England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM GEORGE BARTLETT Q.C.
SITTING AS A DEPUTY HIGH COURT JUDGE

		Royal Courts of Justice Strand, London, WC2A 2LL Friday 2nd March 2001

LORD JUSTICE SCHIEMANN :

Introduction

1. The appellant, Councillor Corbett, is a councillor of the Restormel Borough Council and a council tax payer in the Council's district. He appeals against a judgment of George Bartlett Esq., Q.C. sitting as a deputy judge of the Queen's Bench Division. In the judgment under appeal he refused as a matter of discretion to quash a planning permission which had been unlawfully granted by the Council in 1997. That permission had already been modified prior to the commencement of these judicial review proceedings, following an inquiry in the previous year, by the Secretary of State pursuant to his powers in section 100 of the Town and Country Planning Act 1990. That modification had the result that the landowner, Land and Property Ltd. ("L&P"), was entitled to compensation from the Council for the loss attributable to the modification - see section 107 of the Act. Thereupon Councillor Corbett started these proceedings.
2. Councillor Corbett submits that the Judge ought to have quashed the permission which had been unlawfully granted and substituted one modified so as to conform with the one which resulted from the Secretary of State's modification. His motive in so submitting is that if the permission had been quashed by the Judge then no compensation would be payable - a quashed planning permission has no value and therefore its modification can cause no loss. For the same reasons the Council wished to have the permission quashed. However, the Council itself plays no part in this appeal. It has never appeared in the proceedings although another councillor, Councillor Parkyn, brought proceedings in effect on the Council's behalf, seeking the quashing of the permission. He failed. He appealed but that appeal has been dismissed by consent without a hearing. The appeal by Councillor Corbett however continued. It is resisted, not of course by the Council who would be delighted if it succeeds, but by L&P who are naturally anxious to retain the possibility of compensation and submit that the Judge's decision was correct.

The background

3. The background is complex but its presently relevant features, somewhat simplified, are the following. In 1990 permission was granted to ML Real Estates Ltd. for the "erection of non-food retail units with associated car-parking, etc." The permission was a full permission with the standard 5 year time limit on commencement. Among the conditions imposed was the following:

"The total floor space to be used for non-food retail shall not exceed 120,000 sq. feet comprising a maximum number of 5 units which shall not be sub-divided but shall be occupied by a single non-food retail operator".

4. The application had been referred to the Secretary of State as a departure from the Development Plan. He had power to call it in for his own decision but did not do so.
5. In 1994 planning permission was granted to Ernst & Young, as receivers for ML Real Estate Ltd., for "erection of buildings for uses within classes B1, B2, and B8 of the Town and Country Planning (Use classes) Order 1987 and for non-food retail use together with associated car-parking, services and roads". It was an outline permission, and under Condition 3 the reserved matters had to be submitted to the Council before 8 August 1997. One of the conditions read:

"The total floor space to be used for non-food retail shall not exceed 125,000 sq. feet in area comprising a maximum number of 5 units 4 of which shall not be sub-divided and shall each be occupied by a single non-food retailer".

