example in the interests of nature
conservation. The Department welcomes the initiatives taken by some developers
in creating nature reserves, planting trees, establishing wildlife ponds and
providing other nature conservation benefits. This echoes the Government’s view
in This Common Inheritance (Cm 1200) that local authorities and
developers should work together in the interest of preserving the natural
environment.
Planning
obligations can therefore relate to land, roads or buildings other than those
covered by the planning permission, provided that there is a direct
relationship between the two. But they should not be sought where this
connection does not exist or is too remote to be considered reasonable.
B9. If what
is required passes one of the tests set out in the preceding paragraph, a
further test has to be applied. This is whether the extent of what is required
is fairly and reasonably related in scale and kind to the proposed development.
Thus a developer may reasonably be expected to pay for or contribute to the
cost of infrastructure which would not have been necessary but for his
development, but his payments should be directly related in scale to the
benefit which the proposed development will derive from the facilities to be
provided. So, for example, a developer may reach agreement with an
infrastructure undertaker to bring forward in time a project which is already
programmed but is some years from implementation.
Para B12,
under the heading Unilateral Undertakings stated:
The use of
unilateral undertakings is expected to be principally at appeal, where there
are planning objections which only a planning obligation can resolve, but the
parties cannot reach agreement. Where a developer offers an undertaking at
appeal, it will be referred to the local planning authority to seek their
views. Such an undertaking should be in accordance with the general policy in
this guidance. It should be relevant to planning and should resolve the
planning objections to the development proposal concerned. Otherwise, it would
not be a material consideration and will not be taken into account. If the
undertaking would resolve an identified planning objection to a development
proposal but also contains unrelated benefits, it should only be taken into
account to the extent that it resolves the objection. Developers should not
promise to do what they cannot perform. Attention is drawn to the statutory
requirement that a developer must have an interest in the land before he can
enter into a planning obligation. At appeal the Inspector may seek evidence of
title if it has not been demonstrated that the developer has the requisite interest.
Where a trunk road is involved the developer will also need the agreement of
the relevant highway authorities and any necessary highway orders.
The Secretary
of State’s decision letter, in dealing with the matter of Tesco’s offer to fund
the WEL, had regard to the policy guidance in Circular 16/91. The relevant
paragraphs are these:
7. Turning,
therefore to the first main issue, the WEL, the Secretary to State accepts that
a new foodstore on any of the three sites would result in additional traffic on
the local road network, but he observes that such an increase would be less
than 10% in excess of that which would have been generated by the permitted B1
development on the Mount Mills and Henry Box sites. He agrees with the
Inspector that this slight worsening of traffic conditions produces some
relationship between the funding of WEL and a proposed store, but shares her
view that the relationship is tenuous, given the distance of these sites from
WEL and the amount of traffic likely to be generated compared to the potential
from uses already permitted. Looking at the offer of funding made by Tesco in
relation to the tests of reasonableness set out in paragraph B8 of Annex B to
Circular 16/91, the Secretary of State does not consider that WEL is needed to
enable any of the superstore proposals to go ahead, or is otherwise so directly
related to any of the proposed developments and to the use of the land after
completion that any of the developments ought not to be permitted without it.
He appreciates that provision for the road is made in the Local Plan which is
nearing adoption, and that it is the County Council’s intention to seek funding
or a major contribution. However, having regard to paragraph B9 of the Annex to
the Circular, and bearing in mind also that no contributions towards highway
improvements were sought when planning permission was granted in 1991 for B1
development on two of the sites, he agrees with the Inspector that the full
funding of WEL is not fairly and reasonably related in scale to any of the
proposed developments. As to whether it would be appropriate to seek a major
contribution from developers before allowing any superstore proposal, he takes
the view, given the anticipated traffic levels and the distance between the
sites and the route of WEL, that it would be unreasonable to seek even a
partial contribution from developers towards the cost of the work in connection
with the proposals currently before him. He notes the Inspector’s conclusion
that it would be ‘perverse’ to turn away an offer from a developer of a site
preferred by the Council after a lengthy Local Plan inquiry but, for the
reasons given in paragraphs 5 and 6 above, he thinks that the expressed
preference can carry only limited weight. Accordingly, in his view, since the
offer of funding fails the tests of Annex B of Circular 16/91, it cannot be
treated either as a reason for granting planning permission to Tesco or for
dismissing either of the two section 78 appeals.
8. If the
Secretary of State is wrong in his conclusion that it would be unreasonable to
seek even a partial contribution towards the funding of WEL, then it would be
the case that he would be required to take into account Tesco’s offer of
funding, albeit not fully but only to the extent of such partial contribution
as he considered was reasonable. For the same reasons that led him to his
conclusion that not even the seeking of a partial contribution would be
reasonable, he considers that the extent to which the funding should be taken
into account (assuming, for the purposes of argument, that it has to be taken
into account at all) will be of such a limited nature that, even upon taking
the benefit into account, the balance of the arguments would not be tipped so
as to change his decision.
The argument
for Tesco draws attention to the reference in paras B5 and B7 of Circular 16/91
to the benefits of planning obligations being properly sought only where they
are necessary to the grant of planning permission, and in para B8 to the
reasonableness of seeking a planning obligation being dependent on whether it
is needed to enable the development to go ahead. Para 7 of the decision letter
states that the WEL is not needed to enable any of the superstore proposals to
go ahead. This demonstrates, so it is maintained, that the Secretary of State
has applied a test of necessity which has wrongly resulted in his treating
Tesco’s offer of funding as immaterial. Reliance is placed on Newbury
District Council v Secretary of State for the Environment [1981] AC
578. That case was concerned with the question as to the type of conditions
which might lawfully be annexed to a grant of planning permission. Viscount
Dilhorne said, at p599:
It follows
that the conditions imposed must be for a planning purpose and not for any
ulterior one, and that they must fairly and reasonably relate to the
development permitted. Also they must not be so unreasonable that no reasonable
planning authority could have imposed them.
