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Cite as: [2001] EWHC Admin 642

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London Borough of Barnet v. SSHD and McCarthy & and Stone (Developments) Ltd [2001] EWHC Admin 642 (23rd August, 2001)

Case No: CO/155/2001
Neutral Citation Number: [2001] EWHC Admin 642
IN THE HIGH COURT OF JUSTICE
QUEENS BENCH DIVISION
ADMINISTRATIVE COURT
Royal Courts of Justice
Strand,
London, WC2A 2LL
Thursday 23 August 2001

B e f o r e:
THE HONOURABLE MR JUSTICE STANLEY BURNTON
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Between

	THE LONDON BOROUGH OF BARNET	Claimant
	- and -
	THE SECRETARY OF STATE FOR ENVIRONMENT, TRANSPORT AND THE REGIONS	First Defendant
	- and -
	McCARTHY & STONE (DEVELOPMENTS) LTD	Second Defendant

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(Transcript of the Handed Down Judgment of
Smith Bernal Reporting Limited, 190 Fleet Street
London EC4A 2AG
Tel No: 020 7421 4040, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
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Andrew Tabachnik (instructed by the Borough Solicitor ) for the Claimant
Christopher Katkowski QC (instructed by Lester Aldridge ) for the Second Defendant
The First Defendant did not appear and was not represented.
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Judgment
As Approved by the Court
Crown Copyright ©
MR JUSTICE STANLEY BURNTON:
Introduction

1. This is an application by the Claimant under section 288 of the Town and Country Planning Act 1990 for an order quashing the decision of the First Defendant given by letter dated 6 December 2000 allowing the appeal of the Second Defendant against the Claimant's failure to grant planning permission for a development of 43 sheltered apartments and ancillary accommodation and provision at the site at 178 High Road, East Finchley in London ("the site") and granting planning permission for that development.

2. The First Defendant has offered to submit to judgment in favour of the Claimant, on the basis that the Inspector failed to give adequate reasons for his decision. However, the Claimant's right to relief is strenuously opposed by the Second Defendant. In these circumstances, it is for the Court to determine whether or not the Claimant is entitled to the relief it seeks without regard to the First Defendant's position.
The main issue before the Inspector

3. Planning permission had been refused by the Claimant on the basis of the failure of the Second Defendant to include in its proposal an element of affordable housing. The Claimant contended that there is an established need for such housing in Barnet, and that the site was suitable for the inclusion of an element of such housing; the Second Defendant contended that the site was unsuitable and that affordable housing could not be sensibly incorporated into its scheme. The main issue before the Inspector was stated by him as follows:

"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. This issue fell to be considered on the basis of government policy set out in PPG3: Housing (2000) and Circular No. 06/98: Planning and Affordable Housing . Paragraph 17 of the former document is as follows:

"The policy in this guidance on planning and affordable housing is set out in more detail in DETR Circular 6/98 Planning and Affordable Housing . 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."

The relevant provisions of Circular 6/98 are as follows:

"1. .... where there is evidence of need for affordable housing, local plans should include a policy for seeking an element of such housing on suitable sites. Such policies will be a material consideration in determining an application for planning permission.
2. Planning Policy Guidance note 3 (PPG3): Housing (1992) [see now the 2000 edition] sets out the Government's policy on how the planning system can contribute to the overall supply of affordable housing. It recognises that it may be desirable in planning terms for new housing development on a substantial scale to incorporate a reasonable mix and balance of house types and sizes to cater for a range of housing needs. Whilst this is intended to encourage the development of mixed and balanced communities, it is also intended to ensure that affordable housing is only required on sites which are large enough to accommodate a reasonable mix of types and sizes of housing.
....
10. 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:
(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 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.
- 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 need 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.
13. In some cases the identified need for affordable housing may exceed the total number of affordable homes likely to be achieved from public investment and the sites specified in the plan. If so, the plan should include the criteria, set out in paragraph 10 above, for other sites (so-called windfall sites) identified for housing after the plan is adopted or approved, on which the local planning authority would seek an element of affordable housing.
....
22. ... 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 panning 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 provisions of an element of affordable housing, such as those below the site threshold and other criteria set out in paragraph 10 above.

5. Barnet has not yet adopted an up-to-date UDP taking into account the policies set out in the above central government documents. The appeal before the Inspector took place on the basis that Barnet's policies properly reflected those central government policies.

