England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT
ADMINISTRATIVE COURT LIST
(SIR RICHARD TUCKER)

		Royal Courts of Justice Strand London, WC2A 2LL
		5 December 2003

1. LORD JUSTICE SIMON BROWN: I will ask Lord Justice Keene to give the first judgment.
2. LORD JUSTICE KEENE: This is an appeal by the First Secretary of State from a decision of Sir Richard Tucker, sitting as a judge of the High Court, whereby he quashed, under section 288 of the Town and Country Planning Act 1990 ("the Act"), a decision of an Inspector acting on behalf of the Secretary of State. The judge granted permission to appeal on the basis that the arguments were interesting and finely balanced and raised points of specialised planning law.
3. The facts of the case are not unduly complicated. In the late 1990s the then owners of land at Knaresborough Road, Bishop Monkton, Harrogate ("the appeal site") wished to obtain planning permission for its residential development. They made an outline planning application in July 1996 for permission for the erection of seven bungalows and an access road. Adjoining the appeal site was some other land which was in the same ownership, but which the Parish Council wished to use for various community purposes. The Parish Council applied for permission for those community uses on the adjoining land ("the adjoining land").
4. A number of residential properties backed on to the south side of that adjoining land. There seems to have been some delay before the local planning authority, the Harrogate Borough Council, was prepared to grant permission for the residential development of the appeal site. On the 19 March 1998 it granted outline planning permission for the seven bungalows and access road. As required by section 92 of the Act, the outline permission was subject to the usual conditions about the time within which application for approval of reserved matters was to be made and within which the development was to start. Condition 2 of the permission stated:

"Application for the approval of reserved matters shall be made to the Local Planning Authority not later than 16.03.2001. The development hereby permitted shall be begun on or before whichever is the later of the following dates:

I. 16.03.2003

II. The expiration of two years from the final approval of reserved matters or in the case of approval on different dates, the final approval of the last such matter to be approved."

5. A few days before the grant of permission, the owners of the appeal site had entered into an agreement made by deed under section 106 of the Act with the Harrogate Borough Council. It was, perhaps surprisingly, not made conditional on the granting of planning permission for the appeal site, but it is clear from its terms that such permission was anticipated since the Borough Council expressed itself in recital E as satisfied that the development in the owners' planning application was such as might be approved under the Act.
6. The terms of the section 106 agreement are highly material to this present appeal. The agreement provided that references to any parties included successors in title and the term "the permission" meant a planning permission granted in respect of the application submitted in respect of the appeal site in July 1996. Clause 2.3 stated:

"If the permission expires within the meaning of the 1990 Act sections 91, 92 or 93 or is revoked or otherwise withdrawn or modified by any statutory procedure without the consent of the Owners or their successors in title this undertaking shall cease to have effect."

7. By clause 2.5 the owners covenanted that the land should be subject to the obligations specified in the Second Schedule. The Second Schedule contained three paragraphs. The first obliged the owners to offer within three months to sell to the Borough Council or the Parish Council the adjoining land for the sum of £1. The second obliged the owners to transfer the adjoining land to the Council upon acceptance of that offer. The third paragraph was in the following terms:

"Following the transfer of the land edged blue [the adjoining land] to the Council or the Bishop Monkton Parish Council and with the intention of ensuring that the transferees should incur no expense in respect of flooding caused to adjacent properties as a result of works carried out by the Owners in the event that properties adjacent to the land shown edged in blue on the Site Plan are flooded as a result of insufficient or inadequate works of drainage on the land shown edged in blue on the Site Plan, within one month of receipt of a written request from the Council to carry out such works as may be necessary to prevent any flooding of adjacent properties and further to indemnify the owners for the time being of the land shown edged in blue on the Site Plan against any claim or expense resulting from such flooding."