6. The Council should, on this occasion also, have referred the application to Secretary of State as being a departure from the Development Plan. This would have given him the opportunity to consider whether on this occasion he would call the application in for his own decision. The Council failed to do so. Whether anybody noticed this failure does not appear.
7. On 13 May 1997 outline planning permission was granted for "extension of time of [the 1994 permission] for erection of buildings for use within Classes B1, B2, and B8 of Town and Country Planning (Use Classes) Order 1978 [sc 1987] and for non-food retail use together with associated car-parking services and roads." It repeated the conditions which had been imposed on the 1994 permission. The application for the 1997 permission was made by L&P. Since the grant of the 1994 permission L&P had become the owners of the land. Its principal Managing Director was Michael Lott who had been a principal shareholder in ML Real Estate Ltd. Again the Council should have notified the Secretary of State of the application. However it did not. Again there was no immediate protest by anyone.
8. In July 1997 a reserved matters application pursuant to the 1997 permission was made by L&P. The details submitted showed one large unit sub-divided into 60 smaller units. The application was greeted with consternation by members of the Council, by Cornwall County Council and by others who thought that such a development would do severe damage to the shopping centres of nearby towns. It was drawn to the attention of the Government Office for the South West.
9. On 29 January 1998 the Head of Development in the Government Office for the South West wrote to the Council's Chief Executive with reference to the discussions that the Office had had with the Council about the application for approval of reserved matters. He said that it was the Department's opinion that the applications should have been referred to the Secretary of State as departures from the Development Plan pursuant to the Town and Country Planning (Development Plan and Consultation) Directions 1992. He said that the grant appeared to go against planning guidance and was "grossly wrong" and the Secretary of State was therefore considering whether it would be expedient to make modification and revocation orders under section 97(1) of the Act. He asked whether the Council would be prepared to make the orders themselves.
10. It was not until 25 June 1998 that the Chief Executive gave the Council's substantive reply. In short, the Council was not prepared to make the order.
11. The Secretary of State thereupon directed that a local public inquiry should be held to consider all aspects of the factors material to his discretion as to whether he should make an order or orders revoking and/or modifying the permissions. The inquiry was held in May 1999. The Inspector concluded that the grants of planning permission were grossly wrong because they conflicted with the relevant planning policies, because there was no evidence to show that there were material considerations which were taken into account at the time that the permissions were granted which would out-weigh the conflict with the Development Plan policies and because the applications were not referred to the Secretary of State as involving a departure from the Development Plan.
12. She concluded that the implementation of any of the permissions would cause damage to the wider public interest for reasons which she set out. She recommended the modification of the 94 and 97 planning permissions by removing non-food retail use from the matters permitted. The Secretary of State accepted the Inspector's recommendations except that he decided not to modify the 1994 permission since this had expired by the time of his decision. An order modifying the 1997 permission was made on 8 March 2000. Costs were awarded against the Council. There were also before him 2 appeals in respect of reserved matters applications. The Secretary of State dismissed those.

The judgment under appeal

13. The Judge held that the Council had acted unlawfully in granting the 1997 permission. He so held for two independent reasons, both going to procedure. The first was that the Council, both in 1994 and in 1997, granted permissions without addressing the provisions of the Development Plan or other considerations bearing on the planning merits but had instead simply treated the applications as ones for renewal of an existing permission (para. 26 of the judgment). The second was that the Council failed to refer the applications to the Secretary of State as they should have done (para.35). Neither of those conclusions is challenged by way of respondent's notice. It had not been contended before him that the decisions fell to be quashed on the grounds that they were ones to which the Council were not as such entitled to come (para.68). This is not wholly surprising : given that the 1990 permission had been validly granted after a decision by the Secretary of State not to call it in although it had been referred to him as a departure from the Development Plan, the existence of that permission was a material consideration when deciding whether or not to grant the 1994 permission. Given the existence unchallenged of the 1994 permission, that permission in turn was a material consideration when deciding whether or not to grant the 1997 permission.
14. The Judge refused to quash the 1997 permission as a matter of discretion. He took into account a number of factors of which the chief are the following:-

(i) Quashing would serve no planning purpose since the planning harm which would follow from the implementation of the planning permission had been prevented by the modification of the planning permission (para.79)

(ii) There was no suggestion that L&P shared any part of the blame in what had gone wrong (para 84)

(iii) In reliance on the 1994 permission L&P had acquired the land from the receivers of ML Real Estates Ltd. for £450,000 (paras. 72, 74, 84)

(iv) In reliance on the 1997 permission L&P had allowed the 1994 permission to lapse by not submitting an application for approval of reserved matters (paras.74, 84)

(v) Substantial amounts of time and money had been spent on the modification procedure and inquiry (para.77)

(vi) In reliance on the 1997 permission L&P had incurred costs in appearing at the modification order public enquiry (para. 73)

(vii) L&P for a number of years conducted their business on the basis that the permissions were valid (para.74)

(viii) The delay in applying for judicial review was very substantial - 6 years in the case of the 1994 decision and nearly 3 years in the case of the 1997 decision (para.84)

(ix) The compensation payable for the modification might be very substantial or it might not be (para.82)

(x) The Council had insurance for the first £500,000 of any loss and there was a possibility that any loss might be funded by grant (para.83)

(xi) There was an unquantifiable risk that the payment of compensation would impact to some unquantifiable extent on council tax payers (para. 83)

(xii) If the Council had taken into account all they should have done they would probably still have granted planning permission (paras. 75, 81)

(xiii) The Council until after the modification order inquiry throughout maintained that the planning permissions were both lawful and appropriately granted on their merits (para. 84)

(xiv) The Council resolved not to seek judicial review (para.84).

