ON APPEAL FROM QUEEN'S BENCH DIVISION
THE ADMINISTRATIVE COURT
SIR MICHAEL HARRISON
(Sitting as a Deputy High Court Judge)
Strand, London, WC2A 2LL
B e f o r e :
LADY JUSTICE ARDEN
LORD JUSTICE MCFARLANE
| The Queen on the application of Milton Keynes Council & Ors
|- and -
|Secretary of State for Communities & Local Government
Tim Morshead QC (instructed by Treasury Solicitor) for the Respondent
Hearing date : 23 November 2011
Crown Copyright ©
LORD JUSTICE PILL :
The statutory scheme
"2. The GPDAO amends Class I of Part 3 of Schedule 2 to the General Permitted Development Order 1995 by including, as permitted development under Class I, the following development:
'Development consisting of a change of use of a building-
(a) to a use falling within Class C3 (dwelling houses) of the Schedule to the Use Classes Order from a use falling within Class C4 (houses in multiple occupation) of that Schedule;
(b) to a use falling within Class C4 of that Schedule from a use falling within Class C3."
3. The claimants' objection relates to paragraph (b), which grants a new permitted development right enabling a change of use from use as a single dwelling house to use as a small house in multiple occupation (an "HMO") without the need to obtain planning permission. There is no objection to paragraph (a), which allows a change of use in the reverse direction and which had been contained in a previous statutory instrument.
4. The Compensation Regulations limit the liability of local planning authorities ("LPAs") to pay compensation in the event that they decide to make an Article 4 direction to remove the new permitted development right granted by the GPDAO. It does so by providing in Regulation 2 as follows:
'For the purposes of paragraphs (2A)(a) and (3C)(a) of section 108 of the Act (compensation where development order or local development order withdrawn), development of the following description is prescribed-
(b) development permitted by Class I of Part 3 of Schedule 2 (changes of use relating to dwelling houses and houses in multiple occupation).'
5. Section 108 of the Town and Country Planning Act 1990 provides for the payment of compensation in certain cases where planning permission granted by a development order is withdrawn and where, on an application for planning permission for that development, the application is refused or permission is granted subject to conditions.
6. The combined effect of Regulation 2 and section 108 of the 1990 Act is convoluted to explain, but the parties are agreed that the resulting position is that LPAs' liability to pay compensation where they make an Article 4 direction withdrawing the permitted development rights under the GPDAO is reduced in the following two situations:
i. Where 12 months' notice is given in advance of an Article 4 direction taking effect, there will be no liability to pay compensation, and
ii. Where an Article 4 direction is made with immediate effect or with less than 12 months' notice, compensation will only be payable in relation to planning applications which are submitted within 12 months of the effective date of the direction and which are subsequently refused or are granted permission subject to conditions.
7. The position therefore is that, prior to 1 October 2010 when the GPDAO and the Compensation Regulations came into force, planning permission was needed for a change of use from a dwelling house to an HMO (ie from Class C3 to Class C4) so that LPAs could control the potential amenity and environmental problems that can arise from HMOs, by either refusing planning permission or by the imposition of planning conditions. Now that such a change of use is permitted development, the LPAs have no control over the change of use, except by making an Article 4 direction which will expose them to the risk of compensation in the circumstances I have just described."
An attempt to pray against the statutory instruments in Parliament with a request that they be annulled failed and they came into force on 1 October 2010.
The 2009 Consultation
(1) Option 1:
Make no change to the planning legislation but promote best practice, focusing on local management of HMOs through other means and existing legislative powers;
(2) Option 2:
Amend the Use Classes Order ("UCO") to introduce a new HMO use class and a definition of an HMO along the lines of the Housing Act 2004;
(3) Option 3:
Amend the UCO to introduce a new HMO use class and a definition of an HMO along the lines of that in the Housing Act 2004 and also amend the GPDO to allow for changes of use between a dwelling and an HMO to be permitted development, leaving LPOs to issue directions under article 4 of the GPDO if they wish to remove permitted development rights in respect of defined areas.
(i) "the majority of respondents were in favour of the second option outlined in the consultation" (paragraph 1.4);
(ii) "option 3 was deemed to be overly bureaucratic and ran the risk of local authorities being subject to compensation payments to development" (paragraph 1.5);
(iii) of those consultees who expressed a preference "a combined total of 92% expressed a preference for some form of option 2" (paragraph 2.14), "option 1 was preferred by 6%" (paragraph 2.15) and "option 3 was preferred by 1%" (paragraph 2.17).
At paragraph 3.63 it was stated:
"Option 3 was the least popular option, being preferred by only 1% of respondents. These were mainly individuals or landlords, although a few local authorities who were not experiencing problems with the concentration of HMOs were supportive of this option. It was felt that this option could give LPAs the highest level of control to manage the problems locally."