6. The Inspector considered in his decision letter the various factors that paragraph 10 of Circular 6/98 required to be taken into account. He held that the site qualified for the provision of affordable housing in terms of its size. There was agreement before him that there is a need for affordable housing in Barnet. There was also no dispute between the parties as to the suitability of the site for affordable housing in terms of its location in close proximity to local services and facilities and access to transport. The Inspector pointed out that these factors also made the site suitable for sheltered housing.

7. The Inspector did not consider that the provision of affordable housing would prejudice the realisation of other planning objectives that needed to be given priority in development of the site.

8. There were therefore 2 remaining issues to be dealt with in considering the matters set out in paragraph 10 of Circular 6/98: whether there would be particular costs associated with the development of the site, and the need to ac achieve a successful housing development.

9. The Inspector dealt with the question of costs in paragraphs 27 and 28 of his decision letter:

27. The appellant has drawn my attention to particular costs associated with development of the site as being in the order of £327,000. Around £182,000 would be particularly incurred in preparing the site for beneficial redevelopment (demolition, removal of underground tanks, imported fill, decontamination and piled foundations). The balance of particular costs would be incurred in providing communal non-saleable areas and items for the safety and security of elderly residents. The appellant's planning evidence indicated that the additional burden of affordable housing on the site would be at a cost of the complete loss of a sheltered housing scheme or at worst, it could prevent the beneficial redevelopment of the site for any form of housing. The Council submitted that these costs would be incurred in any event and did not prove that affordable housing would be uneconomic to provide.
28. 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.

(The existing use that the Inspector referred to in paragraph 27 was as a petrol station with vehicle workshops.)

10. The Inspector's conclusions as set out in these paragraphs are criticised by Barnet. They contend that he failed to take into account the availability of grant subsidy, which had been the subject of the unchallenged evidence of Mr S Rawlings, the Development Director of Notting Hill Housing Trust. In addition, it is difficult to reconcile the Inspector's conclusion with the undisputed fact that the development of the whole site with affordable housing was financially viable. That fact was evidenced by the admission of the Second Defendant's planning witness, Mr Day. The references in the last two sentences of paragraph 27 of the decision letter to the rival submissions of the parties indicate that the Inspector overlooked this evidence.

11. The availability of grant and the financial viability of development for affordable housing alone are not referred to by the Inspector, and it is not possible to see whether he took them into account, and if he did so how he arrived at his conclusion. This is what led to the Secretary of State accepting that the Inspector's decision should be quashed. The Treasury Solicitor's letter of 25 April 2001 states:

"The First Defendant offers submission to judgment on the basis that the Inspector has failed to give adequate reasons for his conclusion relating to the effect of a grant and the relevance of the possibility that the whole site could be developed for affordable housing."

12. There is an additional criticism of this part of the Inspector's reasons. As paragraph 28 indicates, he had no details to support this aspect of the Second Defendant's case. He had little more than assertion. Any professional developer will easily be able to produce figures establishing the cost of development. An inspector should not too readily accept assertion unaccompanied by financial data as a basis for a planning decision. Furthermore, any assessment of financial viability involves consideration of the entirety of the costs involved and of the likely revenue on completion of the development. The price of the site is normally a large feature in the costs. The price paid or payable by the developer may reflect the expected costs of preparing the site for development. If it fully reflects those costs, those costs cannot constitute particular costs associated with the development of the site; certainly, the weight to be given to such costs must be substantially affected. It appears that the Inspector did not know what the price paid or payable by the Second Defendant was, and had no evidence as to the extent, if any, that it reflected the costs of preparing the site for beneficial development. He did not have a statement of expected revenue if affordable housing was included (i.e., of revenue from both sheltered and affordable housing) and furthermore the evidence of the Second Defendant did not take account of the availability of grant aid. Without evidence of the price paid or payable by the Second Defendant, the Inspector could not determine whether there were particular costs associated with the development of the site or the weight to be given to that consideration.

13. In addition, I agree that the Inspector's statement that "the costs involved in preparing the appeal site for any form of housing development would be relatively high because of its existing use" is difficult to reconcile with the financial viability of affordable housing on the whole site, if not logically inconsistent with it. The inference I draw from this reference, and the last two sentences of paragraph 27 of his decision letter, is that he failed to take into account the financial viability of such a development.