8. The adjoining land was subsequently transferred to the Parish Council on 1 July 1999 and planning permission was granted for the erection of a village hall and sports and community facilities. However no application for the approval of reserved matters under the outline permission on the appeal site for its residential development was made by 16 March 2001 as required by condition 2 on that permission. There is no evidence as to why this was not done.
9. Following that, and at some time before September 2001, the present respondent, Kebbell Development Limited ("the developer") acquired the development site. From the outset the developer was unable to make application for approval of reserved matters under condition 2 because it was too late. But on 13 September 2001 the developer did make an application under section 73 of the Act which enables an application to be made for permission without complying with conditions subject to which a previous planning permission was granted. It was made clear in the application that what was wanted was an extension of time until 16 March 2003 for the approval of reserved matters under the original residential outline permission. Such an application under section 73 can be made as long as the time within which the development permitted by the previous planning permission must be begun has not expired without the development having been begun (see section 73(4)).
10. It was not, and is not, in dispute that in considering such an application under section 73, the local planning authority and an Inspector, or the Secretary of State on appeal, is entitled, and obliged, to have regard to the factual circumstances as they exist at the date of deciding that application, including the then current planning policies (see Pye v Secretary of State for the Environment [1998] 3 PLR 72 at page 87D; and R v Leicester City Council ex parte PowerGen UK Limited (2001) 81 P & CR 47).
11. In dealing with the developers' section 73 application, the Borough Council took into account certain changes in planning policy since the original grant of permission in March 1998 and it refused the application. The matter then went to appeal, but the Inspector upheld the planning authority's refusal by a decision letter dated 8 October 2002. It was that decision which the developer successfully challenged in the High Court under section 288 of the Act.
12. In his decision letter the Inspector spelt out the changes in planning policy since the original grant of permission. Those included changes in local policy, in the regional policy guidance and also in national policy in the shape of a new version of Planning Policy Guidance Note PPG3 on residential development. He expressed the view that there had been a significant change in circumstances since the outline planning permission had been granted, particularly because of the emphasis on reusing previously developed land before developing green field sites. He concluded that the development of the appeal site would be contrary to PPG3 and local planning policies. In essence, he saw these factors as amounting to substantial planning objections to the granting of the section 73 application. There is no challenge to his conclusions on these conventional planning issues.
13. At the heart of this case is the way in which the Inspector dealt with the planning history of the appeal site and the adjoining land. He was patently well aware of the section 106 agreement and its terms because he referred to the agreement and he summarised its main provisions at paragraph 3 of his decision letter. He also noted the transfer of the adjoining land to the Parish Council and the grant of permission for the community facilities on that land. He dealt with the relevance of this history at paragraphs 17 to 20 of his decision as follows:

"17. In essence, the appellant's case under this heading is based on the maxim that 'he who takes the benefit must accept it with the burdens that go with it'. In this respect my attention has been drawn to the comments made in this respect by Lord Denning in Newbury District Council v Secretary of State [1999] 1 All ER 243. It is submitted that as the Council have accepted the benefit of the agreement, the 'burden' that must be accepted in this instance is the construction of the dwellings proposed. It is contended that the acceptance of the landowners' obligation renders the appeal site a commitment for housing which cannot, either lawfully or equitably, be prevented.

18. The Council acknowledge that the offer of recreational facilities inherent in the agreement was a material consideration when the decision to grant planning permission was made. It may well be therefore that this factor had a strong bearing on the Council's decision at the time. Be that as it may, I am unable to identify anything in the terms of the agreement that placed a continuing obligation upon the Council to view the proposed development in a favourable light in perpetuity.

19. It is clear that the 'benefit' conferred by the Section 106 agreement, that is the transfer of land to the local Parish Council at nominal cost, has been realised. But, even accepting that the grant of planning permission was the 'burden' that went with this benefit, it seems to me that the Council accepted this when they honoured their obligation by granting outline planning permission in 1998. Furthermore, I am unable to identify anything on their part that would have prevented the submission of an application for approval of reserved matters during the 3 year period pursuant to the grant of the outline planning permission.

