England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
(Mr Justice Stanley Burton)

		Royal Courts of Justice Strand London WC2 Tuesday, 19th March 2002

1. LORD JUSTICE LATHAM: The appellant is a builder and developer specializing in the provision of sheltered accommodation for the elderly. On 17th March 2000 it applied for permission to develop the site of a former petrol filling station in order to provide 43 sheltered apartments for the elderly plus accommodation for a house manager. The respondent Council failed to determine the application within the statutory period. The appellant appealed to the Secretary of State. Subsequent to the appeal being lodged, the respondent Council resolved that permission would have been refused for the following reason:

"The proposed development fails to provide any affordable housing and this would be contrary to advice contained in PPG 3 'Housing', Circular 6/98 'Planning and Affordable Housing' and the Barnet Draft Deposit UDP Policy H5, which require that adequate provision of affordable housing be met to ensure that the Borough's housing needs are met."

2. The appeal was determined on 6th December 2000 by the Inspector appointed by the Secretary of State after a three day inquiry. He allowed the appeal and granted planning permission for the development in accordance with the terms of the application, subject to conditions which are not material to the present appeal. The respondent Council applied for judicial review of the Inspector's decision. The Secretary of State was prepared to submit to judgment on the basis that the Inspector had failed to give adequate reasons for his decision in view of the availability of housing grant in the event of the provision of affordable housing, and evidence that the whole site could have been viably developed for affordable housing. The appellant nonetheless resisted the application. Stanley Burton J held, after full argument, that the Secretary of State's concession was properly made and quashed the Inspector's decision. He went further, however, and concluded that the Inspector's decision was perverse, in the sense that no reasonable inspector could have come to the same conclusion on the material available.
3. No objection had been raised in principle by the respondent Council to the redevelopment of the appeal site for sheltered housing, nor the details as to car parking and amenity space. It considered, however, that an element of affordable housing should be incorporated into the appeal proposal. The Inspector accordingly identified the main issue which he had to determine in the following terms, with which both parties agree:

"I consider that the main issue in this case is whether it is appropriate to seek the provision of any affordable housing in the appeal proposal and if so, the number of units it would be reasonable and practicable to provide."

4. There is no doubt that the provision of affordable housing is a matter of considerable significance in the current state of the housing market, particularly in the southeast.
5. The respondent Council's Unitary Development Plan ("UDP), which was adopted in 1991, did not contain any specific policy for affordable housing. However, it did contain a general policy statement H2.1 to ensure that a range of residential accommodation, in terms of size, type and tenure was provided on appropriate development sites in order to meet any demand that might exist in a locality for housing for special needs groups. Specific provision was made in Policy H2.2 that sheltered housing schemes should be located within easy walking distance of service and community facilities. It was accepted that the proposed development was in accordance with both these policies, there being an undoubted need in the locality for sheltered accommodation, and it was in an appropriate location. Policies relating to the provision of affordable housing are, however, contained in a draft deposit UDP which has not yet completed the public consultation and inquiry process.
6. The Inspector determined that national planning policy guidance issued by the government in the form of PPG 3 (Housing) and Circular 6/98 (Planning and Affordable Housing) set out the relevant planning considerations to which he was required to have regard. Having considered the respondent Council's draft deposit UDP, he concluded that it did not yet provide a coherent and robust basis for determining planning applications of this sort. Despite the reference to the draft in its refusal reasons, the respondent Council has not challenged this part of the Inspector's reasoning.
7. PPG 3, inter alia, was concerned to ensure that development made appropriate provision for the different needs of different sections of the community and did not do so by unnecessarily segregating or compartmentalising such needs. In paragraphs 9 to 11 it encouraged the development of mixed communities. In paragraph 13 it required local planning authorities to assess the needs in its area for affordable housing, amongst other particular types of housing. In paragraph 17 it directed attention to the fact that government policy on affordable housing was set out in Circular 6/98 and concluded:

"Where a local planning authority has decided, having regard to the criteria set out in paragraph 10 of Circular 6/98, that an element of affordable housing should be provided in development of a site, there is a presumption that such housing should be provided as part of the proposed development of the site. Failure to apply this policy could justify the refusal of planning permission."