14. In these circumstances, the criticisms of the Claimant of these paragraphs of the Inspector's decision letter are well-founded. One cannot see how he came to his conclusion on the financial non-viability of a mixed development. He did not take account of the financial viability of a wholly affordable housing development. I cannot see how he could have reasonably come to his conclusion on the information and evidence before him.

15. Mr Katkowski submitted that the Claimant's complaints as to the lack of reference in the decision letter to the availability of grant aid, and to the financial viability of an entirely affordable housing development, did not render the decision liable to be quashed. He submitted, rightly, that it is sufficient for the Inspector to deal with the main issues in dispute. Neither the availability of grants nor the financial viability of an entirely affordable housing development was in issue. It was therefore unnecessary for the Inspector to deal with them. However, this submission does not meet the point referred to in paragraph [13] above or inadequacy of the facts available to the Inspector on which he could reasonably come to the conclusion as to the particular costs of developing the site, a matter required to be taken into account by paragraph 10 of Circular 6/98 and which the Inspector purported to take into account. His finding was in my judgment one he could not reasonably have come to on the information and evidence before him. Unless, therefore, his finding as to these costs played no significant part in the Inspector's final decision, it is liable to be quashed.

16. I therefore turn to consider the other matters referred to by the Inspector for his decision. He did not find that there were other planning objectives justifying omitting provision of affordable housing. What decided the matter in favour of the Second Defendant was the Inspector's finding that the provision of affordable housing as part of the appeal proposal could not achieve a successful housing development. The Claimant has not challenged this finding. One might have thought that this finding, with the findings in paragraph 39 of the decision letter (set out below), would have been decisive in favour of the grant of planning permission. If so, the Claimant's complaints in relation to paragraphs 27 and 28 of the decision letter could not have led to the quashing of his decision. However, that is not how the Inspector put the matter. He stated his conclusion on the Main Issue as follows:

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

17. The statement that the Inspector's considerations on the main issue were "finely balanced", and the introductory 11 words of paragraph 40, indicate that the costs of developing the site remained a factor in his decision on the main issue. It is not clear that if he had come to a reasonable and reasoned finding on the question of the particular costs associated with the development, he would have come to the same decision. The wording of the decision letter compels me to reject Mr Katkowski's submission that if the Inspector had properly dealt with the question of costs his decision would have been the same. In these circumstances, I shall make an order quashing his decision.
The question of a financial contribution

18. My conclusion on the main issue makes it unnecessary for me to come to a final conclusion on the remaining submission of the Claimant, that on the basis of his findings the Inspector should have required a contribution to be made by the Second Defendant towards the provision of affordable housing on another site, as envisaged in paragraph 22 of Circular 06/98. In case this case goes further, however, I shall set out the issue as I see it.

19. The issue here is one of the correct interpretation of that paragraph, which is as follows:

"22. 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 paragraph10 above. "

20. The Inspector dealt with this issue at paragraph 43 of his decision letter:

"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."

21. In this case, the site as such is appropriate for the inclusion of an element of affordable housing: it satisfies all the criteria set out in paragraph 10(i) of Circular 06/98. What made the inclusion of an element of affordable housing inappropriate was, it would seem, the cost of developing the site and the difficulty of achieving a successful housing development including both sheltered housing and affordable housing. It was not the site that was inherently unsuitable for the inclusion of an element of affordable housing; it was the kind of development proposed by the Second Defendant that made its inclusion unsuitable. If, for example, the planning proposal had been for a development of private and independent flats, the inclusion of an element of affordable housing might have been appropriate. Mr Tabachnik submitted that paragraph 22 of Circular 06/98 focuses on the site itself, not on the development proposed by a developer. If the site is suitable for affordable housing, and none is included, the question of a contribution falls to be considered. On this basis, the Inspector erred in law in misconstruing paragraph 22. Mr Katkowski submitted that the interpretation of the Circular was a matter for the Inspector, and that provided he applied an interpretation of paragraph 22 that it was capable of bearing, the Court could not interfere with his decision. He referred me to the judgment of Brooke LJ in R v Derbyshire County Council, ex p Woods [1997] JPL 958, in which he said, at 968:

"If in all the circumstances the wording of the relevant policy document is properly capable of more than one meaning, and the planning authority adopts and applies a meaning which it is capable as a matter of law of bearing, then it will not have gone wrong in law."

