England and Wales High Court (Administrative Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		31 May 2002

Mr Justice Richards:

1. This is an application under s.288 of the Town and Country Planning Act 1990 to quash a decision of the Secretary of State contained in a letter dated 10 December 2001 by which he granted planning permission for retail development, in particular a food store, at land north of Barkby Thorpe Lane, Thurmaston, Leicester.
2. Barkby Thorpe Lane separates the application site to the north from Thurmaston shopping centre to the south. The shopping centre includes a superstore owned and operated by the claimant, which retails a wide range of food and non-food goods. The application site is across the road from the superstore. The claimant also owns and operates a foodstore at the nearby town of Syston. It took an active part in the inquiry and in the post-inquiry correspondence which led to the decision letter. There is no dispute that the claimant is a “person aggrieved” for the purposes of s.288.
3. The first defendant is the Secretary of State. The second defendant is the local planning authority, Charnwood Borough Council, which has played no part in the proceedings before me. The third defendant is an associated company of Asda Stores Limited. The foodstore for which the planning permission was granted by the Secretary of State will be operated by Asda. It is convenient to refer to the third defendant as “Asda” and to the planning permission under challenge as “the Asda permission”.
4. Although from the written material the case looked relatively complex, the issues have been reduced in practice to two. The first concerns the rationality and adequacy of reasons of part of the decision letter that dealt with the relationship between the application and an earlier planning permission in respect of the same site (the Wyncote permission, described below), the second is an issue of procedural fairness relating to the question of retail impact.
5. Nevertheless, in order to deal with the issues, it is necessary first to set out the relevant history in some detail.

The facts

6. On 25 July 1996 planning permission was granted by the Secretary of State following a public inquiry for a retail warehouse development on the site that is the subject of the Asda permission now under challenge. The applicant on that occasion was Wyncote Developments plc, which is why the permission is referred as the “the Wyncote permission”.
7. The inspector had recommended the grant of the Wyncote permission subject to planning conditions which would reduce the impact of the proposals on Syston town centre. He stated that his conclusions on vitality and viability assumed that a retail warehouse development on the site would continue to operate as such in the future. A significant change in the range of goods sold might not affect the existing Thurmaston district centre, since the site would tend to operate as part of that centre once developed, but it might well increase competition with Syston to the point of adversely affecting that town centre as a whole. On those points he accepted the council’s submissions. The recommended conditions would restrict the range of comparison goods that could be sold to bulky goods (a “bulky goods condition”) and would restrict the retailing of food to a single unit not exceeding 1,400 square metres in gross floorspace (out of a total gross retail floorspace of almost 12,000 square metres).
8. In the decision letter of 25 July 1996, from the Government Office for the East Midlands, (“GOEM”), the Secretary of State agreed with the inspector’s conclusions and accepted his recommendation. He stated that planning permission was therefore granted subject to conditions set out in the letter. There was, however no condition restricting the range of goods to be sold; and the condition restricting the retailing of food was unclear in its terms. The omission of a condition restricting the range of goods to be sold was later described as a clerical error, but the mistake may have resulted in a misunderstanding of the report. The wording of the condition restricting the retailing of food was later said to include a mistake based on a misunderstanding of the inspector’s report.
9. A letter of 5 August 1996 from GOEM stated that the condition limiting the range of goods to be sold was omitted in error and purported to add such a condition. Wyncote subsequently brought proceedings challenging the imposition of the condition and the Secretary of State consented to judgment quashing the decision, accepting that he had been functus officio and had no power to amend the permission in that way.
10. In 1997 Asda purchased the site from Wyncote. There was a lengthy period during which the Secretary of State attempted to negotiate a s.106 agreement whereby Asda would accept a restriction equivalent to the missing condition in return for a payment of a sum of money, but the parties’ valuers were unable to agree on the appropriate level of compensation and the negotiations were abandoned.
11. On 30 January 1998 GOEM informed the council that the Secretary of State was “considering whether it is expedient for him to exercise his powers under s.100 of the 190 Act to make an order modifying the planning permission” on the grounds that the omission of the appropriate condition was a mistake and nothing had occurred since to suggest to him that his original intentions should not be fulfilled. The letter stated that the Secretary of State considered that “having regard to the development plan and to all other material considerations, it might be expedient that an order be made under s.97 of the 1990 Act to modify the planning permission”.
12. Section 97 of the 1990 Act confers a power on a local planning authority to make an order revoking or modifying a planning permission to the extent considered expedient. There are detailed procedural requirements and a provision for the payment of compensation. Under s.100 the Secretary of State may himself make such an order after consultation with the local planning authority and subject to the same procedural requirements with any necessary modifications. I considered these powers in Alnwick District Council v. Secretary of State for the Environment, Transport and the Regions [1999] 4 PLR 43. At 48F-H, I set out the terms of a Parliamentary statement of 20 December 1989 concerning the Secretary of State’s policy with regard to the use of his powers under s.100:

