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: see [1993] 2 PLR 108. The Court of Appeal held that the
Secretary of State had not regarded that funding offer as immaterial, but was
entitled not to give it any, or any significant, weight: see [1994] 1 PLR 97.
Tesco appealed.
It is for the courts to decide whether a
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: see p77F. 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: see pp83B, 93H–95E. The Secretary
of State had had regard to the funding obligation and was entitled to give it
appropriate weight: see pp83G–84C.
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
Appeal against the decision of Court of
Appeal
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.
Katkowski (instructed by Berwin Leighton) appeared for the appellant, Tesco
Stores Ltd.
(instructed by the Treasury Solicitor) appeared for the first respondent,
Secretary of State for the Environment.
Richard Drabble (instructed by McKenna & Co) appeared for the third
respondent, Tarmac Provincial Properties Ltd.
second respondents to the original application, did not appear and were not
represented.
Lord Keith of
KinKel: 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
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 13, 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
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
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 Beldam LJ held
that the Secretary of State had not failed to have regard to Tesco’s offer of
funding nor treated it as immaterial, but had simply declined to give it any or
any significant weight, as he was entitled to do. Steyn LJ went somewhat
further. 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.
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
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 restated 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 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 rights of landowners only so far as might be necessary to prevent
harm to community interests. He did not make any criticism of the policy, but
said:
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
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.
LORD ACKNER: My lords, I have had the advantage of
reading the speech prepared by my noble and learned friend Lord Keith of
Kinkel, and for the reasons he gives, I too, would dismiss the appeal.
LORD BROWNE-WILKINSON: My lords, I have had the
advantage of reading the speech prepared by my noble and learned friend Lord
Keith of Kinkel, and for the reasons he gives, I too, would dismiss the appeal.
LORD LLOYD OF BERWICK: My lords, I have had the
advantage of reading the speech prepared by my noble and learned friend Lord
Keith of Kinkel, and for the reasons he gives, I too, would dismiss the appeal.
Lord Hoffmann: My lords, 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 modern 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 applied to the facts of particular cases. The
landmark case was Hall & 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
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
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
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 selfdefeating. 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 circulars was to give guidance to local planning authorities and state
the 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
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
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:
*
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
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…*
*
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
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)–Planning Policy 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 Northamptonshire District Council, ex parte Crest
Homes plc, Court of 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
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 offsite 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
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
another article, Paying for Growth and Planning Gain: An AngloAmerican
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. My lords, to describe a planning
decision as a bargain and sale is a vivid 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
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
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, decisionmakers 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.
Appeal dismissed.
