COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM QUEEN'S BENCH DIVISON
ADMINISTRATIVE COURT: MR JUSTICE ELIAS
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE MUMMERY
LORD JUSTICE SULLIVAN
| SAINSBURY'S SUPERMARKETS LTD
|- and -
|WOLVERHAMPTON CITY COUNCIL
TESCO STORES LTD
WordWave International Limited
A Merrill Communications Company
165 Fleet Street, London EC4A 2DY
Tel No: 020 7404 1400, Fax No: 020 7404 1424
Official Shorthand Writers to the Court)
Neil King QC & Guy Williams (instructed by Wragge & Co) for the Respondent
Christopher Katkowski QC & Scott Lyness (instructed by Ashurst LLP) for the Interested Party
Hearing date : Thursday, 23rd July 2009
Crown Copyright ©
Lord Justice Sullivan:
"that the acquisition will facilitate the carrying out of development, redevelopment or improvement on or in relation to the land."
All three parties were, and still are agreed that the site should be redeveloped. In the absence of any agreement between the Appellant and the Interested Party, and these proceedings are confirmation if it is needed that there is no realistic prospect of any such agreement, there can be no doubt that the Defendant will have to exercise its powers under section 226(1)(a) to acquire either the Appellant's or the Interested Party's land within the site if any redevelopment is to proceed.
"226(1) A local authority to whom this section applies shall, on being authorised to do so by the Secretary of State, have power to acquire compulsorily any land in their area -
(a) if the authority think that the acquisition will facilitate
the carrying out of development, re-development or
improvement on or in relation to the land…
(1A) But a local authority must not exercise the power under paragraph (a) of subsection (1) unless they think that the development, re-development or improvement is likely to contribute to the achievement of any one of more of the following objects -
(a) the promotion or improvement of the economic well-
being of their area;
(b) the promotion or improvement of the social well-being
of their area;
(c) the promotion or improvement of the environmental
well-being of their area."
"(i) whether the purpose for which the land is being acquired fits
in with the adopted planning framework for the area;
(ii) the extent to which the proposed purpose will contribute to the
promotion or improvement of the economic, social or
environmental well-being of the area;
(iii) the potential financial viability of the scheme for which the
land is being acquired;
(iv) whether the purpose for which the land is being acquired
could be achieved by other means."
"The benefit to be derived from exercising the power is also not restricted to the area subject to the compulsory purchase order, as the concept is applied to the well-being of the whole (or any part) of the acquiring authority's area."
"There is no doubt that both the Tesco and Sainsbury's schemes would fulfil the statutory purpose of facilitating the carrying out of development, redevelopment or improvement on or in relation to the land." (4.4)
The Report also noted that both redevelopment schemes were acceptable in planning terms (5.7).
"the extent to which the two schemes are likely to contribute to the promotion of the economic, social or environmental well-being of the area." (6.1).
The only respect in which the Report is criticised by the Appellant, and the basis of the Appellant's challenge in these proceedings, is the fact that in its consideration of these "well-being" benefits the Report included the benefits which would result from the redevelopment of another site, the Royal Hospital site ("RHS").
"would have a significant positive impact on the regeneration of this area of the city." (6.10).
Within the RHS there are a number of listed buildings which are in need of restoration. Any scheme for the redevelopment of the RHS must incorporate the restoration of these listed buildings and the cost of such restoration has obvious implications for the viability of any scheme on the RHS.
"that development of the RHS site in accordance with the Council's aspirations is unlikely to take place for the foreseeable future unless Tesco's current proposals, which do meet those aspirations, are brought forward through a cross-subsidy from the development of the Ragland Street site."
The Report continued in paragraph 6.21:
"(a) there will be three phases; site clearance and demolition
(phase 1), restoration of the main hospital building (phase 2)
and residential, commercial and public realm (phase 3);
(b) Phase 1 is expected to take 9 months and is not dependent on
the Council making a CPO to support the Tesco Scheme;
(c) They will commit to Phase 2 providing the Council make a
CPO in support of the Tesco scheme and the PCT have signed
an agreement to lease the space;
(d) They will agree to a planning obligation prohibiting the
occupation of the Raglan Street store until the works to the
listed buildings are completed to the reasonable satisfaction of
the Council subject to the council making a CPO for the Site
to support the Tesco scheme and using its reasonable
endeavours to secure its confirmation…"
The Report's conclusion on this issue in para.6.23 was:
"Whilst there is disagreement between Tesco and Sainsbury's about the viability of the RHS development, it is clear is that, for reasons they have explained, Tesco are unlikely to carry out their scheme unless they are selected as the operator of the store at Raglan Street and are thus able to cross-subsidise the RHS development in the manner described above. Tesco have also indicated that if they are not selected, they would not be prepared to sell the RHS and would seek a more commercially attractive planning permission. This would be unlikely to realise the same level of planning benefit to the city as their present proposals for the RHS. In these circumstances, the Council could consider making a CPO for the RHS, but the outcome would be uncertain and dependant to a large degree on finding another party willing to carry out a scheme to the Council's requirements when the viability of them is very much in question."