“My Rt Hon Friend’s practice has been to use this power only rarely. He has taken the view that the power should be used only if the original decision is judged to be grossly wrong, so that damage is likely to be done to the wider public interest.

Recently, however, a particular kind of case has come to the attention of my Rt Hon Friend in which he may well be prepared to exercise his power to revoke a planning permission. This is where he considers that consistency is needed between a local planning authority’s decisions in different cases, in order to ensure that similar circumstances give rise to similar decisions and that the provisions of the development plan, so far as it is material, and other material considerations have been taken into account …

My Rt Hon Friend will continue to consider each case on its merits bearing in mind this policy.”

13. Mr Elvin QC, for the claimant, submits that if the Secretary of State was contemplating the exercise of his power under s.100 in the circumstances of this case, it must have been because he considered that the grant of planning permission without the bulky goods condition was capable in principle of being judged “grossly wrong”. In any event the letter of 30 January 1998 shows the importance attached by the Secretary of State to the condition.
14. By letter of 25 February 1998 Asda objected to the making of such an order, stating inter alia that it would shortly be making an application for planning permission for an Asda food store on the site and that that planning permission, if granted, would make the question of modification and compensation academic since the grant of planning permission would be linked with a s.106 agreement precluding implementation of the Wyncote permission and in any event the physical development of the food store would prevent implementation of the Wyncote permission. It was therefore premature for the Secretary of State to make a modification order.
15. In March 1998 the application for permission for the Asda food store and related development was submitted. On 13 August the council resolved to grant planning permission for the development, subject to conditions and to the completion of a s.106 agreement. The application was notified to the Secretary of State as a departure from the development plan.
16. On 11 September GOEM informed Asda that, in view of the fact that a draft s.106 agreement had been prepared, requiring Asda not to implement the existing Wyncote permission, the Secretary of State proposed to take no further action at present in connection with the Wyncote permission.
17. On 4 March 1999 the Secretary of State called in the Asda application for his own determination.
18. On 13 June 1999 GOEM notified the council that the Secretary of State was still considering whether it was expedient for him to exercise his powers under s.100 to make an order modifying the Wyncote permission for the reasons set out in the letter of 30 January 1998. He was now also considering the expediency of a modification to the condition restricting the retailing of food, which included a mistake based on the misunderstanding of the inspector’s report and was as a result unclear.
19. By letter of 12 July 1999 Asda again objected to the making of any such order, referring to the previous correspondence and saying that nothing material had changed. The council had resolved to grant planning permission for the Asda food store and a s.106 agreement which would preclude implementation of the Wyncote permission had been settled. If Asda was successful at the inquiry in respect of the called-in Asda application, there would be no need for a modification order. Asda also objected on the grounds that for the Secretary of State to proceed with a modification order would mean that he had resolved to refuse the Asda permission or that the order was being proposed to limit the grounds which could be advanced at the inquiry by way of comparison between the Asda proposal and the extant Wyncote permission. Either course, it was submitted, would be an improper use of the Secretary of State’s powers and neither course was necessary at the present time.
20. On 3 November GOEM stated that after careful consideration the Secretary of State had decided to defer his decision whether to exercise his powers under s.100 to modify the Wyncote permission until after the Asda application had been determined.
21. The call-in inquiry was held between 28 October and 12 November 1999. The inspector’s report was received by the Secretary of State on 16 February 2000.
22. On 23 May 2000 the Secretary of State invited the parties to the inquiry to make further representations on a number of points. First, he noted that the application of the sequential approach laid out in PPG6 for selecting sites for new retail development was not considered at the inquiry. He invited representations on the application of the test. Secondly, he referred to the “fall-back position” of development on the site pursuant to the existing Wyncote permission:

“Representations were made at the Inquiry on what could be done under the existing Wyncote permission (i.e. the planning fallback position). The Secretary of State considers that he also requires representations comparing the potential harm arising from the Wyncote permission and the application proposal having regard to material planning considerations. In particular, he requests representations comparing the potential impact on relevant centres of the Wyncote permission and the application proposal. Your clients made representations at the Inquiry on the likelihood of the Wyncote permission being implemented. However, as the likelihood of the Wycote permission being implemented is part of the planning fallback position the Secretary of State also invites representations on this point.”

23. The responses to the letter of 23 May prompted the Secretary of State, in the exceptional circumstances, to disclose the inspector’s report to the parties in order to help them make representations on the issues raised in the letter. In his report the inspector recommended refusal of planning permission. He did not, however, address the sequential approach in PPG6 or the fall-back position in respect of the Wyncote permission. His recommendation was based principally on his views on retail impact, in particular the impact of the proposed development on the vitality and viability of Syston town centre. Thus his overall conclusion was:

“In conclusion, the likely effect of the proposal upon the vitality and viability of Syston town centre puts it firmly against key provisions of the Structure Plan and the emerging local plan. It is also out of step with PPG6, one of the main objectives of which is to sustain and enhance the vitality and viability of town centres. Although the proposal would bring advantages in terms of better public transport provision to the site, improved and safer highway arrangements and greater security for Roundhill College these are not sufficient to outweigh the serious impact on the shopping centre at Syston that would result.”