20. The history of the appeal site and its relationship to the neighbouring land is a valid consideration and I can fully appreciate the appellant's concern in this respect. Nevertheless, I am not satisfied that this matter is sufficiently weighty to commit the Council to extending the time span of the outline planning permission as a matter of course."

14. In his overall conclusion he stated that the section 106 agreement and the benefit derived from it was a material factor, but one which was outweighed by the planning objections to the development of the appeal site.
15. Sir Richard Tucker in his judgment on the section 288 challenge accepted that there had been a change in planning policy and that the Inspector was fully entitled to have regard to it. He went on to say this in the crucial final paragraphs of his judgment:

"However, there is greater attraction in my view in Mr Wolton's submission that the parties freely entered into a bargain with each other when they reached the section 106 Agreement. That bargain contained a continuing obligation on the part of the land owner, and the corresponding obligation on the part of the Local Planning authority ought not to be summarily ended without careful consideration of the whole position.

In my view, the Inspector did not give the full consideration which he should have done to this continuing obligation on the part of the owners, and on this narrow ground I conclude that his decision, so careful in other respects, is fatally flawed.

The claimants had a legitimate expectation of a substantive benefit, and in my view it would be unfair to frustrate that expectation without giving full consideration to it before reaching a decision relating to it. In these circumstances, and on those findings and conclusions, I quash the Inspector's decision."