The other
members of the House spoke to similar effect.
The same test,
so it is claimed, falls to be applied to a planning obligation for the purpose
of deciding whether it amounts to a material consideration in connection with
an application for planning permission. The parallel, however, cannot be exact.
No doubt if a condition is completely unrelated to the development for which
planning permission is sought it will not be lawful. But this case is not
concerned with the lawfulness of Tesco’s planning obligation and there may be
planning obligations which have no connection with any particular proposed
development. Further, in Good v Epping Forest District Council [1994]
1 WLR 376 the Court of Appeal held that an agreement under section 52 of the
Town and Country Planning Act 1971, the predecessor of section 106 of the Act of
1990, might be valid notwithstanding that it did not satisfy the second of the Newbury
tests. So I do not think that reference to the Newbury case is
particularly helpful for the purpose of deciding whether a particular planning
obligation is a consideration material to the determination of a planning
application with which the obligation is associated.
Tesco’s
argument founded on R v Plymouth City Council, ex parte Plymouth
& South Devon Co-operative Society Ltd (1993) 67 P&CR 78* as being
a decision of the Court of Appeal to the effect that offers of section 106
agreements by applicants for planning permission which promised various
benefits on and off site, involving the payment of considerable sums of money,
did not vitiate planning consents granted by the local planning authority,
notwithstanding that the offers were not necessary in the sense that they
overcame what would otherwise be planning objections to the proposed
development. A supermarket operator was seeking to overturn planning consents
granted to two rivals, and argued that the section 106 agreements were not
material considerations unless they passed the necessity test. The Court of
Appeal held that it was sufficient, on the basis of Newbury [1981] AC
578, that the obligations offered concerned planning matters and fairly and
reasonably related to the proposed development. The only member of the court
who referred to the Circular 16/91 was Hoffmann LJ. Having quoted, at p90, from
para B7 the statement that planning obligations should only be sought where
they were necessary to the granting of permission, he observed that this
statement of policy embodied a general principle that planning control should
restrict the
interests. He did not make any criticism of the policy, but said:
*Editor’s
note: Also reported at [1993] 2 EGLR 206.
The fact that
the principle of necessity is applied as policy by the Secretary of State does
not make it an independent ground for judicial review of a planning decision
… to say that a condition or the
requirement of a section 106 agreement would have been discharged on appeal by
the Secretary of State, because its imposition did not accord with the policies
I have quoted, is not at all the same thing as saying that the planning
authority would have been acting beyond its statutory powers.
The meaning,
as I understand it, is that a local planning authority are not bound to apply a
policy favoured by the Secretary of State in the sense that failure to do so
will vitiate their decision. The effect of the decision, therefore, is simply
that the local planning authority are not acting unlawfully if they fail to
apply a necessity test in considering whether a planning obligation should be
required or accepted. It does not decide the converse, namely that the local
planning authority would be acting unlawfully if they did, as a matter of
policy, apply a necessity test.
An offered
planning obligation which has nothing to do with the proposed development,
apart from the fact that it is offered by the developer, will plainly not be a
material consideration and could be regarded only as an attempt to buy the
planning permission. If it has some connection with the proposed development
which is not de minimis, then regard must be had to it. But the extent,
if any, to which it should affect the decision is a matter entirely within the
discretion of the decision maker and in exercising that discretion he is
entitled to have regard to his established policy. The policy set out in
Circular 16/91 is intended to bring about certainty and uniformity of approach,
and is directed among other things to securing that planning permissions are
not bought and sold. It is not suggested that there is anything unlawful about
Circular 16/91 as such. It might be thought the Secretary of State has made a
slip in para B12 where it is stated of unilateral undertakings:
It should be
relevant to planning and should resolve the planning objections to the
development proposal concerned. Otherwise, it would not be a material
consideration and will not be taken into account …
But the
context is that of an appeal against refusal of planning permission, which
involves that the local planning authority should have taken the view that
there were planning objections to the proposed development. If these objections
were bad there would be no need for any unilateral obligation. If they were
good then something would require to be done to overcome them and a unilateral
obligation which would not do so would indeed be irrelevant. As regards the
references in paras B5 and B7 to planning obligations being necessary to the
grant of permission and in para B8 to their being needed to enable the
development to go ahead, I think they mean no more than that a planning
obligation should not be given weight unless the exercise of planning judgment
indicates that permission ought not to be granted without it, not that it is to
be completely disregarded as immaterial.
When it comes
to the Secretary of State’s decision letter. I am clearly of the opinion that
on a fair reading of it he has not disregarded Tesco’s offer of funding as
being immaterial. On the contrary, he has given it careful consideration. Para
7 examines the effect of a new foodstore on the traffic situation in Witney,
concludes that there would be a slight worsening and agrees with the inspector
that this produces some relationship between the funding of the WEL and the
proposed foodstore, but that the relationship is tenuous. He expresses the view
that the WEL is not so closely related to any of the proposed superstores that
any of them ought not to be permitted without it. He goes on to say that full
funding of the WEL is not fairly and reasonably related in scale to any of the
proposed developments, and further that having regard to the expected traffic
and the distance between the sites and the route of the WEL it would be
unreasonable to seek even a partial contribution from developers towards the
cost of it. All of this seems to me, far from being a dismissal of the offer of
funding as immaterial, to be a careful weighing up of its significance for the
purpose of arriving at a planning decision. In para 8 the Secretary of State considers
whether, in the event of its being reasonable to seek a partial contribution to
the funding of WEL, the amount of the benefit would be such as to tip the
balance of the argument in favour of Tesco, and concludes that it would not.