8. Paragraph 10 of Circular 6/98 provides as follows:

"In preparing plan policies for affordable housing, and in assessing the suitability of sites to be identified in the plan and any sites that may come forward not allocated in the plan, the following criteria should be taken into account:

(i) site size, suitability and the economics of provision:

- it will be inappropriate to seek any affordable housing on some sites. In practice the policy should only be applied to suitable sites, namely:

(a) housing developments of 25 or more dwellings or residential sites of 1 hectare or more, irrespective of the number of dwellings;

(b) in Inner London, housing developments of 15 or more dwellings, or residential sites of 0.5 of a hectare or more, irrespective of the number of dwellings;

and

(c) in settlements in rural areas with a population of 3,000 or fewer, the local planning authority should adopt appropriate thresholds. These should be based on assessments which include local needs and the available supply of land for housing, and should be adopted only through the local plan process.

The Secretary of State considers that it may be appropriate for local planning authorities in those areas where the higher threshold (at (a) above) would apply, and who are able to demonstrate exceptional local constraints, to seek to adopt a lower threshold (between the levels at (a) and (b) above). Such constraints must be demonstrated, and proposals to adopt a lower threshold must be justified through the local plan process. However, with the exception of settlements in rural areas with populations of 3,000 or fewer, he does not consider that it would be appropriate for local planning authorities to seek to adopt thresholds below the lower level of 15 dwellings or 0.5 of a hectare.

- the proximity of local services and facilities and access to public transport;

- whether there will be particular costs associated with development of the site;

and

- whether the provision of affordable housing would prejudice the realisation of other planning objectives that need to be given priority in development of the site.

(ii) the need to achieve a successful housing development:

- whenever possible such sites should incorporate a mix of affordable housing types, such as family housing and homes for smaller households; and

- care is needed in determining the proportion of affordable housing in the overall numbers on the site and in implementation and subsequent management of the affordable housing element."

9. Having identified these as the relevant planning policy considerations, the Inspector accepted that the evidence demonstrated that in the respondent Council's area there was a need for affordable housing and also a need to provide suitable accommodation for older people. Applying the size criteria in paragraph 10(i)(a), he concluded that the proposed development was appropriate in terms of size because of the number of dwellings. He noted that there was no dispute between the parties about the suitability of the site in respect of its location in close proximity to local services and facilities and access to public transport. These factors made the site suitable both for the proposed purpose of sheltered housing and affordable housing.
10. He then considered the third element in paragraph 10(i), namely the economics of providing affordable housing. He stated that there were particular costs associated with the development of the site arising substantially out of the need to remove from the site the potentially harmful consequences of its previous use. A further element in the particular costs related to the specific items in the development required for the safety and security of elderly residents. By "particular costs" I understand the Inspector to mean the site and scheme specific costs over and above the normal costs of developing land for housing purposes. He noted that the appellant's evidence was that the additional burden of providing affordable housing could be such as to preclude development for the purpose of providing sheltered housing or even to render any development uneconomic. The respondent Council submitted that none of the material provided by the appellants proved that affordable housing would be uneconomic to provide. The important paragraph in the Inspector's decision letter on this critical issue is paragraph 28, which reads as follows:

"I have no reason to doubt the appellant's evidence that the additional burden of providing affordable housing would deter them from proceeding with the appeal proposal. No details were produced to support this aspect of the appellant's case, but it seems to me that the costs involved in preparing the appeal site for any form of housing development would be relatively high because of its existing use. This would detract from the site's suitability for providing an element of affordable housing."