Paragraph 11.3 drew the threads together:
"In conclusion, both Schemes would bring appreciable planning benefits and would promote and improve the economic, social and environmental well-being of the city. However, the Tesco Scheme enjoys a decisive advantage in that it will enable the development of the RHS to be brought forward in a manner that is consistent with the Council's planning objectives for that site. Making a CPO for the Tesco Scheme will therefore result in a significantly greater contribution to the economic, social and environmental well-being of the Council's area than would making a CPO for the Sainsbury's Scheme. On this basis, and subject to the satisfactory resolution of the matters identified in the Recommendations set out at the beginning of this report, there is a compelling case in the public interest to make a CPO to enable the Tesco Scheme to proceed."
"The Director for Sustainable Communities introduced the report and highlighted the salient matters for consideration by the Cabinet. He reported that both Schemes would bring appreciable planning benefits and would promote and improve the economic, social and environmental well-being of the City. However, the Tesco scheme enjoyed a decisive advantage in that it would enable the development of the Royal Hospital Site to be brought forward in a manner that is consistent with the Council's planning objectives for that site."
It was resolved:
"(a) That approval in principle be given to the making of a
compulsory purchase order for the land bounded by Raglan
Street, St Mark's Road, Alexandra Street and Great Brickkiln Street
within the Tesco application shown on the plan displayed at the
meeting (the Raglan Street Site) to facilitate the carrying out of:
(i) a mixed use development comprising 1,300 m² of A1 retail
use, 1,102 m² of either A2, A3, A4 or A5 use, 145 flats
including a minimum of 40 very sheltered flats, and a petrol
filling station with car wash on that land and other land in the
ownership of or controlled by Tesco Stores Ltd and the
(ii) a mixed use retail, office and residential development of the
Royal Hospital site
Subject to Tesco Stores Ltd (Tesco) producing further satisfactory evidence of
a commitment to the carrying out of the development referred to at (ii) above
before consideration is given to a resolution to authorise the making of the
compulsory purchase order…."
The proceedings before Elias J.
i) The Defendant had no power to use its CPO powers for the second purpose set out in the resolution: viz. to facilitate the carrying out of a mixed use retail, office and residential development of the RHS.
ii) In reaching its decision as to whose land, the Appellant's or the Interested Party's, should be acquired to facilitate the re-development of the site, the "decisive advantage" of securing the re-development of the RHS was an immaterial consideration.
A third ground, that the Defendant had predetermined the decision and/or fettered its discretion was rejected by the Judge and is not pursued in this Court.
"I agree with Mr Katkowski that the resolution does not need to be altered. Perhaps serendipitously, it does not state in terms that the purpose is to promote both developments, even if that was the Council's understanding. It simply says that the CPO will facilitate the carrying out of both developments, and as a matter of fact, that is correct. The making of the CPO will in the unusual circumstances of this case, achieve precisely those results, and in my judgment it can do so lawfully. So I do not consider that it would be appropriate to quash the resolution."
i) They fell within subsection 226(1A) of the 1990 Act; or
ii) Even if they did not fall within subsection 226(1A) the Defendant was required to have regard to all material considerations when deciding whether to make a CPO under subsection 226(1)(a), and was therefore entitled to have regard to all of the benefits which would flow from facilitating the carrying out of a proposed redevelopment scheme when deciding which of two rival redevelopment schemes it should facilitate by the making of a CPO.
"was condoning the sale of planning permissions to the highest bidder."
See per Lord Hoffmann at p.782 of the Tesco case. Lord Hoffmann's response to this concern was that the "bargain and sale" metaphor:
"…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 has 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 the Plymouth case, 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."