That is clearly a weighing exercise.
Upon the whole
matter I am of opinion that the Secretary of State has not treated Tesco’s
offer of funding as immaterial, but has given it full and proper consideration
and that his decision is not open to challenge. I would accordingly dismiss the
appeal.
LORDS
ACKNER, BROWNE-WILKINSON and LLOYD OF BERWICK agreed
with the speech of Lord Keith of Kinkel and did not add anything.
Also agreeing,
LORD HOFFMANN said: I have had the advantage of reading the speech
prepared by my noble and learned friend, Lord Keith of Kinkel. I agree that for
the reasons which he gives, this appeal must be dismissed. But in view of what
the Master of the Rolls, in the passage quoted at the beginning of my noble and
learned friend’s speech, described as the unusual public importance of the
questions involved in this appeal, I add some observations of my own.
1. External costs
A development
will often give rise to what are commonly called external costs, that is to
say, consequences involving loss or expenditure by other persons or the
community at large. Obvious examples are the factory causing pollution, the
office building causing parking problems, the fast food restaurant causing
litter in the streets. Under the laissez-faire system which existed
before the introduction of modem planning control by the Town and Country
Planning Act 1947, the public had for the most part to bear such external costs
as best it could. The law of torts (particularly nuisance and public nuisance)
and the Public Health Acts could provide a remedy for only the most flagrant
cases of un-neighbourly behaviour.
2. Imposing conditions
Section 14(1)
of the Town and Country Planning Act 1947 gave planning authorities the power,
when granting planning permission, to impose ‘such conditions as they think
fit’. This power has been repeated in subsequent planning Acts and is now
contained in section 70(1) of the Town and Country Planning Act 1990. This
might have been thought to be a suitable instrument by which planning
authorities could require that developers bear, or at any rate contribute to,
their own external costs. But the courts, in the early days of planning
control, construed the power to impose conditions very narrowly. It was not so
much the general principles which the courts laid down as the way in which, in
practice, the principles were applied. The classic statement of the general
principle was by Lord Denning in Pyx Granite Co Ltd v Ministry of
Housing and Local Government [1958] 1 QB 554, at p572:
Although the
planning authorities are given very wide powers to impose ‘such conditions as
they think fit’, nevertheless the law says that those conditions, to be valid,
must fairly and reasonably relate to the permitted development. The planning
authority are not at liberty to use their powers for an ulterior object,
however desirable that object may seem to them to be in the public interest.
As a general
statement, this formulation has never been challenged. In Newbury District
Council v Secretary of State for the Environment [1981] AC 578 it
was paraphrased by Viscount Dilhorne as stating three conditions for the
validity of a condition. It must: (1) be for a planning purpose and not for any
ulterior one; (2) fairly and reasonably relate to the permitted development;
and (3) not be Wednesbury unreasonable [1948] 1 KB 223.
3. The Shoreham case
The inability
of planners to use conditions to require developers to bear external costs
arose from the way in which these principles were
Co Ltd v Shoreham-by-Sea Urban District Council [1964] 1 WLR 240.
The plaintiffs wanted to build a ready-mixed concrete plant and other
facilities on land between the sea near Shoreham and the heavily congested main
road to Brighton. The local planning authority granted permission subject to a
condition that the plaintiffs construct an ancillary road on their own land
parallel to the main road and allow access over that road to traffic from
neighbouring land which was scheduled for development and over which it was
proposed that a continuation of the ancillary road would be built. Willmer LJ
said that this was an admirable way to avoid further congestion and minimise
the risk of accident. Nevertheless he and the other members of the Court of
Appeal held the condition to be Wednesbury unreasonable. He said, at
pp250–251:
… if what the defendants desire to achieve is
the construction of an ancillary road serving all the properties to be
developed along the strip of land that is scheduled for development, for the
use of all persons proceeding to or from such properties, they could and should
have proceeded in a different way. What is suggested is that, in addition to
the strip of land already earmarked for the proposed road widening, they could
have designated a further strip 26 feet wide immediately to the southward, and
could have imposed a condition that no building should be erected on this
additional strip which would in any way interfere with its use hereafter for
the building of the proposed ancillary road …
Under the
conditions now sought to be imposed, on the other hand, the plaintiffs must
construct the ancillary road as and when they may be required to do so over the
whole of their frontage entirely at their own expense … The defendants would thus obtain the benefit
of having the road constructed for them at the plaintiffs’ expense, on the
plaintiffs’ land, and without the necessity for paying, any compensation in
respect thereof.
Bearing in
mind that another and more regular course is open to the defendants, it seems
to me that this result would be utterly unreasonable and such as Parliament
cannot possibly have intended.
This judgment
shows no recognition of the possibility that the need to widen the Brighton
Road could in part be regarded as an external cost of the applicant’s
ready-mixed concrete business, to which they could in fairness be required to
contribute as a condition of the planning permission. It is assumed that the
‘regular course’, the natural order of things, is that such costs should be
borne by taxation upon the public at large. The fact that the local authority
have power, on payment of compensation, to take land for highway purposes from
any person, whether or not he imposes external costs upon the community, is
treated as a reason for denying that they can use planning powers to exact a
contribution from those who do.
4. Planning agreements
I have dwelt
upon Hall & Co Ltd v Shoreham-by-Sea Urban District Council because
it exercised a decisive influence upon the development of British planning law
and practice. The Ministry of Housing and Local Government issued a circular
for the guidance of local planning authorities (Circular 5/68), which was
intended to reflect its ratio decidendi. It has since been replaced in
similar terms by para 63 of Circular 1/85:
No payment of
money or other consideration can be required when granting a permission or any
other kind of consent required by a statute, except where there is specific
statutory authority. Conditions requiring, for instance, the cession of land
for road improvements or for open space, or requiring the developer to
contribute money towards the provision of public car parking facilities, should
accordingly not be attached to planning permissions. Similarly, permission
cannot be granted subject to a condition that the applicant enters into an
agreement under Section 52 of the Act [now section 106 of the 1990 Act] or
other powers. However, conditions may in some cases reasonably be imposed to
oblige developers to carry out works, eg provision of an access road, which are
directly designed to facilitate the development.