11. The Inspector then considered the question whether or not the development as proposed would prejudice the realisation of any other planning objectives. He was satisfied that a change of use to housing was justified, and that there were planning benefits from both the appellant's proposal and the Council's view that an element of affordable housing should be included. He proceeded then to consider the criteria set out in paragraph 10(ii).
12. The rival contentions, as recorded by the Inspector, were, on the one hand, the appellant's argument that within a development of this size it would be inappropriate and impracticable to seek to provide for general housing needs, with the obvious impact that would have on the essence of their proposal for sheltered housing accommodation. The respondent Council, on the other hand, submitted that the provision of seven affordable units restricted to the over 50s would be feasible and provide a viable basis for development. The Inspector was concerned as to the way in which the affordable units would be managed and was not satisfied that it would be practicable to create such a division on the site bearing in mind its size. He concluded that any mixed development of detached blocks of sheltered housing and affordable dwellings would be impracticable and an inefficient use of the site. He did not consider that the provision of affordable housing on the general market, including as it would a possibility of occupation by families, would be compatible with the provision of sheltered housing on the majority of the site. He therefore concluded that the provision of affordable housing as part of the scheme would not achieve a successful housing development.
13. He expressed his final conclusion as follows:

"My considerations on the main issue are finely balanced. On the one hand there is an undisputed need to provide affordable housing in the Borough and the appeal proposal could physically accommodate a small part of that need. On the other hand, the scale and nature of the appeal proposal, and the costs of developing the site, weigh against the provision of affordable housing as part of the proposed development.

39. However, there are other factors in the above considerations which lend further weight in favour of the appeal proposal. The provision of Category 11 sheltered housing on the site accords with Policy H2.1 of the adopted UDP and would make a contribution to the needs of older people in the Borough. The proposal would increase the supply of sheltered housing in the Borough. It would be a sustainable form of development in that it would make effective use of a previously developed site for high density housing without harm to the townscape or amenities which accords with current national planning policy and relevant policies of the UDP. The site is also very well located in terms of reducing the need to use a car which reflects current national planning policy for sustainable development. The proposal would not harm any interests of acknowledged importance.

On balance, and having regard to all of the above considerations, I conclude that it is not appropriate, reasonable or practicable to seek the provision of any affordable housing in the appeal proposal."