(xv) This was a challenge by the Council and any challenge brought by them before the decision on the modification would have been so lacking in merit that it would have failed (para. 84)

(xvi) Councillor Parkyn was authorised by resolution of the Council to act as applicant in the judicial review proceedings and the Council was paying his costs (para.16)

(xvii) It was very likely, but not inevitable, that if the applications had been referred to the Secretary of State they would have been called in (para.81)

(xviii) However, the person for whose administrative benefit the call in procedure was provided - the Secretary of State - had not sought to quash the earlier permissions but had instead proceeded by way of modification which would entitle the landowners to compensation in principle (para.76)

(xix) Councillor Corbett had been a councillor since May 1999 and made the application so as not to have the difficulties which faced the Council in seeking judicial review (para.17)

(xx) The reality was that Councillor Corbett had been added as a claimant in order to support the Council's case (para.66)

(xxi) Councillor Corbett's case was simply part of the Council's case and accordingly, in so far as the difficulties facing the Council were real ones Councillor Corbett's participation in these proceedings could not overcome them (para 66).

Discussion

15. Mr Christopher Katkowski Q.C. who appeared on behalf of Mr Corbett submitted that the permission which had been unlawfully granted should be treated as though it had never had any legal existence; L&P never had the benefit of a lawfully granted planning permission and therefore should not be compensated for the modification of a lawfully granted permission. That submission has a certain elegance but can not stand on its own, as Mr Katkowski recognises. If it were right then no discretionary exercise by the Judge would be called for. Quashing would follow as of right. The reason why the submission can not stand on its own is that people rely and are entitled to rely on decisions of public bodies as being lawful until such time as they are quashed. They arrange their affairs on this basis. This is a desirable fact of life, desirable because if everyone felt free to ignore such decisions because he suspected or hoped that there was something legally wrong with them life would be filled with uncertainty.
16. However, as is well known, there clashes with this principle of legal certainty another principle which is also of great value - the principle of legality which requires that administrators act in accordance with the law and within their powers. When they do things they are not empowered to do this principle points towards the striking down of their illegal actions. The clashes between these two principles have given rise to many cases and many books and articles. The end result is that it is agreed on all sides that while the courts have power to quash they also have power to refuse to quash unlawful decisions.
17. Recognising as he does the existence of this discretion, Mr Katkowski submits that the Judge should incline to quash what is shown to be an unlawful decision unless the person resisting the quashing can show at least that he would be harmed by the quashing or some other reason is shown for not striking down. For my part, I would agree with that submission - see the dicta by Lord Bingham of Cornhill and Lord Hoffmann in Berkeley v Secretary of State for the Environment and another [2000] 3 WLR 420 at pages 423F and 431G.
18. He submits that the Judge was in error in concluding that Councillor Corbett's case was simply part of the Council's case. He says that Councillor Corbett has been paying for these proceedings by himself and the Judge was wrong to conclude, if he did, that Councillor Corbett was merely a cat's paw for the Council. Again, on the information before us, I would accept that. That said, it is clearly right that the whole of the modification procedure would have been unnecessary if an attempt to quash the 1997 permission had been made earlier. Councillor Corbett was already a councillor at the time of the inquiry into the modification order. There is no record of his attending the inquiry or of having so much as written a letter on the topic.
19. Mr Katkowski submits that the Judge was wrong to conclude that L&P had let the 1994 permission lapse because of the grant of the 1997 permission : L&P had not been in a position to submit acceptable details pursuant to the 1994 permission in time. There was no reason to suppose that any details which L&P might have submitted would be approved in time. In support of that submission he points to a letter dated 11 March 1997 in which L&P's agent asserted that he did not have time to prepare a full set of details before the 1994 permission expired in August 1997. He points to the fact that the details submitted pursuant to the 1997 permission which were eventually considered by the Inspector at the modification inquiry did not meet with either her approval or that of the Secretary of State. The Judge does not expressly refer to these submissions. Whether he had them in mind when he wrote his long and careful judgment we can not know. For my part I see little force in them. It is commonplace for landowners to ask for extra time but to make extra effort in situations where it is clear that permissions will soon run out. In any event the point is a minor one - a view evidently shared when the 26 paragraph skeleton argument on behalf of the appellant was prepared. The point is not mentioned there.