"have regard to the provisions of the development plan so far as material to the application, and to any other material considerations."
While off-site, or "external" benefits are capable of being "other material considerations", there is no express obligation in subsection 70(2), such as is imposed by subsection 226(1A) to have regard to them. Local planning authorities are not required to refuse an application for planning permission unless granting it would be likely to contribute to off-site "well-being" benefits. If there is no policy or other planning objection to the development of a particular site, planning permission will be granted even though carrying out the development is unlikely to have any wider benefits.
"provide as much information as possible about the resource implications of both acquiring the land and implementing the scheme for which the land is required."
"Circumstances vary so widely that it may be unsatisfactory and unwise to attempt to state a formula which is intended to provide a definitive answer in all types of case. All that need be said to decide this appeal is that the sites of the commercial development, approved in principle, are sufficiently close to the Opera House for it to have been proper for the local planning authority to treat the proposed development of the office sites, in Russell Street and elsewhere, and the proposed improvements to the Opera House as forming part of one composite development project. As such it was open to the planning authority to balance the pros and cons of the various features of the scheme. It was open to the authority to treat the consequence, for the Opera House works, of granting or withholding permission for offices as a material consideration in considering the part of the application which related to offices." (p.121 D-F)
Kerr L.J. said that an application for such widely separated sites:
"would be unlikely to be properly entertained as a single planning application or as an application for one composite development, as in the present case. I therefore say no more about it save that all such cases would, in my view, involve considerations of fact and degree rather than of principle." (p.117C)
Staughton L.J. agreed, saying that:
"The building of office premises in close proximity, A, is necessary if development B is to occur. It can fairly and reasonably be said to relate to the proposed development which ought to be permitted. The whole is, to quote the words of Kerr L.J., a composite or related development. The offices are not ulterior or extraneous; they are part of the whole." (p.122F)
Hoffman L.J. (as he then was) at page 88 of the Plymouth case, in which he referred to the Court's finding in Monahan that there was a nexus between the office development and the improvements to the Royal Opera House on the basis of (1) the financial dependency of the one part of the development on the other and (2) their physical proximity.
"public interest is not allowing planning permissions to be sold in exchange for benefits which are not planning considerations or do not relate to the proposed development." See per Hoffmann L.J. at p.90 of the Plymouth case.
Subject to the Secretary of State's power to "call in" any application for planning permission for determination by him, local planning authorities are free to grant any planning permission they wish. The concern that they might be improperly influenced to "sell" planning permissions does not apply to CPOs made under s.226. While local authorities may make such orders, they must be confirmed by the Secretary of State: see subsection 226(1). If there is an objection to the CPO from a landowner, such as the Appellant, whose interests would be adversely affected by the proposed compulsory acquisition, the Secretary of State will appoint an independent Inspector to conduct a public inquiry at which witnesses appearing in support of the making of the CPO can be cross-examined by the objector. The Inspector's report and recommendation will be considered by the Secretary of State when he decides whether or not to confirm the CPO. If the Secretary of State concludes, as a matter of fact and degree, that there is no genuine nexus between the proposed redevelopment of the CPO site and an alleged off-site "well-being" benefit, and that what is proposed is, in reality, the sale of the acquiring authority's compulsory acquisition powers to the highest bidder, then he will give that alleged benefit no weight. Thus, the procedures for authorising compulsory acquisition contain sufficient safeguards to prevent "the auction of CPO powers".
"I accept the submission of Mr Lockhart-Mummery that in order to fall within subsection (1A) in relation to the RSS development, these benefits must flow from the RSS development alone, since that is the site covered by the CPO. The justification for the CPO is that it facilitates that development, not some other development at a different site. I do not accept that the fact that a link between the two developments can be achieved by a section 106 agreement (or some other linking device) entitles the Council to treat what are in reality well-being benefits resulting from the RHS development as if they were generated by the RSS development…."
I am in complete agreement with the proposition that, in order to fall within subsection 226(A) the benefits in question must flow from the redevelopment of the CPO site (the RSS). However, for the reasons set out above I do not accept that the cross-subsidy of the redevelopment of the RHS must be excluded from consideration as one of those benefits. The likelihood of the redevelopment of a CPO site leading, whether because of cross-subsidy or for any other reason, to the development or redevelopment of other sites in the authority's area is precisely the kind of wider benefit that subsection (1A) requires the authority to consider.
Lord Justice Mummery