Town and country planning – Planning decision – Compensation – Inspector’s decision on claimant’s planning appeal being quashed due to admitted error of fact – Second inspector granting planning permission – Claimant being deprived of more favourable level of tariff under Feed-in Tariff Scheme – Claimant applying for compensation under ex gratia scheme – Claimant applying for judicial review of refusal of compensation – Whether compensation scheme covering loss of earnings or profits resulting from inspector’s error – Whether failure to provide compensation breaching claimant’s human rights – Application dismissed
The claimant provided engineering consultancy services to clients involved in aerospace, civil engineering and renewable energy projects. He planned to finance his retirement in part by carrying out wind turbine developments to provide him with a guaranteed level of return based on the Feed-in Tariff Scheme established by the Department for Business, Energy and Industrial Strategy. An inspector appointed by the defendant secretary of state dismissed the claimant’s appeal against the refusal of planning permission for a proposed development at Honeypot Lane, near Colsterworth, Grantham, Lincolnshire. However, the inspector made an error of fact as to the amount of renewable energy which the turbine would produce each year. Therefore, the claimant obtained an order under section 288 of the Town and Country Planning Act 1990 quashing the inspector’s decision. A second inspector granted the planning permission sought.
By the time the second decision letter was issued, a substantial reduction had been made to the level of tariff payable under the Feed-in Tariff Scheme. The claimant applied for an ex gratia payment under the compensation scheme operated by the Planning Inspectorate on the ground that the first inspector’s error meant that he had lost the ability to secure the more favourable tariff from which he would otherwise have benefited. The inspectorate refused the application on the basis that the compensation scheme did not compensate for loss of earnings or profits but only for directly attributable, incurred costs; in any event, the claim was misconceived because it assumed that if the first inspector had not made the error, he would have granted planning permission, which was not necessarily the case.
The claimant applied for judicial review contending, amongst other things, that: (i) on the proper construction of the compensation scheme at the date of the claim, it included a claim for loss of profits or earnings; and (ii) article 1 of the First Protocol to the Convention for the Protection of Human Rights and Fundamental Freedoms (A1P1) entitled him to compensation for loss of profits as a result of the inspector’s error.
Held: The application was dismissed.
(1) Read objectively and as a whole, it was plain that the compensation scheme did not cover losses which went beyond expenditure incurred as a result of an error or failing. It did not include a loss of profits or earnings, whether in the past or the future. There was no indication that the scheme provided compensation for an adverse effect on the profitability of the development of a site resulting from a mistake in the decision-making process. The reference in the scheme to a “goodwill payment” for hardship or injustice was not intended to provide a back-door route to enable a claim which fell outside the ex gratia scheme, namely a loss of profits, to be pursued, or some variation of that claim.
The aim of the compensation scheme was expressly to restore the complainant to the position that he would have been in had the agency acted correctly. Here, the sole error made by the inspector was to misunderstand or misstate the estimated output of the wind turbine, an error about the information before him which he then took into account in his decision whether or not to grant permission. In order to correct that error, the claimant was entitled to a determination of its appeal which used the correct output figure. The first determination of the planning appeal was not quashed on the grounds of irrationality, such that the only lawful outcome of the appeal would have been a grant of planning permission. Since most planning appeals involved the application of judgment to a number of issues, on each of which different decision-makers might rationally come to different views, and might strike the overall planning balance in different ways, it was difficult to see how it could be claimed that an error in the making of a planning decision deprived a complainant of an entitlement to a grant of planning permission if that error had not been committed.
In the present case, even if the first inspector had not committed the error, there was no logical reason to think that he would not have reached the same overall conclusion and dismissed the appeal. The fact that the second inspector decided the case differently did not demonstrate the contrary. He reached the conclusion that the proposal would not cause any harm to heritage assets and would not have a detrimental impact upon residential amenity. Those were planning considerations upon which different decision-makers could legitimately reach different conclusions and which would affect the way in which they might strike the overall balance, even with the correct output figure properly reflected in the mix.
(2) Decisions on planning appeals taken by inspectors or by the defendant secretary of state under the Town and Country Planning Act 1990 related to the use of land in the public interest. No authority had been cited to show that merely deciding to refuse an application for planning permission involved an interference with property or a possession or otherwise engaged A1P1. Although the goodwill of a business might constitute a “possession” under A1P1, an expectation of future income did not. A future loss of income could not fall within A1P1 unless an enforceable claim to that income already existed. Merely capitalising and expressing an anticipated future income stream as a net present value did not demonstrate a loss of goodwill. The claimed loss related to a future business on the site which had not yet produced any profit. The State was entitled to control the use and development of land in the public interest. A mere refusal of planning permission did not amount to an interference with the peaceful enjoyment of possessions under the first rule in A1P1. There could be no interference with a possession unless it could at least be shown that, absent the error, the landowner would have been entitled to the planning permission sought.
Richard Turney (instructed by Kingsley Smith Solicitors LLP, of Chatham) appeared for the claimant; Isabella Tafur (instructed by the Government Legal Department) appeared for the defendant.
Eileen O’Grady, barrister