Faced with
this restriction on their power to require contribution to external costs by
the imposition of conditions, local planning authorities resorted to a
different route by which they could achieve the same purpose. This was the
agreement under section 52 of the Town and Country Planning Act 1971, now
replaced by section 106 of the Town and Country Planning Act 1990. In its
original form it provided as follows:
(1) A local
planning authority may enter into an agreement with any person interested in
land in their area for the purpose of restricting or regulating the development
or use of the land, either permanently or during such period as may be
prescribed by the agreement: and any such agreement may contain such incidental
and consequential provisions (including provisions of a financial character) as
appear to the local planning authority to be necessary or expedient for the
purposes of the agreement.
5. Planning gain
During the
property boom of the early seventies, local planning authorities increasingly
used the power to enter into section 52 agreements (or agreements under their
general powers) to exact payments or cessions of land which could not be
imposed by conditions. Under Circular 5/68 it could not be made a condition of
the planning permission that the developer enter into such an agreement, but
that presented no difficulty. The local planning authority simply refused to
grant a planning permission until the developer had entered into the agreement.
Then they granted permission unconditionally. Of course the developer could
always appeal against a refusal to the Secretary of State, but the delay and
expense which would be involved was a powerful incentive to negotiate an
agreement which would meet the local planning authority’s demands.
There
developed a practice by which the grant of planning permissions was regularly
accompanied by negotiations for what was called a ‘planning gain’ to be
provided by the developer to the local planning authority. The practice caused
a good deal of public concern. Developers complained that they were being held
to ransom. They said that some local authorities insisted that in return for
planning permission, an applicant should make a payment for purposes which
could in no way be described as external costs of the particular development.
In the boom atmosphere of the time, in which a grant of planning permission
could add substantially to the value of land, some authorities appeared to
regard themselves as entitled to share in the profits of development, thereby
imposing an informal land development tax without the authority of Parliament.
Citizens, on the other hand, complained that permissions were being granted for
inappropriate developments simply because the developers were willing to
contribute to some pet scheme of the local planning authority. There was also a
more general concern about distortion of the machinery of planning. The process
envisaged by the planning Acts was that decisions would be made openly in
council or committee by adjudicating on the merits of the application and then
either refusing permission or granting it with or without unilaterally imposed
conditions. If the developer did not like the condition, he could appeal to the
Secretary of State, who would also adjudicate upon the matter openly after
public inquiry. But the shift from conditions to agreements meant that a
crucial part of the planning process took place in secret, by negotiation
between the developer and the council’s planning officers. It began to look
more like bargain and sale than democratic decision making. Furthermore, the
process excluded the appeal to the Secretary of State. The developer who had
entered into a section 52 agreement could not appeal. Nor did anyone else have
a right of appeal. The only possibility of challenge was if some sufficiently
interested party applied for judicial review on the ground that the planning
authority had taken improper matters into consideration when granting the
permission. In this respect the decision in Hall & Co Ltd v Shoreham-by-Sea
Urban District Council [1964] 1 WLR 240 had been self-defeating. By
preventing local planning authorities from requiring financial contributions or
cessions of land by appealable conditions, it had driven them to doing so by
unappealable section 52 agreements.
6. Circular 16/91
It was in
response to these concerns that the Department of the Environment issued its
Circular 22/83 — Planning Gain, now replaced by Circular 16/91 — Planning
Obligations. The purpose of these
policy which the Secretary of State would apply in dealing with appeals. The
essence of the advice is contained in para B5 of Circular 16/91. It says that
any benefit sought in return for a grant of planning permission must be
‘related to the development and necessary to the grant of permission’. The test
thus has two limbs: relationship to the development and necessity for the grant
of permission. The need for a relationship to the development flows from the
requirements of what is now section 70(2) of the Town and Country Planning Act
1990, which says that in deciding whether to grant or refuse planning
permission (or to impose conditions) ‘the authority shall have regard to the
provisions of the development plan, so far as material to the application, and
to any other material considerations’. A benefit unrelated to the development
would not be a ‘material consideration’ and a refusal based upon the
developer’s unwillingness to provide such a benefit would therefore be
unlawful. Thus far, the circular does no more than reflect the requirements of
the statute. But the second limb, ‘necessary to the grant of permission’, is a
different matter. The foundation for this test is the policy which has been
applied by successive governments since the inception of the modern planning
system, namely that: ‘applications for development should be allowed, having
regard to the development plan and all material considerations, unless the
proposed development would cause demonstrable harm to interests of acknowledged
importance: PPG1, March 1992 — General Policy and Principles para 5. As
a corollary of this principle of policy, the department had for many years
advised that conditions should not be imposed unless without them the
development would be unacceptable in the sense that it would have to be refused
as likely to cause ‘demonstrable harm to interests of acknowledged importance’:
see Circular 1/85, para 12. Circular 16/91 declares a similar policy in respect
of benefits required to be provided by agreements under section 106 of the Town
and Country Planning Act 1990. It says that an obligation to provide such a
benefit may be imposed if it is needed to enable the development to go
ahead or designed to secure an acceptable balance of uses or ‘so
directly related to the proposed development that [it] ought not [be allowed to
go ahead] without it’: para B8. If there is the necessary relationship between
the development and the benefit, ie if the benefit can be regarded as meeting
or contributing to an external cost of the development, then ‘the extent of
what is required [must be] fairly and reasonably related in scale and kind to
the proposed development’. A developer may ‘reasonably be expected to pay for
or contribute to the cost of infrastructure which would not have been necessary
but for his development, but his payments should be directly related in scale
to the benefit which the proposed development will derive from the facilities
to be provided’: para B9.