24. On 11 July GOEM sent the parties copies of the representations received in response to the letter of 23 May and invited comments upon them. Comments made on 27 July on behalf of the claimant expressed concern that, as appeared from the documents sent with the letter of 11 July, the Secretary of State had requested from Asda copies of original documentation produced at the inquiry, and submitted that if the Secretary of State were to propose to visit any of the original evidence then in the interests of natural justice he must visit it all. It was also submitted that if the Secretary of State accepted the inspector’s recommendation to refuse permission for the Asda proposal for the reasons given, the Wyncote permission would have to be modified for the same reasons.
25. By letter of 3 August GOEM then allowed a further round of representations, sending the parties copies of the comments received from other parties in response to the previous letter of 11 July and giving the opportunity to make any points on those comments.
26. On 19 March 2001 the Secretary of State issued an interim decision letter (“the IDL”), stating that in the light of new evidence received since the close of the inquiry he was minded to grant outline planning permission and was therefore offering the parties the opportunity of making representations on his disagreement with the inspector's recommendation and the reasons for it. In the IDL the Secretary of State stated inter alia that he agreed with the inspector’s conclusion that the application did not accord with key provisions of the approved Structure Plan and emerging local plan; he agreed with the inspector’s conclusion that there was no quantitative need for the proposed development; he considered that the sequential approach set out in PPG6 had not been applied to all the relevant centres in the catchment to be served by the proposed development; and he agreed with the inspector’s conclusion that the proposed development would adversely impact on the vitality and viability of the Thurmaston and Syston centres. Those factors would normally justify refusal of permission. The balance was tipped in favour of the proposal, however, by a comparison with the Wyncote permission. Given that there was a real possibility that the Wyncote permission would be implemented should permission for the Asda proposal be refused, the Secretary of State considered that this was an important material consideration which would outweigh the conflict with national and local policies on retail development.
27. The section of the IDL dealing with the comparison with the Wyncote permission stated first that in granting that permission the Secretary of State had intended to restrict the range of non-food goods to be sold but did not include the appropriate condition in his decision letter, and that there was also a dispute about the area available for food sales. He had previously indicated his willingness to consider modification of the permission, but he considered that he could give little weight to the possible outcome of any modification proceedings “as it would be inappropriate to fetter his discretion in relation to any such proceedings”. Work already undertaken and proposed demonstrated a commitment to implement the Wyncote permission should the Asda application be refused; and the s.106 agreement not to implement the Wyncote permission should the Asda application be approved was also noted. The Secretary of State therefore considered that there was a real possibility that the Wyncote permission could be implemented and he had considered whether this fall-back position would have worse implications than the Asda application.
28. As to comparative effects, the IDL made reference inter alia to a preliminary retail study submitted by Asda, on the basis of which Asda contended that the adverse impact of the Asda proposal would be significantly less than that of the Wyncote permission and would be broadly comparable with that of any likely modified Wyncote permission. It was noted (erroneously, as the claimant later submitted) that, although they may have claimed different relative impacts, the other parties did not contest Asda’s evidence drawn from the preliminary retail study (“the PRS”). In the light of those and other factors the Secretary of State considered that the Asda proposal would have less impact on nearby centres than the Wyncote permission, would be not worse in terms of car use and scope for linked trips to the existing centre, and would be preferable in terms of impact on the character and amenity of the surrounding area.
29. Amongst the representations on the IDL was a letter of 5 April 2001 on behalf of the claimant, challenging the Secretary of State’s assessment of the comparison with the Wyncote permission, stating (with supporting references) that the PRS submitted by Asda had indeed been contested at the inquiry, and submitting that the correct course was to modify the Wyncote permission and to refuse the Asda application. Representations on behalf of Somerfield Stores Limited also challenged the statement that the PRS had not been contested.
30. On 10 May GOEM sent the parties copies of the representations received from other parties on the IDL and invited any comments on those representations.
31. On 14 June GOEM wrote to the parties, sending copies of comments received in response to the letter of 10 May. The letter of 14 June went on to invite further representations on a number of issues concerning the fall-back position of the Wyncote permission. It stated:

“Our letter of 19 March indicated that the Secretary of State considered that he could give little weight to the possible outcome of any proceedings which might affect the development permitted by the Wyncote permission, as it would be inappropriate to fetter his discretion in relation to any such proceedings. The Secretary of State has noted the representations made by Leicestershire County Council, Marrons, Roger Tym & Partners, Willowlake Properties Ltd and Charles Street Buildings in relation to this indication and he considers that he requires representations on the following matters before proceeding to a decision in this case. The Secretary of State appreciates that he has had representations on some aspects of these questions before, in particular on point (b) below. However, after further careful consideration he now considers that he requires these further representations to enable him to decide what the actual planning fallback position is likely to be: in what form is it most likely that the Wyncote permission will be implemented. The Secretary of State is happy for your clients and the other parties to simply cross-refer to earlier representations where they feel this is appropriate in response to parts of the following questions:

a. The arguments that you would make, having regard to the planning merits, as to whether or not the development authorised by the Wyncote permission should be modified and any development already carried out discontinued pursuant to modification and discontinuance proceedings under sections 97, 100, 102 and 104 of the Town and Country Planning Act 1990.

b. Assuming that the Wyncote permission remains in its current form, would it be:

i. likely to be implemented in full:

ii. worse, having regard to material planning considerations, than the application proposal?

c. Assuming that the Wyncote permission is modified by the addition of a condition as set out in the letter of 30^th January 1998 from the Government Office for the East Midlands and the modification of condition (viii) to that permission as set out in the letter of 17 June 1999 from the Government Office for the East Midlands (copies enclosed) and (if appropriate) any development already carried out is continued, would it be:

i. likely to be implemented in that modified form in full;

ii. worse, having regard to material planning considerations, than the application proposal?

d. Would it be preferable for the Secretary of State to -

i. proceed promptly to a final decision on the current application at this stage in the light of his consideration of representations on items (i)–(iii) in the interests of proceeding promptly to a decision; or

ii. delay the decision on the application proposal until after a public inquiry about the Wyncote permission and until after he has made a final decision on any modification and discontinuance proceedings in relation to the Wyncote permission?”