20. It was submitted on behalf of L&P that this court should approach the review of the Judge's decision not to quash on the basis that we should only interfere if it was demonstrably wrong or took into account matters which it should not have taken into account. For my part, I would hesitate to adopt this approach in a case such as the present. There is room for an argument to the effect that a judicial decision not to quash the result of an admittedly unlawful administrative act is a decision which this court will set aside if its own judgment differs from that of the judge albeit that his could not be described as manifestly wrong. The point has not been argued so I say no more about it. In any event, I think that the Judge was arguably wrong in relying on his interpretation of a particular Council resolution to which I have not thought it necessary to refer, to assimilate the position of Mr Corbett with that of the Council. I approach this case on the basis that we are entitled to use our own judgment in deciding whether or not to quash.
21. It is in my judgment clear, and Mr Katkowski accepts, that L&P will suffer some detriment if this permission is quashed : they will lose their rights to compensation. What is uncertain is whether this compensation will be substantial. For my part I think it would be wrong to depart from the Judge's assessment of this, namely, that the compensation might be very substantial or it might not be. While in the present case sitting as a Deputy High Court Judge he is President of the Lands Tribunal has, both at the Bar and in his present capacity, had a very substantial experience which entitles his judgment on planning and compensation issues to particular respect.
22. When considering whether or not to quash in circumstances such as the present the court is entitled to have in mind that no adverse planning consequences will fall on the public as the result of a refusal to quash and that Parliament has provided for compensation to be paid to the landowner whose permission is revoked. In substance the dispute in the present case is about money and there is no possibility whatever that the amount which the council tax payers will have to pay will exceed the loss of L&P who are wholly innocent. It is I suppose conceivable that L&P will not be entitled to any compensation in which case the tax payer will not have to pay any and these proceedings will be proved to have been without any practical benefit to anyone save the lawyers. If, as seems possible, the loss to L&P is less than £500,000 these proceedings would apparently benefit no-one save the Council's insurers who have not seen fit to launch or join in these proceedings. If the loss to L&P is more than £500,000 it is possible, perhaps probable, that some small fraction of any surplus will fall on Mr Corbett. If, as seems to me permissible, one looks to the position of the single appellant the disparity between the loss which he might suffer and the loss which L&P might suffer is manifest.
23. This court has recently in Burkett & anors application for judicial review (Unreported C/2000/2480 n13.12.2000, Ward, Sedley and Jonathan Parker LJJ) had occasion to point out once more that there is a general principle that an applicant seeking to quash a resolution to grant planning permission must move with urgency after the passing of the resolution and that it is not necessarily appropriate to wait to see whether in fact permission is granted. That principle is variable in application depending on the facts of any particular case. Speed may be possible in some cases and not so possible in others. What has happened in the interim will be important, as will the consequences on the parties on either side and on the public at large of granting the relief sought.
24. All this is demonstrated in R v Bassetlaw District Council, ex parte Oxby [1998] P.C.L.R.283 C.A. a case to which the Judge made extensive reference. In that case this court on the application of the leader of the council did quash planning permissions about two years after they had been granted by that council. It was found that there was ample reason on the evidence before the court to suspect that the permissions had been granted in circumstances where there was an association between the landowner's agent and some voting members of the council which was improper, at any rate if not disclosed. In relation to discretion, Hobhouse LJ delivering the only substantive judgment said at page 302:

" if it has been clearly established, as it has in this case, that a planning consent was improperly and invalidly granted, then it should, in principle, be declared to be void. It is not appropriate that, other things being equal, the council should be required to pay compensation as a condition of achieving that result. The answer would be different if the planning consent was one which should in any event have properly been granted or where at least it appears that that might be the case. Similarly, the position would be different if there had been a material change of position on the part of an affected party on the faith of the consent being valid. Each case would depend upon its own facts and an evaluation of the relevant factors overall."