16. That reference to "a continuing obligation on the part of the land owner" is quite clearly a reference to paragraph 3 of the Second Schedule to the section 106 agreement which I have set out (ie to carry out drainage or other anti-flooding works in certain circumstances). That that is what the judge was referring to is clear from earlier passages in his judgment, in particular where he sets out Mr Wolton's argument.
17. From those paragraphs I have quoted from the judgment below, one can discern, at least in form, two grounds on which the Inspector's decision was quashed. First, there is what the judge describes as the "narrow ground", namely that the Inspector failed to take into account the landowner's continuing obligation under paragraph 3 of the Second Schedule of the agreement. I put it in terms of failing to take into account rather than using the judge's words of "not giving full consideration" to that factor since it is well established that the weight to be attached to each relevant consideration is a matter for the original decision-maker, as the judge would have known. He must therefore have meant that the Inspector failed to take this into account.
18. There is then the different formulation to be found subsequently, that there was here a legitimate expectation on the part of the landowners of a substantive benefit. Mr Mould, who appears on behalf of the Secretary of State, chooses to take this second formulation first and it is convenient to do so.
19. The legitimate expectation is simply described by the judge as being "of a substantive benefit" without that benefit being clearly identified. Patently, it could not be that as a result of the section 106 agreement the owner of the appeal site could expect a renewal of planning permission at any date into the future. That was what the Inspector rejected in paragraph 18 of his decision letter when he said that the council could not be obliged to view the proposed development in a favourable light in perpetuity.
20. Nor does Mr Wolton QC put the developer's case in that way. He contends that the legitimate expectation was that if a section 73 application to extend time for the submission of details was made within the overall 5-year time limit for beginning development on the appeal site, it would be granted. That is how it is put in the skeleton argument; orally it is put in terms of such a possibility being given full consideration. It is submitted by Mr Wolton that there was here originally a bargain. There had been part performance of that bargain by the transfer by the landowners of the adjoining land to the Parish Council. In those circumstances the owners, it is said, were entitled to a planning permission which would, in effect, live for five years. Any application to extend time for detailed approvals ought to be viewed in that light.
21. Was there such a legitimate expectation? As Lord Scarman emphasised in Re Findlay [1985] AC 318 at 338D-E it is not enough that a party has in fact a particular expectation. His expectation may be a wholly unreasonable and illegitimate one. It has to be a legitimate expectation.
22. I cannot accept that there was any such legitimate expectation of the kind contended for by the respondent developer. Once the section 106 agreement had been entered into, the landowners and any successors in title had a legitimate expectation that the July 1996 application for permission for the residential development would be granted. That expectation was fulfilled. In other words, the landowners got what they had bargained for. The permission granted had condition 2 on it with its various time limits, but that was precisely what any applicant for planning permission would legitimately expect, given section 92 of the Act.
23. In so far as there was any further expectation as to what would happen if time for the submission of details expired and the section 73 application had to be made, the only legitimate expectation which could be held would be that the application would be dealt with in accordance with established legal principles and the Act. In other words, there could properly be a legitimate expectation that the decision maker, in considering a section 73 application, would take into account all material considerations, including changes in planning policy since the original permission and including the planning history of the appeal site. That history would include the fact that the adjoining land had been transferred for a nominal sum to the Parish Council. It would also include any remaining relevant features in the section 106 agreement.
24. It follows from this analysis that the legitimate expectation argument adds nothing to the other ground, the "narrow ground" which found favour with the judge, namely that the Inspector failed to take into account the obligation arising under clause 3 of schedule 2 of the agreement.
25. I turn, therefore, to that other ground which particularly attracted the judge. It is clear that the Inspector did take account of the transfer of the adjoining land to the Parish Council; he says so in terms. But it is argued on behalf of the developer that the Inspector's decision letter shows that he failed to have regard to the developer's continuing obligation relating to the works of drainage.
26. This argument by the respondent seems to me to be unsound for two reasons. First, in construing planning decision letters it has long been established that the court will not readily assume that an Inspector has left out of account a factor of which he was clearly aware. As was said long ago in Seddon Properties Limited v Secretary of State for the Environment [1981] 42 P & CR 26, "It is no part of the court's duty to subject the decision letter to the kind of scrutiny appropriate for the determination of the meaning of a contract or a statute".
27. In the present case, the Inspector made express reference in paragraph 3 of his decision letter to the obligation requiring the land owners to carry out certain drainage works if need be. Subsequently, in his overall conclusion, he refers to the section 106 agreement and the benefit derived from it as being a material factor. In those circumstances, I can see no reason why it should be concluded that he left the drainage obligation, such as it was, out of account.
28. I say "such as it was", because that brings me to my second reason. When one looks at the detailed wording of paragraph 3 of the Second Schedule which is said to impose this continuing obligation on the landowners, one can see that it was not imposing such an obligation to carry out works to prevent flooding however that flooding might be caused. The paragraph expressly states that the purpose of this provision is that the transferee of the adjoining land (the Parish Council) "should incur no expense in respect of flooding caused to adjacent properties as a result of works carried out by the owners". The "owners" in that paragraph is a reference to the then owners of the appeal site. They were not proposing to carry out any works on the adjoining land transferred for community purposes and so the reference to works carried out by them must be intended to be a reference to the proposed development for residential purposes of the appeal site under the planning permission. Mr Wolton does not seek to gainsay that.
29. In essence, this paragraph only puts the landowners of the appeal site under an obligation to carry out flood prevention measures in so far as those are necessary as a result of the development of the appeal site. But if that is so, it is difficult to see that this so-called "continuing obligation" had any materiality to the Inspector's decision on the section 73 application. If, for planning policy reasons that application was not to be granted, the development of the appeal site could not lawfully go ahead (see Whitley & Sons v Secretary of State for Wales (1992) 64 P & CR 296). If it could not go ahead the developer would, in reality, not be at risk of having to fulfil the obligation imposed by paragraph 3 of the Second Schedule. Consequently, that obligation was not something which needed to be weighed against the planning policy objections to the granting of the section 73 application.
30. I therefore conclude that the judge was wrong to have regarded the Inspector as having fallen into error. I see no flaw in the decision letter and for my part I would allow this appeal.
31. LORD JUSTICE SCOTT BAKER: I agree.
32. LORD JUSTICE SIMON BROWN: For the reasons given by Lord Justice Keene, with which I fully agree, I too would allow this appeal.

Order. Appeal allowed with costs here and below assessed in the agreed sum of £9,118. Order of the judge below to be set aside and statutory application dismissed.