14. The argument before the judge concentrated on the Inspector's treatment of the economics of the proposed development. Before the Inspector there had been evidence from Mr. Rawlings of the Notting Hill Housing Trust of the existence of social housing grant available to social landlords which would enable central government funds to be used to facilitate the provision of affordable housing. Secondly, the appellant's main witness, Mr. Day, in answer to one question in cross-examination, accepted that it would possibly be economically viable to develop the whole site for affordable housing. In these circumstances, it was submitted by the respondent Council that the Inspector, in failing to mention either of those matters, and in accepting what was essentially the say so of the appellants as to the viability of a mixed development, had either completely failed to explain how he came to that conclusion, bearing in mind the fact that he did not refer either to the social housing grant or the appellant's concession, or alternatively he had come to a conclusion that could not be supported on the evidence before him. It was submitted that economics formed a significant part of his decision in the light of his reference to "the costs of developing the site" in paragraph 38. Since he expressly stated that the matter was finely balanced, it must follow, it was said, that his decision was flawed.
15. The judge agreed. In particular, he was concerned that the Inspector had given no indication of having taken account of the availability of housing grant or alternatively how he viewed it. Further, he criticised the Inspector for appearing in paragraph 27 to have simply accepted the appellant's assertion as to costs without any financial data. He concluded that the Inspector had essentially acted perversely in that regard. For these reasons he quashed the decision.
16. There is no dispute about the principles to be applied by the courts in reviewing decisions of specialist tribunals such as planning inspectors. Determination of the facts and matters of planning judgment are for the Inspector whose decision can only be successfully challenged if it is irrational, unlawful in the sense that he or she has misdirected himself as to his or her powers, or otherwise gone wrong in law, or has so conducted the inquiry so as to produce procedural unfairness. Although the Inspector is required to give reasons which deal with the main issues between the parties, so as to ensure that the decision is comprehensible, he or she does not have to deal with every issue that may have been raised by the parties. Finally, the court should not treat an inspector's decision letter as if it were a statute or an answer to an exam question which requires critical analysis, other than that necessary to ensure that the inspector has asked himself or herself the right questions and provided sensible answers on the material made available to the inquiry.
17. In the present case the essential criticism which the respondent Council made and continues to make of the Inspector's decision was that the Inspector had failed properly to deal, as they submitted to the judge, with the issue of economics, and, in particular, the Inspector had failed to indicate his view as to and therefore the way in which he had taken into account the question of social housing grant and the answer given by Mr. Day in cross-examination.
18. It seems to me that the answers to the respondent Council's criticisms depend upon a proper understanding of the issues before the Inspector. The issue clearly identified by the Inspector was the question whether or not, in terms of the criteria in paragraph 10, part of the development should be devoted to affordable housing. The Council's argument was ultimately that seven units could be made available to the over 50s, either in the main development or separately. The Inspector, in dealing with that issue, appears to me to have carried out the task of applying the paragraph 10 criteria impeccably. He dealt firstly with size and determined, as was inevitable, that paragraph 10 applied by reason of the number of dwelling units which were proposed by the appellant. He dealt with suitability in terms of its location. The critical issue was the question of economics. I have already related in paragraphs 28 and 29 his conclusions in that regard. It is to be noted that the circular, in dealing with the question of economics, simply identifies in paragraph 10 as a specific matter to be considered "whether there will be particular costs associated with development of the site." The question of whether or not it will be necessary in any given case for the Inspector to go beyond a consideration of that question to determine viability will depend upon the way in which the argument at the inquiry has developed. In the present case, although there was an attack by the respondent Council on the assertions by the appellant as to the financial consequences of having to develop the site because of the particular costs, it is clear that the Inspector himself considered that it was only necessary for him to determine the amount of the particular costs so as to identify a potential deterrent to development. He did not consider that it was necessary clearly to determine the extent to which that could affect viability of a development. He made no finding as to viability. It seems to me that, in order for the respondent Council to be able to make good their criticisms in this regard, they would have to establish that it was a necessary ingredient of the decision that the Inspector came to a conclusion as to viability. That was not a necessary element in the decision that had to be made by him. He had answered the specific issue which was required by the circular, and in the circumstances of this appeal it does not seem to me that he was required to go further. The particular criticisms therefore which were made, namely that he failed to deal with the question of the impact or potential impact of social housing grant and the answer of Mr. Day, in my judgment therefore have no force. As far as the impact of the grant was concerned, in any event, I fail to see the relevance of that to the issues before the Inspector. The question of whether or not grant would be available would of course be relevant to the ability of any housing trust, which was asked by the respondent Council to take responsibility for affordable housing, to make affordable housing available. It had nothing to do with the question the Inspector had to answer in relation to affordable housing on this site. As far as the answer given by Mr. Day was concerned, it seems to me that that was of no relevance to the way in which the Inspector dealt with the issue before him. It was in any event only one answer which was not the subject of any elaboration, either in questioning or in further evidence. It had not formed any part of the respondent Council's case before or at the Inquiry and does not seem to me to have been a matter which was likely to illuminate the question which the Inspector had to answer. In those circumstances, the particular criticisms made by the respondent Council do not seem to me to be valid criticisms of the Inspector's reasoning at all.
19. As far as the judge's criticism is concerned, namely that the Inspector was wrong to have accepted the say-so of the appellant as to the effect that being required to provide affordable housing would have upon their proposed development, it seems to me that that was precisely the sort of matter which the Inspector was entitled to come to a view about, and he did so, warning himself that he had not heard any detailed financial analysis to support the evidence given by the appellant. Nonetheless, he was prepared to accept their evidence to that effect. He was entitled to do so and there can be no criticism as a matter of law of his coming to the conclusion that he did.
20. It is important in the overall context of this case and the criticisms made of the Inspector's decision to note that the Inspector dealt in detail with the remaining issue in paragraph 10 of the Circular, namely whether or not the provision of affordable housing would result in a successful development. He came to a clear conclusion in favour of the appellant, namely that it would not do so. It seems to me that, in those circumstances, the decision which this Inspector reached was not only a decision that was open to him on the facts; it was a decision for which he has given clear reasons. It seems to me that there is no basis upon which the respondent Council can complain that they do not know why they have failed in front of the Inspector. That is a critical question when determining the adequacy of reasons that have been given by an inspector. Accordingly, on the basis of the way in which the matter was presented to the Inspector and on the basis of the way in which the argument was put to the judge, I would conclude that the judge was wrong to accept the submissions of the respondent Council and that the Inspector's decision letter should be upheld.
21. Before us, however, Mr. Straker has developed a more fundamental argument. He submits that Circular 6/98 requires the Inspector to consider not the development which is proposed by the developer but the site. His submission is that the questions which have to be answered under paragraph 10 are accordingly to be answered by reference to the way in which the site can be capable of being developed as opposed to the way in which the proposed development has been presented. That is a new argument. It is not one which has been considered before. It is an argument which may be considered somewhat surprising, bearing in mind that it is only because of the number of units these appellants propose in their development that paragraph 10 applies. But, for my part, it does not seem to me that this particular argument, which was never part of any argument before the Inspector and therefore was not considered by the Inspector, was not considered by the judge and has only emerged in the course of argument before us today, should be one with which we should deal. It seems to me that we should deal with the arguments as they presented themselves to the Inspector and the judge. My answer to those arguments is that there is no proper basis for criticizing the Inspector's decision.
22. The respondent Council has a further string to its bow. Paragraph 22 of Circular 6/98 provides as follows:

"However, if the local planning authority and the developer both consider that, on particular sites where a requirement for an element of affordable housing would be appropriate, it is nonetheless preferable that a financial or other contribution should be made towards the provision of the element of affordable housing on another site in the local planning authority's area, they should ensure that such arrangements would actually result in the provision of affordable housing (whether via new build or conversions), that would not otherwise be provided, in the local planning authority's area. These arrangements should not be used in respect of application sites which are inherently unsuitable for the provision of an element of affordable housing, such as those below the site threshold and other criteria set out in paragraph 19 above."

23. The Inspector concluded in paragraph 43 of his decision letter as follows:

"I have considered the representations from the Council about the appellant's lack of any offer to contribute towards the provision of affordable housing on another site in the Borough. In the circumstances of this case, such a contribution would conflict with paragraph 22 of Circular 6/98 since my conclusion on the main issue indicates that the site is inherently unsuitable for the provision of affordable housing in terms of the criteria in paragraph 10 of the Circular."

24. The judge decided that the Inspector had given paragraph 22 a meaning that it could reasonably bear.
25. In a respondent's notice the respondent Council challenges that aspect of the decision. It submits that paragraph 22 requires only consideration of whether or not the site could be capable of being used for affordable housing and not whether the development proposed could properly accommodate affordable housing, an echo of the argument that Mr Straker has put before us in relation to the main appeal today. In my view, the Inspector was entitled to conclude that paragraph 22 applies where the presumption in paragraph 17 of PPG 3 would result in a requirement that affordable housing be provided. The opening words of paragraph 22 are only apt to cover the situation where the developer appreciates that, unless he can enter into an arrangement with the local planning authority, he will be required to provide affordable housing. That situation can only be reached if all the criteria in paragraph 10 of Circular 6/98 have been met. The Inspector considered that they had not been met and he was accordingly entitled to conclude, as he did, that paragraph 22 had no application. I would allow this appeal.
26. SIR DENIS HENRY: I agree.
27. LORD JUSTICE BUXTON: I also agree that this appeal should be allowed for the reasons given by my Lord. As we are differing from the judge below I add a few words of my own.
28. Paragraph 28 of the decision letter, already set out by my Lord, said:

"I have no reason to doubt the appellant's evidence that the additional burden of providing affordable housing would deter them from proceeding with the appeal proposal."