Brooke LJ referred to the judgment of Auld J in Northaven D C v Secretary of State for the Environment [1993] JPL 761. In that case, the expression in issue was "institutions standing in extensive grounds". In R v Derbyshire County Council, ex p Woods the question was whether particular impacts on the environment "would have such an adverse effect on the environment and on the quality of life for a locality that planning permission should not be given unless the development would produce overriding benefits " (italics added). The application of expressions such as these is very much one of fact and degree and planning judgment.

22. In the present case, the key expressions in paragraph 22 of Circular 06/98 are "appropriate" and "preferable". They are very similar to the expressions considered in the Derbyshire County Council and Northaven cases. There is one difference however between that case and this. In the present case, the issue is not as to the judgment of appropriateness, but whether the particular development proposed by the developer is a relevant consideration in deciding appropriateness. The desirability of consistency in planning decisions suggests that there should be only one answer to this question. The principle applied in the above cases does not necessarily apply to such questions.

23. I accept Mr Katkowski's submission that the Inspector gave to paragraph 22 of Circular 06/98 a meaning it can reasonably bear. The criterion of a successful housing development is included in paragraph 10, to which paragraph 22 refers. However, paragraph 22 refers to a site that is inherently unsuitable for the provision of an element of affordable housing. I initially preferred the view that appropriateness in paragraph 22 does relate to the site alone. However, on further thought, it is obvious that the questions of appropriateness and preferability must take into account financial viability: a decision on whether a payment should be made, and if so how much, must be based in part on the estimated financial results of a development.

24. As mentioned above, in view of my decision on the main issue, I do not have to decide this subsidiary issue. However, irrespective of the question of the proper interpretation of paragraph 22 and the approach of the Court to its interpretation and application by decision makers, it seems to me that the Inspector took into account his conclusions as to the cost of developing the site when he reached the conclusion that the site is "inherently unsuitable for the provision of affordable housing", and on this basis this conclusion too would fall to be quashed for the reasons I gave in relation to the main issue.
Costs

25. The parties were agreed that as between them costs would follow the event, at least from the date of the Secretary of State's agreement to submit to judgment, and I was provided with schedules of costs by both parties. The Second Defendant did not quarrel with the Claimant's schedule, which amounts to the very modest sum of £6,704. The Second Defendant was a necessary party to these proceedings, and I think that the Claimant is entitled to all its costs against it, irrespective of the possible liability of the First Defendant for part of the costs incurred prior to 25 April 2001. If the Second Defendant wishes to make any further submissions on costs it may do so in writing at any time within 10 days after this judgment is handed down or orally when judgment is handed down. Otherwise, there will be an order that the Second Defendant pays the Claimant's costs assessed in the sum of £6,704.