In each case
the language emphasises that an obligation should not be required if, even
without it, or with a less onerous obligation, a refusal of planning permission
would be contrary to the presumption in favour of development.
7. Modern policy on external
costs
I shall defer
for the moment an examination of the relationship between this second limb of
the test in Circular 16/91 and the legal limits of the powers of planning
authorities. For the moment I would only draw attention to two aspects of the
policy which it lays down. First, it comes down firmly against the practice of
using demands for ‘planning gain’ as a means of enabling local planning
authorities to share in the profits of development. The more flagrant examples
of demands for purposes unrelated to the development were in any event illegal
as Wednesbury unreasonable [1948] 1 KB 223 or founded upon immaterial
considerations. But the circular also makes it clear that appeals will be
allowed if local planning authorities make demands which are excessive in the
sense of being in planning terms unnecessary or disproportionate. This policy
is reinforced by a warning that applications for costs against local planning
authorities making such excessive demands will be sympathetically considered.
But second, the circular sanctions the use of planning obligations to require
developers to cede land, make payments or undertake other obligations which are
bona fide for the purpose of meeting or contributing to the external
costs of the development. In other words, it authorises the use of planning
obligations in a way which the court in Hall & Co Ltd v Shoreham-by-Sea
Urban District Council [1964] 1 WLR 240 would have regarded as Wednesbury
unreasonable in a condition. A good example of its application is the recent
case of R v South Northamptonshire District Council, ex parte Crest
Homes plc unreported October 13 1994; Court of Appeal (Civil Division)
transcript no 1204 of 1994*. The district council, faced with an alteration to
the structure plan which contemplated residential development which would
double the population of the small town of Towcester, decided that applicants
for planning permission to build the new houses would be required to enter into
agreements to contribute to the necessary infrastructure, such as schools,
community centres, a bypass road and so forth. The council calculated how much
these works would cost and decided to allocate the burden among prospective
developers in accordance with a formula based on the percentage of value added
to the land by the grant of planning permission. The Court of Appeal held that
this policy was both lawful and in accordance with Circular 16/91. Henry LJ
said:
*Editor’s
note: Reported at [1994] 3 PLR 47.
Where
residential development makes additional infrastructure necessary or desirable,
there is nothing wrong in having a policy that requires major developers to
contribute to the costs of infrastructure related to their development.
He went on to
say that the formula was, in the circumstances of that case, a practical and
legitimate way of relating the infrastructure costs to the various
developments.
8. Legislation in support of
the new policy
The government
policy of encouraging such agreements has been buttressed by amendments to the
planning and highways legislation to confer upon local planning authorities and
highway authorities very wide powers to enter into agreements with developers.
The new section 106 of the Town and Country Planning Act 1990 says in express
terms that agreements under that section may require a developer to pay sums of
money. The new section 278 of the Highways Act 1980, substituted by section 23
of the New Roads and Street Works Act 1991, confers a broad power upon a
highway authority to enter into agreements by which some other person will pay
for the construction or improvement of roads or streets. Parliament has
therefore encouraged local planning authorities to enter into agreements by
which developers will pay for infrastructure and other facilities which would
otherwise have to be provided at the public expense. These policies reflect a
shift in government attitudes to the respective responsibilities of the public
and private sectors. While rejecting the politics of using planning control to
extract benefits for the community at large, the government has accepted the
view that market forces are distorted if commercial developments are not
required to bear their own external costs.
9. Law and policy in the
United Kingdom
This brings me
to the relationship between the policy and the law. I have already said that
the first limb of the test in para B5 of Circular 16/91 marches together with
the requirements of the statute. But the second — the test of necessity (and
proportionality) — does not. It is well within the broad discretion entrusted
to planning authorities by section 70 of the Town and Country Planning Act
1990. But it is not the only policy which the Secretary of State might have
adopted. There is nothing in the Act of 1990 which requires him to adopt the
tests of necessity and proportionality. It is of course entirely consistent
with the basic policy of permitting development unless it would cause
demonstrable harm to interests of acknowledged importance. But even that policy
is not mandated by Parliament. There may come a Secretary of State who will say
with Larkin:
Despite all
the land left free
For the first
time I feel somehow
That it isn’t
going to last,
That before I
snuff it, the whole
Boiling will
be bricked in …
And that will
be England gone,
The shadows,
the meadows, the lanes,
The
guildhalls, the carved choirs.*
*Editor’s
note: Extract from ‘Going, Going’ by Philip Larkin, published in 1974 in High
Windows.
and promulgate
a policy that planning permissions should be granted only for good reason.
There is nothing against this in the statute. And among the good reasons could
be the willingness of the developer to provide related external benefits.
The
potentiality for conflict between the policy of Circular 16/91 and other
equally defensible policies has arisen most acutely in cases in which
developers are in competition for a planning permission, that is to say, in
which it is accepted that the grant of permission to one developer is a valid
planning reason for refusing it to another. In such cases the presumption in
favour of development does not yield an easy answer. If there was no
competition, it might be that the proposal of developer A could not be said to
cause demonstrable harm to interests of acknowledged importance. But what
happens when one has to throw into the scale having to forego the benefits of
the far more attractive proposal of developer B? Is that not harm to an
interest of acknowledged importance? I do not think anyone would doubt that in
such a case of competition, it would be legitimate to take into account that one
developer was willing, for example, to employ the finest architect, use the
best materials, lay out beautiful gardens and so forth, whereas the proposal of
the other developer, though not unacceptable if it had stood alone, was far
inferior. The problem arises when a developer tries to win the competition by
offering more offsite benefits.