32. Representations on behalf of Asda were made on 12 July. In addition to detailed representations on the issues raised by GOEM, concern was expressed about the delay in reaching a final decision on the Asda application and it was submitted to be wholly inappropriate that the Secretary of State should seek to revisit his earlier decision that the question of modification of the Wyncote permission be deferred pending a decision on the Asda application. Representations on behalf of the claimant were made on 19 July.
33. On 23 July GOEM sent the parties copies of representations made by other parties and invited comments on those representations. On 26 July it invited representations on another decision letter that had been mentioned by some parties in response to the letter of 14 June.
34. Then, on 10 December 2001, the Secretary of State issued his final decision letter (“the FDL”). Paragraph 5 of the FDL referred to the IDL and stated that the FDL should be read in conjunction with the IDL. The next section of the FDL dealt with the comparison with the Wyncote permission. Paragraph 6 referred to the view expressed in the IDL that the Secretary of State could give little weight to the possible outcome of any proceedings which might affect the development permitted by the Wyncote permission, as it would be inappropriate to fetter his discretion in relation to any such proceedings. Reference was then made to the subsequent representations. The FDL went on:

“7. The Secretary of State has considered very carefully the representations of the parties in response to his letter of 14 June 2001. Having regard to the actual prospects on the fallback position and having reviewed all the arguments raised he still considers that it is appropriate to assess the fallback position on the footing of the Wyncote permission [in] its existing form. He considers that this is particularly so as the result of the public inquiry which would be carried out to review any proposed modification cannot be anticipated with confidence. Certainly, it cannot be assumed that it is a foregone conclusion that the result would be in favour of modification of the existing Wyncote permission. It is also difficult to anticipate the exact extent of any modification or discontinuation in advance of full representations and full consideration by an inspector in the context of any modification or discontinuance proceedings. On the weight to be given to the fallback position he agrees with you that this is a matter for the decision maker subject to there being a real prospect of the fallback position actually occurring (Brentwood BC v SSE (1996) 72 P&CR 6; Ahern (PE) (London) Ltd v SSE [1998] JPL).

8. The Secretary of State has also considered very carefully the view made by several parties that he should proceed first to modify the Wyncote permission and then to refuse permission for the application proposal. He considers that it would be inappropriate to delay this decision until the outcome of modification and discontinuance proceedings were known. Firstly, modification and discontinuance proceedings may only be initiated where the Secretary of State considers it is expedient to do so. As a matter of policy, the powers are only exercised where the original decision is judged to be grossly wrong. The Secretary of State also considers that the need for modification and discontinuance appears unclear in this case in view of the signed section 106 Agreement entered into by your clients not to erect the buildings authorised by the Wyncote permission if planning permission is granted for your client’s application. Secondly, insofar as these arguments suggest that the Secretary of State has a duty to exercise his statutory functions in relation to modification or discontinuance, the Secretary of State disagrees: the relevant powers are powers as to which he has a discretion whether to exercise them or not. Thirdly, he considers that in this case in view of the time which has passed since you made the present application that it would be unreasonable and contrary to good administration to seek now to delay this decision pending the outcome of modification and discontinuance proceedings.