The April 2010 Orders
"This change will allow the free development of smaller shared housing, which is a vital component of our private rented sector, unless there is a serious threat to the area."
The 2010 Consultation
"However, it was not considered prudent simply to announce unilaterally that Option 3 would be implemented without seeking the view of key interests one final time to verify that there was nothing further that they wished to bring to the [Secretary of State's] attention in relation to this policy. In view of the unpopularity of Option 3 during the first public consultation, Ministers were conscious that any implementation of Option 3 would have to be sensitively handled. To this end, in accordance with the advice of their officials, Ministers agreed that it would be sensible to give key partners, representing the full range of interests in this policy area, one last opportunity to express any views in relation to Option 3 so that they could inform the detailed implementation of the policy in due course."
(The expressions "one final time" and "one last opportunity" appear to me to be insensitive when it was the Government's own change of mind that led to the need to permit further representations.)
(i) National HMO Lobby;
(ii) Local Government Association;
(iii) British Property Federation;
(iv) Planning Officers' Society;
(v) Residential Landlords' Association;
(vi) National Landlords' Association;
(vii) National Union of Students;
(viii) Universities UK
- Do you consider that the proposals will allow local areas to take action without imposing unnecessary burdens on unaffected areas?
- If not, why not? What do you think could be done, within the constraints of the current planning framework, instead?
- Do you think there will be unintended consequences as a result of the proposed changes? If so what will they be and how do you think they could be mitigated?
- Do you think there are any other changes which need to be made to make this approach work more effectively e.g. to HMO definition?
- Do you have any information on costs/benefits which would be relevant to impact assessment?
- Do you think LPAs will choose to issue Article 4 directions with immediate effect or less than 12 months notice?
- How should we monitor the impact of these proposals and assess their success? What is the best review approach?
- Do you have any comments on the legislation as drafted?
These were quite general questions, permitting of a range of responses.
"There is a great deal of uncertainty regarding the extent of the problem of HMOs and the extent to which local authorities will decide to use their article 4 powers. Costs and benefits will vary by local authority depending on level of HMO development.
. . .
It is assumed that 12% of local authorities could make article 4 directions; applying a blanket requirement for planning permission in their areas. There is a risk that there may be an increase in concentration of HMOs with associated problems, such as noise, litter, 'ghost towns', in some areas if local authorities do not take other action to prevent this where it is required."
"It is common ground that, whether or not consultation of interested parties and the public is a legal requirement, if it is embarked upon it must be carried out properly. To be proper, consultation must be undertaken at a time when proposals are still at a formative stage; it must include sufficient reasons for particular proposals to allow those consulted to give intelligent consideration and an intelligent response; adequate time must be given for this purpose; and the product of consultation must be conscientiously taken into account when the ultimate decision is taken (R v Brent LBC ex parte Gunning (1985) 84 LGR 168)."
"In the Institute's view it was an error not to allow a formal period of consultation on these proposals which would have drawn on the practical experience and judgment of local authorities and communities, in particular those that expressed views on the last set of proposals which were recently and widely discussed."
"(3) The principles of fairness are not to be applied by rote identically in every situation. What fairness demands is dependent on the context of the decision, and this is to be taken into account in all its aspects.
. . .
(5) Fairness will very often require that a person who may be adversely affected by the decision will have an opportunity to make representations on his own behalf either before the decision is taken with a view to producing a favourable result; or after it is taken, with a view to procuring its modification; or both."
"Ministers' decisions on important matters of policy are not on that account sacrosanct against the unreasonableness doctrine, though the court must take special care, for constitutional reasons, not to pass judgment on action which is essentially political."
Laws LJ added, at page 1131C:
"The more the decision challenged lies in what may inelegantly be called the macro-political field, the less intrusive will be the court's supervision."
"If the courts were to extend the doctrine of legitimate expectation to embrace expectations arising from the 'scale' or 'context' of particular decisions, the duty of consultation would be entirely open-ended and no public authority could tell with any confidence in what circumstances a duty of consultation was cast upon them. The probable reaction of authorities to such an extension of the doctrine would be to opt for safety and assume a duty of consultation whenever there was room for doubt, to the detriment of the efficient conduct of public business. The suggested development of the law would, in my opinion, by wholly lamentable."
"It must also be recognised that a decision-maker will usually have a broad discretion as to how a consultation exercise should be carried out."
"In those circumstances, it is extremely difficult to find any legal basis upon which a duty of fairness to the appellants, in the form of a duty to consult them, when making a decision as to the placement of SL, can be established."
Mr Morshead submitted that, in the present context, there was no duty to consult the council.
LADY JUSTICE ARDEN :
LORD JUSTICE MCFARLANE :