10. The Plymouth case
If it is
proper in a case of competition to take into account the architecture and
landscaping within the respective development sites, it is difficult logically
to distinguish the provision of benefits related to the development but off the
site. It is true that the former may be more likely to enhance the value of the
developer’s land than the latter. But the difference is one of degree and, one
might think, a matter for the developer’s choice. This was the view of the
local planning authority in R v Plymouth City Council, ex parte
Plymouth & South Devon Co-operative Society Ltd (1993) 67 P&CR 78.
They were advised by their planning officers that only one permission should be
granted for a superstore on the eastern approach to Plymouth. They thereupon
organised a competition. They invited prospective developers to select from a
menu of ‘community benefits’, all of which satisfied the test of being fairly
related to the proposed development, and indicated that they would take into
account the extent to which a developer was willing to pay for items on the
menu. Having received two attractive bids which included a number of external
benefits, they changed their policy and decided to grant both permissions. This
was challenged by the Co-operative Society, which had a competing supermarket
nearby, on the ground that the local planning authority had taken into account
an offer of benefits which were not necessary, in the sense that they
overcame what would otherwise have been planning objections to the development.
Because a local planning authority give no reasons for a decision to grant
planning permission, it is not easy to tell what view they have formed about
whether a proposed benefit did or did not overcome an objection to the
development. It is probably true to say that, as it was agreed that there could
be a superstore in the area, the menu of benefits offered by each developer was
not necessary to make his development acceptable if his had been the only
application.
The matter
becomes more complicated when, as the council originally intended, acceptance
of one application involves rejection of the other, or when, as afterwards
happened, it was decided to grant both applications — a change of policy in
which the benefits offered no doubt played a substantial part. But the Court of
Appeal was content to deal with the matter on the basis that the council had
indeed taken into account promises of benefits which, though relating to the
proposed development, were not necessary for the grant of permission within the
terms of Circular 16/91. It dismissed the appeal on the ground that the test of
necessity, whether as explained in the circular or in any other form, was not a
legal requirement. It said that the tests for the vires of a grant of
planning permission which took into account benefits offered under a planning
obligation were the same as the tests for the validity of a condition laid down
by this House in Newbury [1981] AC 578: the planning obligation must be
for a planning purpose; it must fairly relate to the proposed development and
having regard to it must not be Wednesbury unreasonable [1948] 1 KB 223.
There is no additional test of necessity.
11. Planning obligations and
the Newbury tests
Although I was
party to the Plymouth decision and accepted the transposition of the
three Newbury tests to the validity of a planning permission granted on
the basis of the developer undertaking a planning obligation, I am bound to
agree with my noble and teamed friend, Lord Keith of Kinkel, that the parallel
is by no means exact. The analogy has been invoked because, as Lord Scarman
pointed out in Newbury [1981] AC 578 at p619A. the first two tests are a
judicial paraphrase of the planning authority’s statutory duty in section 70(2)
of the 1990 Act to have regard to the provisions of the development plan and
‘any other material considerations’. This duty applies as much to the decision
to grant a planning permission (which is what was under attack in Plymouth)
as to the decision to impose conditions (which was under attack in Newbury).
The third Newbury test, Wednesbury unreasonableness, is a general
principle of our administrative law. But the use of the Newbury tests in
relation to planning obligations can cause confusion unless certain points are
borne clearly in mind.
First, Newbury
was concerned with the validity of a condition and there is a temptation to
regard a planning obligation as analogous to a condition. But section 70(2)
does not apply to planning obligations. The vires of planning
obligations depends entirely upon the terms of section 106. This does not
require that the planning obligation should relate to any particular
development. As the Court of Appeal held in Good v Epping Forest
District Council [1994] 1 WLR 376, the only tests for the validity of a
planning obligation outside the express terms of section 106 are that it must
be for a planning purpose and not Wednesbury unreasonable. Of course it
is normal for a planning obligation to be undertaken or offered in connection
with an application for planning permission and to be expressed as conditional
upon the grant of that permission. But once the condition has been satisfied,
the planning obligation becomes binding and cannot be challenged by the
developer or his successor in title on the ground that it lacked a sufficient
nexus with the proposed development. The reason why the adoption of the Newbury
tests had any plausibility in Plymouth was because the case was not
concerned with the validity of planning obligations. It turned upon whether the
planning obligations undertaken in that case were material considerations which
could legitimately be taken into account in granting planning permission. The
same is true of this case.
Second, it
does not follow that because a condition imposing a certain obligation (such as
to cede land or pay money) would be regarded as Wednesbury unreasonable,
the same would be true of a refusal of planning permission on the ground that
the developer was unwilling to undertake a similar obligation under section
106. I say this because the test of Wednesbury unreasonableness applied in Hall
& Co Ltd v Shoreham-by-Sea Urban District Council to conditions
is quite inconsistent with the modern practice in relation to planning
obligations which has been encouraged by the Secretary of State in Circular
16/91 and by Parliament in the new section 106 of the Town and Country Planning
Act 1990 and the new section 278 of the Highways Act 1980 and approved by the
Court of Appeal in R v South
Appeal (Civil Division) transcript no 1204 of 1994.
Third, while
Newbury is a convenient judicial paraphrase of the effect of section 70(2), it
cannot be substituted for the words of the statute. The principal questions in
a case like this must always be whether the planning obligation was a ‘material
consideration’ and whether the planning authority had regard to it.