25. Most of the facts relied on by the Judge as justifying his decision not to quash are ones which cannot be and have not been challenged. They lead me to the same conclusion and I would dismiss this appeal. I add two paragraphs by way of postscript.
26. From one point of view the crucial question to be resolved in a case like the present is whether the council tax payers should suffer the result of an unlawful decision by their council which at all relevant times was presented by the Council as a lawful decision or whether the landowner should without compensation suffer from that unlawful decision. I confess to an instinctive preference for arriving at a solution which allows the burden to fall on the multitude who elected the Council which caused this injury rather than upon the individual who suffered all of the loss.
27. The justice of this case seems to me to require that L&P should not be deprived of their compensation purely as a result of the automatic application of jurisprudential doctrines in relation to invalidity. It may be that if deprived of compensation under the Act they would have an alternative remedy sounding in similar damages against the Council as a result of misrepresenting that the planning permission had been validly granted and misusing statutory powers. If so the present proceedings would even if successful have achieved little of substance. However, this has not been argued and I do not pause to investigate the chances of success of such an action in the present state of our law.

LORD JUSTICE SEDLEY:

28. I agree with Schiemann LJ that this appeal fails. Since the issue ably argued by Mr Katkowski is one of legal principle, I add a few words of my own.
29. Like Schiemann LJ I am hesitant to treat a decision so fraught with basic principles as one simply of discretion. It seems to me, especially in the light of what Hobhouse LJ said in Ex parte Oxby (ante), to be better described and regarded as a matter of judgment. If so, it is open to closer re-examination on appeal than a pure exercise of discretion. Equally, however, we do not write on a blank page: the view of this deputy judge carries great weight in the present field.
30. For my part (cf. paragraph 26 ante) I would not resolve the choice between granting and withholding relief by deciding, if only viscerally, where the loss ought morally to fall. I can see good policy reasons for not fixing the local electors with the cost of wrongdoing on the part of the members and officers of a local statutory body corporate which from day to day is answerable not to them but to the law (from which all its powers come) and to the executive (which controls funding and policy).
31. The injustice of letting L & P go without compensation is in my view no greater in principle than the injustice of awarding them a windfall at public expense. We have no way of quantifying the amount involved, and for my part therefore I would prefer not to be carried either way by this part of the argument.
32. There remain the several other elements set out by Schiemann LJ. Because they include the lapse of time, they potentially attract the provisions of s.31(6) of the Supreme Court Act 1981. Schiemann LJ's reasoning shows once again how distracting and unhelpful that provision is. It selects one element - time - of the many which may affect the grant of relief and builds upon it some of the many other possible factors which can - as the present case shows - be relevant. It also includes, delphically, detriment to good administration. How, one wonders, is good administration ever assisted by upholding an unlawful decision? If there are reasons for not interfering with an unlawful decision, as there are here, they operate not in the interests of good administration but in defiance of it.
33. In the present case L & P have in essence been allowed to rely for a good many years on an ostensibly valid grant of permission which has now been modified. Although the grant was a serious abuse of power, all the illegitimate effects of the grant have been cured by modification, and striking it down now has no other purpose and no other effect than to subvert the consequent entitlement to compensation.
34. In these circumstances, which do not include or depend on Mr Corbett's standing or interest, I agree that there are good reasons for holding that in this particular case the usual consequence of illegality in public law - the quashing of the material decision - should not follow.

MR JUSTICE BLACKBURNE:

35. I agree that, for the reasons given by Schiemann L.J. this appeal fails.
ORDER: Appeal dismissed with costs; costs to be assessed or agreed. (Order does not form part of approved Judgment)