29. That observation, like all of the observations in the decision letter, was, for the reasons that my Lord has indicated, made in the context of this particular proposal and in the context of what appears to have been the Council's case at the Inquiry, that the appropriate course in respect of this development would be the insertion within it of some seven units of affordable housing.
30. The Inspector's observations about that proposal, under the heading "the economics of providing affordable housing", was not, if one looks at the structure of the decision letter as a whole, the only basis upon which he approached the matter, because when we turn to paragraphs 38 to 40, where he sets out his conclusions, his view about the cost of developing the site and of the view of the developers is but one element in the balance that he strikes in respect of this proposal in respect of this site. I think that the judge below may have been led astray by thinking that the Inspector had made a final decision on the viability in economic terms of the site, and that it was for the judge to assess whether such a decision had been open to him on the evidence. I do not think that that is correct. The Inspector was entitled to say, as he did, that he had no reason to doubt the appellant's evidence, that is the evidence of those who were putting forward this proposal on this site, that they would be deterred from proceeding with the proposal by the additional burden of providing affordable housing. Like my Lord, I have had difficulty in seeing how, in any event, the matters that the Inspector is said not to have taken into account, in particular the single admission of Mr. Day that the development of the whole site with affordable housing would be financially viable, casts doubt on the Inspector's acceptance of that part of the appellant's evidence, much less undermines it to the extent that the Inspector was acting irrationally in accepting what the developer said.
31. Without going into any detail, because the matter was not pursued in any detail at any level, the economic considerations that attracted Mr. Rawlings of the Notting Hill Housing Trust, and were conceded by the planning witness, Mr Day, as to development of a whole site with affordable housing, with all the support of grants and other proper social housing support that such such a development would attract, in my view by no means self-evidently casts any light, much less any decisive light, on the view taken by the developers of the particular proposal that was being debated before the Inspector. But, in any event, the Inspector was entirely entitled to take the view that he did. Having taken that view, in my judgement a fair reading of paragraphs 38 to 40 of his determination, already again set out by my Lord, shows that in paragraph 38 he found a number of matters balanced as to the desirability or otherwise of the development that the Council would wish to see pursued; including what he describes as the costs of developing the site, an element that he had already dealt with, in my judgement satisfactorily, in paragraph 28. He then, however, found himself led to considering that no affordable housing should be sought by reason of the findings that he had already made in paragraph 28 as to the outcome on this site, and by reason therefore of the disbenefits that he sets out in paragraph 39 that would flow from the developers' proposal not going forward at all.
32. The judge in paragraph 16 of his judgment accepted that, prima facie, the Inspector's finding that the need to achieve a successful housing development would not be achieved on this site would, in any event, be conclusive in favour of his determination. But he was persuaded, as I understand his judgment in paragraph 16, that that conclusion or view had been only a part of the Inspector's determination, and that the Inspector had also been influenced by what the judge had thought to be his incorrect acceptance of the developer's view as to costs and as to economic viability. As I have already indicated, the latter view was open to the Inspector. Once that stage is reached, it is entirely consistent with the judge's reasoning in paragraph 16 to say that the central finding which he makes about the possibility of a successful housing development, which has not been criticised in this appeal, nor as I understand it was criticised before the judge, must prevail in supporting the Inspector's reasoning.
33. Everything that I have said so far has been on the basis of the way in which the case had been conducted throughout, until this appeal; that is to say, concentrating on the economics of and the need for a successful development in the context of the particular development proposal that the Inspector was considering, and the amendments to it potentially suggested by the Council in order to introduce an element of affordable housing. Mr. Straker has however argued before us that that was in fact not the right basis at all; and, much more radically, that the enquiry should have started with a clean sheet, and looked at whether affordable housing could be provided in any way at all, if needs be by a complete development. If the answer to that question was yes, as I understand Mr Straker's argument, that under the terms of the Circular in itself gave the Council licence to withhold planning permission, unless some arrangements, unspecified in that context, were made to provide affordable housing. As my Lord has said, I do not think that that argument is open to the Council in this appeal, in view of the way in which the matter was conducted before the Inspector and in view of the fact that the Inspector's decision can only be challenged on judicial review if it is vulnerable to one of the accepted grounds of judicial review; including, in particular in this case, irrationality or failure to consider relevant evidence. The Inspector can only makes those errors in the context of the case that is put before him. The case that was put before him did not encompass that which Mr Straker now raises.
34. It is important to make clear, as my Lord already has so done, that this court has not passed on those arguments, because they do not arise. They may arise in another case, at another time, in which forum there may be much to say; but that, or any of it, is not being said by this court. I would allow the appeal.
Order: Appeal allowed with costs here and below, to be subject to detailed assessment if not agreed.