12. The necessity test
This brings me
to the submissions in this appeal, the facts of which have been fully stated by
my noble and learned friend, Lord Keith of Kinkel. Mr Roy Vandermeer QC, for
the appellant, submitted that Tesco’s offer to pay for the WEL was a material
consideration and that the Secretary of State failed to have regard to it. Mr
Duncan Ouseley QC, for the Secretary of State, agreed that it was a material
consideration but said that upon a fair construction of the Secretary of
State’s decision letter, he did have regard to it. Mr Christopher
Lockhart-Mummery QC, for Tarmac, said that the offer was not a material consideration
at all. Logically I should start with Mr Lockhart-Mummery’s submission, because
if he is right, it does not matter whether the Secretary of State had regard to
the offer.
Mr
Lockhart-Mummery’s submission was that Tesco’s offer was not material because
it did not have the effect of rendering acceptable a development which would
otherwise have been unacceptable. The development would have been perfectly
acceptable without it, or at any rate, with an offer of a good deal less. He
formulated the test of materiality as follows:
A planning
authority may lawfully take into account a developer’s offer to provide
off-site infrastructure or other benefits whose objective and effect are to
render his development acceptable so that it may be granted planning
permission under section 70 of the Town and Country Planning Act 1990.
(Emphasis
supplied.)
Mr
Lockhart-Mummery disclaimed any intention of challenging the correctness of the
Plymouth decision, despite some encouragement from Steyn LJ in the Court
of Appeal. But, in my judgment, his formulation is in substance a rerun of the
unsuccessful submission of Mr Andrew Gilbart QC in Plymouth. The key
word is that which I have emphasised: acceptable. The planning obligation, he
says, must have the effect of making acceptable what would otherwise have been
unacceptable. This, it seems to me, is indistinguishable from the test of
necessity for the purpose of granting a planning permission which was rejected
in Plymouth.
13. Materiality and planning
merits
It would be
inappropriate for me rehearse the reasoning in Plymouth. But I shall, if
I may, look at the question from a slightly different perspective. The law has
always made a clear distinction between the question of whether something is a
material consideration and the weight which it should be given. The former is a
question of law and the latter is a question of planning judgment, which is
entirely a matter for the planning authority. Provided that the planning
authority have regard to all material considerations, they are at liberty
(provided that they do not lapse into Wednesbury irrationality) to give
them whatever weight the planning authority thinks fit or no weight at all. The
fact that the law regards something as a material consideration therefore
involves no view about the part, if any, which it should play in the
decision-making process.
This
distinction between whether something is a material consideration and the
weight which it should be given is only one aspect of a fundamental principle
of British planning law, namely that the courts are concerned only with the
legality of the decision-making process and not with the merits of the
decision. If there is one principle of planning law more firmly settled than
any other, it is that matters of planning judgment are within the exclusive
province of the local planning authority or the Secretary of State.
The test of
acceptability or necessity put forward by Mr Lockhart-Mummery suffers, in my
view, from the fatal defect that it necessarily involves an investigation by
the court of the merits of the planning decision. How is the court to decide
whether the effect of a planning obligation is to make a development acceptable
without deciding that without that obligation it would have been unacceptable?
Whether it would have been unacceptable must be a matter of planning judgment.
It is, I suppose, theoretically possible that a Secretary of State or local
planning authority may say in terms that he or they thought that a proposed
development was perfectly acceptable on its merits, but nevertheless thought
that it was a good idea to insist that the developer should be required to
undertake a planning obligation as the price of obtaining his permission. If
that should ever happen, I should think the courts would have no difficulty in
saying that it disclosed a state of mind which was Wednesbury
unreasonable. But in the absence of such a confession, the application of the
acceptability or necessity test must involve the courts in an investigation of
the planning merits. The criteria in Circular 16/91 are entirely appropriate to
be applied by the Secretary of State as part of his assessment of the planning
merits of the application. But they are quite unsuited to application by the
courts.
14. Law and policy in the
United States of America
It is
instructive to compare this basic principle of English planning law with the
position in the USA. There the question of what conditions can be imposed on
the equivalent of a grant of planning permission has a constitutional dimension
because the Fifth Amendment prohibits the taking of property by the state
except for a public purpose and upon payment of just compensation.
Nevertheless, the debate over when the imposition of a condition amounts to an
unconstitutional taking of property or (in terms of state law) an unreasonable
exercise of the planning (or ‘police’) power has given rise to a debate
remarkably similar to that over ‘planning gain’ in the United Kingdom. The
courts, following the decision of the Supreme Court in Nollan v California
Coastal Commission (1987) 483 US 825, apply what has been called the
‘rational nexus’ test. This requires the planning authority which exacts a
contribution to infrastructure as a condition of their consent to demonstrate
that ‘the development will cause a need for new public facilities and
that the contribution required is proportionate to that need and will
actually be used to provide those facilities’: Planning Gain and the
Grant of Planning Permission: Is the United States’ Test of the ‘Rational Nexus’
the Appropriate Solution? by Purdue, Healey and Ennis [1992] JPL 1012 at
p1014. This, as the authors of the article from which I have quoted point out,
is very similar to the tests of necessity and proportionality in Circular
16/91. In another article, Paying for Growth and Planning Gain: An
Anglo-American Comparison of Development Conditions, Impact Fees and
Development Agreements Callies and Grant ((1991) 23 The Urban Lawyer
221 at p248) say:
The necessity
to avoid falling foul of the ‘taking’ doctrine has meant that United States
local governments have always had to be in a position to justify their rules in
case of constitutional challenge, and hence to pursue openness and economic
transparency …
Purdue, Healey
and Ennis add that the rational nexus test ‘has led some state courts to
require sophisticated analysis which goes into questions of past expenditure
and double taxation’.
My lords, no
English court would countenance having the merits of a planning decision
judicially examined in this way. The result may be some lack of transparency,
but that is a price which the English planning system, based upon central and
local political responsibility, has been willing to pay for its relative
freedom from judicial interference.
