Sainsbury’s loses appeal in Tesco supermarket dispute

Sainsbury’s has lost an appeal against its defeat in a dispute with Tesco concerning the development of a store on land adjoining the Wolverhampton ring road. The supermarket giant soughtto overturn the decision of Elias J, who ruled that Wolverhampton council’s January 2008 decision to approve in principle a compulsory purchase order (CPO) to force Sainsbury’s to sell its 86% share of the Raglan Street site to Tesco was lawful. Under section 226(1)(a) of the Town and Country Planning Act 1990, a local authority can make a CPO of land if it thinks “that the acquisition will facilitate the carrying out of development, redevelopment or improvement on or in relation to the land”. That power is exercised subject to section 226(1A) of the 1990 Act, which states the local authority must not exercise the CPO power unless it thinks that the development will contribute to promote the area’s economic, social or environmental well-being. The council had found that Tesco’s plans to redevelop the nearby dilapidated Royal Hospital site as part of its successful bid, thereby providing 100 homes and new offices for the city’s primary care trust, was “decisive” in their decision to approve the CPO in principle. Christopher Lockhart-Mummery QC, for Sainsbury’s, had argued that the decision to use CPO powers was unlawful. He argued that the council had no power to acquire land to facilitate the development of an unrelated site and it had taken into account immaterial considerations, namely the benefits of securing development of an unrelated site. The council and Tesco argued that the benefits accruing from the redevelopment of the Royal Hospital site fell within section 226(1A) and could be taken into account. Elias J dismissed Sainsbury’s challenge on the “fundamental” point of whether, when determining in whose favour the CPO should be exercised, the council was entitled to have regard to the benefits of the hospital development. He said: “When deciding which development should receive its support, the council could have regard to all the benefits accruing from the proposed development, including any off-site benefits achieved by way of a section 106 agreement.” Dismissing the appeal against that decision, Sullivan LJ said: “The likelihood of the redevelopment of a CPO site leading, whether because of a cross-subsidy or for any other reason, to the development or redevelopment of other sites in the authority’s area is precisely the kind of wider benefit that subsection (1A) requires the authority to consider.” R (on the application of Sainsbury’s Supermarkets Ltd) v Wolverhampton City Council Court of Appeal (Ward, Mummery and Sullivan LJJ) 31 July 2009. Christopher Lockhart–Mummery QC and David Forsdick (instructed by CMS Cameron McKenna LLP) appeared for the appellant; Neil King QC and Guy Williams (instructed by Wragge & Co, of Birmingham) appeared for the respondent; Christopher Katkowski QC and Scott Lyness (instructed by Ashurst LLP) appeared for the interested party.