**************
MR JUSTICE STANLEY BURNTON : My judgment has been distributed in draft and sets out my findings and conclusions in this case.
MR GREATOREX : My Lord, I am very grateful. I would ask for an order quashing the decision of the first defendant. With regard to costs, I understand the matter is almost completely agreed. Your Lordship, I hope, has on file a letter from the first defendant sent on 31st July. I have a copy. It is simply the first defendant's agreement to pay the claimant's costs up to the date of their submitting to judgment in the amount of £2,570.
MR JUSTICE STANLEY BURNTON : Let me see what I said in the first place.
MR GREATOREX : The letter reads:
"The first defendant agrees to pay £2,570 representing those costs incurred by the claimant prior to my letter of 25th April 2001."
MR JUSTICE STANLEY BURNTON : So you are asking for an order for costs against the first defendant of some £2,500 --
MR GREATOREX : Yes, and against the second defendant in the sum indicated in your judgment with the only minor exception of adding £100 for today, so £6,804. Is that agreed?
MR ABRAHAMS : It is, my Lord.
MR JUSTICE STANLEY BURNTON : So be it.
MR ABRAHAMS : There is only one matter on costs which is that I would seek a stay pending an appeal of this matter. Logically, therefore, I should begin with my application for permission to appeal.
MR JUSTICE STANLEY BURNTON : Let me hear why there should be a stay? After all you have another party which is perfectly solvent. If you succeed in the appeal they will repay the money.
MR ABRAHAMS : My Lord, if this matter is going to be looked at again in another place it seems appropriate that the question of costs should be left to one side until we get a final outcome. That is the basis for my application for a stay. If I can deal with the substantive question of permission first.
MR JUSTICE STANLEY BURNTON : I do not need to hear you until I hear from Mr Greatorex. What do you say about permission?
MR GREATOREX : My Lord, I am not entirely sure what grounds my learned friend is going to base his submissions on --
MR JUSTICE STANLEY BURNTON : Presumably that I was wrong.
MR GREATOREX : With respect, at this stage I cannot see any possible grounds for giving permission to appeal at this case. The substantive issue you decided the case on was entirely on the facts. It raises no important issue of law or principle or otherwise. In my submission there is no prospect of the Court of Appeal coming to a different conclusion. If the Court of Appeal does want to hear it, it is a decision that they ought to take.
MR ABRAHAMS : My Lord, in his decision the inspector came to the clear conclusion that the inclusion of affordable housing in the development would not achieve a successful housing development. That conclusion is unchallenged. Your Lordship conducted a close textual analysis of the decision letter and that led you to conclude that there was a possibility that had the issue of the cost of the inclusion of affordable housing been properly addressed by the inspector, then the inspector might have reached a different conclusion on appeal.
MR JUSTICE STANLEY BURNTON : That is because that is what he said. He said this was finally balanced and taking into account all the above considerations --
MR ABRAHAMS : Yes. So your Lordship's decision turns on seven words in paragraph 38 of the decision letter and the costs of developing the site. Those were crucial in your judgment.
MR JUSTICE STANLEY BURNTON : Yes.
MR ABRAHAMS : I submit that that approach was wrong. That approach gives too much weight to that single phrase in the decision letter. Decision letters cannot be construed like statutes and there is no requirement in considering them to take a highly literalist approach to their construction.
MR JUSTICE STANLEY BURNTON : So I should ignore what he says?
MR ABRAHAMS : No, my Lord. The reasoning in the decision letter has to be considered as a whole. Allowance does have to be made for a somewhat loose drafting given that this is not a statutory or contractual document. If that approach is taken, my Lord, it becomes clear that the suggestion that the inspector might, if he had taken a different view on costs, have refused permission in the face of that clear finding that the inclusion of affordable housing would not lead to a successful development, in my submission, that conclusion is highly unlikely and such a conclusion by the inspector would have been unsustainable. No inspector, in my submission, could reasonably refuse permission on the basis that the proposed development failed to include an element of affordable housing when he had already found, and that finding was not challenged, that if such an element is included the result is that the housing development was not likely to be successful. In my submission, such a conclusion is tantamount to demanding that the developer put forward proposals for an unsuccessful housing development.
On the inspector's unchallenged finding on the successful housing development question, in my submission, he could not reasonably have reached any conclusion but to grant planning permission in this case.
The second defendant should be granted permission to appeal if he has a realistic rather than a fanciful prospect of success. That is the test. As I have said, your Lordship's conclusion is based on a highly textual analysis of the decision letter and in particular on those seven words in paragraph 38. I submit that the second defendant does have a realistic prospect of persuading the Court of Appeal to take a more broad brush approach to this decision letter. For those reasons I submit that permission to appeal should be granted in this case.
MR JUSTICE STANLEY BURNTON : Anything else you want to say?
MR GREATOREX : Not unless I can assist you further.
MR JUSTICE STANLEY BURNTON : There were effectively two issues in this case. Firstly, whether planning permission was refused unless there were an element of affordable housing and, secondly, whether a contribution should be made by the developer to the costs of affordable housing elsewhere having regard to the fact that the inspector concluded that it was inappropriate for there to be affordable housing on this site. The question of costs was relevant to both of those aspects of the case. I indicated in my judgment some surprise that the question of cost was taken as far as it did by the inspector, but the wording of his decision letter was relatively clear.
In those circumstances I do not consider it is a proper case for permission to appeal. In any event, the second defendant now has my written judgment which can go before the Court of Appeal as soon as possible. In those circumstances I refuse permission and I refuse a stay.
MR GREATOREX : Thank you, my Lord.
MR ABRAHAMS : I am grateful.