15. Buying and selling planning
permissions
This
reluctance of the English courts to enter into questions of planning judgment
means that they cannot intervene in cases in which there is sufficient
connection between the development and a planning obligation to make it a
material consideration but the obligation appears disproportionate to the
external costs of the development. Plymouth (1993) 67 P&CR 78, was
such a case, leading to concern among academic writers and Steyn LJ in the
present case that the court was condoning the sale of planning permissions to
the highest bidder.
metaphor. But I venture to suggest that such a metaphor (and I could myself
have used the more emotive term ‘auction’ rather than ‘competition’ to describe
the process of decision-making process in Plymouth) is an uncertain
guide to the legality of a grant or refusal of planning permission. It is easy
enough to apply in a clear case in which the planning authority have demanded
or taken account of benefits which are quite unconnected with the proposed
development. But in such a case the phrase merely adds colour to the statutory
duty to have regard only to material considerations. In cases in which there is
a sufficient connection, the application of the metaphor or its relevance to
the legality of the planning decision may be highly debatable. I have already
explained how in a case of competition such as Plymouth in which it is
contemplated that the grant of permission to one developer will be a reason for
refusing it to another, it may be perfectly rational to choose the proposal
which offers the greatest public benefit in terms of both the development
itself and related external benefits. Or take the present case, which is in
some respects the converse of Plymouth. Tarmac say that Tesco’s offer to
pay £6.6m to build the WEL was a blatant attempt to buy the planning
permission. Although it is true that Witney bridge is a notorious bottleneck
and the town very congested, the construction of a superstore would make the
congestion only marginally worse than if the site had been developed under its
existing permission for offices. Therefore an offer to pay for the whole road
was wholly disproportionate and it would be quite unfair if Tarmac was
disadvantaged because it was unwilling to match this offer. The Secretary of
State in substance accepted this argument. His policy, even in cases of
competition for a site, is obviously defensible on the ground that although it
may not maximise the benefit for Witney, it does produce fairness between
developers.
Tesco, on the
other hand, say that nothing was further from its mind than to try to buy the
planning permission. It made the offer because the local planning authority had
said that in their view no superstore should be allowed unless the WEL was
built. Tesco say that this seemed a sensible attitude because although it was
true that the development would add only marginally to the congestion which
would have existed if offices had been built, this was an unrealistic
comparison. In practice it was most unlikely that anyone would build offices in
that part of Witney in the foreseeable future. The fact was that the
development would make the existing traffic problems a good deal worse. In an
ideal world it would have been fairer if the highway authority had paid for
most of the road and Tesco only for a proportion which reflected the benefit to
its development. But the highway authority had made it clear that they had no
money for the WEL. So there was no point in Tesco offering anything less than
the whole cost. Why should this be regarded as an improper attempt to buy the
planning permission? The result of the Secretary of State’s decision is that
Witney will still get a superstore, but no relief road. Why should that be in
the public interest?
I think that
Tesco’s argument is also a perfectly respectable one. But the choice between a
policy which emphasises the presumption in favour of development and fairness
between developers, such as guided the Secretary of State in this case, and a
policy of attempting to obtain the maximum legitimate public benefit, which was
pursued by the local planning authority in Plymouth, lies within the
area of discretion which Parliament has entrusted to planning authorities. It
is not a choice which should be imposed upon them by the courts.
I would
therefore reject Mr Lockhart-Mummery’s submission that Tesco’s offer was not a
material consideration. I think that it was open to the Secretary of State to
have taken the same view as Plymouth City Council did in Plymouth and
given the planning permission to Tesco on the grounds that its proposals
offered the greater public benefit. But the Secretary of State did not do so.
Instead, he applied the policy of Circular 16/91 and decided to attribute
little or no weight to the offer. And so, on the ground that its site was
marginally more suitable, Tarmac got the permission.
16. The appeal
This brings me
to Mr Vandermeer’s submissions in support of the appeal. He says that although the
Secretary of State through Mr Ouseley now asserts that the offer was a material
consideration, that was not the view he took in his decision letter. There he
treated Circular 16/91 as being not merely a statement of policy as to the
weight to be given to planning obligations but as a direction that planning
obligations which did not satisfy its criteria were not to be treated as
material considerations at all.
For the
reasons given by my noble and learned friend. Lord Keith of Kinkel. I do not
think that the Secretary of State fell into this error. Para 21 of PPG1, March
1992– General Policy and Principles — describes the status of the
department’s circulars in unambiguous terms:
The
Department’s policy statements cannot make irrelevant any matter which is a
material consideration in a particular case. But where such statements indicate
the weight that should be given to relevant considerations, decision-makers
must have proper regard to them.
The Secretary
of State can hardly have forgotten this statement when he came to apply
Circular 16/91 in his decision letter. So, for example, when he said in para 7:
Accordingly,
in his view, since the offer of funding fails the tests of Annex B of Circular
16/91, it cannot be treated either as a reason for granting planning permission
to Tesco or for dismissing [the appeal by Tarmac]
He could not
have used the word ‘cannot’ to mean that he was legally precluded from doing
so. He clearly meant that he could not do so consistently with his stated
policy in Circular 16/91.
17. Little weight or no
weight?
Finally, I
should notice a subsidiary argument of Mr Vandermeer. He submitted that a
material consideration must be given some weight, even if it was very
little. It was therefore wrong for the Secretary of State, if he did accept
that the offer was a material consideration, to say that he would give it no
weight at all. I think that a distinction between very little weight and no
weight at all is a piece of scolasticism which would do the law no credit. If
the planning authority ignores a material consideration because they have
forgotten about it, or because they wrongly think that the law or departmental
policy (as in Safeway Properties Ltd v Secretary of State for the
Environment [1991] JPL 966) precludes them from taking it into account,
then they have failed to have regard to a material consideration. But if the
decision to give that consideration no weight is based on rational planning
grounds, then the planning authority are entitled to ignore it.