9. Having reviewed all the representations on the issue, the Secretary of State does not consider that he can conclude that the result of any procedure in relation to a proposed modification of the existing Wyncot permission would be a foregone conclusion in favour of modification. In his judgement, therefore, there is a real prospect that the Wyncote permission would continue in unmodified form were the present application rejected. He considers it likely that the Wyncote permission would be implemented; the Secretary of State is persuaded that this would be the case, having considered all representations made in relation to the commercial viability of the Wyncote scheme, by the representations made by GL Hearn (annexed to your letter of 12 July 2001) and Farrell Bass Pritchard (annexed to Marrons letter of 19 July 2001) to the effect that there would be significant commercial interest from retailers for representation in the Wyncote development and for the reasons set out in paragraph 12 below.

10. Insofar as the current application before him is concerned, therefore, the Secretary of State considers it is appropriate for him to proceed to a decision now, rather than delaying the matter further; that there is a real prospect of the fallback position actually occurring, and in the form of the existing unmodified Wyncote permission; and that it is appropriate for him to assess the impact of the fallback position on that basis.”

35. Paragraph 14 of the FDL referred to the view expressed in the IDL that the Asda proposal would have less impact on nearby centres than the Wyncote permission in its existing form, be no worse than that permission in terms of car use and scope for linked trips to the existing centre, and preferable to it in terms of impact on the character and amenity of the surrounding area. Reference was made to the representations on behalf of the claimant and Somerfield that the IDL had been wrong to state that the other parties did not contest Asda’s evidence drawn from the PRS. The letter continued:

“14. … They and other parties have in any event made further representations in response to the interim decision letter and the reference back letter of 14 June that contest the findings of the PRS. As the Secretary of State considers that the planning fallback position is the unmodified Wyncote permission, in reaching his conclusions he has considered comments made in relation to the comparative retail impact of the application proposal and the existing Wyncote permission (scenario A in the PRS).

15. The Secretary of State has considered these further representations very carefully, in particular the criticisms of the PRS, namely that:

i. it overestimated the overall and food turnover of the existing Wyncote permission …

ii. it did not accurately reflect the different catchment areas likely to be served by the comparison goods-based Wyncote proposal and your client’s food-based application …

iii. it did not accurately reflect the vulnerability of the Syston centre to the diversion of convenience goods trade, which would be greater in respect of your client’s application than the Wyncote permission…

Having reviewed the points set out in sub-paragraphs (i)-(iii) above, the Secretary of State has reconsidered the Inspector’s conclusions at IR115-120. He has taken into account that these conclusions were accepted by the Lidl inspector in the appeal case referred to below. The Secretary of State considers, however, that he cannot accept the Inspector’s reasoning on the impact of your client’s application on Thurmaston and Syston as it turns upon him accepting certain criticisms of the PRS which are listed in sub-paragraphs (i)-(iii) above and which he does not accept. The Secretary of State concludes that the respective impacts of the Wyncote permission and your client’s application on Syston are in the order of 10% and 8% and on Thurmaston are in the order of 27% and 21% for the reasons given in the PRS. Taking all these matters in the round the Secretary of State considers that your client’s application would have less impact on nearby centres than the existing Wyncote permission.”

36. I have omitted the detailed reasons given by the Secretary of State for not accepting certain criticisms of the PRS as listed in subparagraphs (i)-(iii). They are not material to the resolution of the present case.
37. The FDL next considered other matters, before coming to the conclusion expressed in paragraph 21:

“In paragraph 41 of his interim decision letter, the Secretary of State stated that he considered that the failure to adequately demonstrate both need and the proper application of the sequential approach, and the anticipated adverse impact on the vitality and viability of nearby centres would normally justify the refusal of planning permission. In addition, he also stated that he considered that your client’s application would be no worse than the existing, unmodified Wyncote permission in terms of car use, scope for linked trips to the existing Thurmaston centre, would have less impact on the vitality and viability of nearby centres and would be preferable in terms of impact on the character and amenity of the surrounding area. Given that there is a real possibility that the existing, unmodified Wyncote permission would be implemented should planning permission for this application be refused, the Secretary of State stated that he considered that this is an important material consideration which would outweigh in this case the conflict with national and local planning policies on retail development. For the reasons given above and in his interim decision letter, the Secretary of State confirms these conclusions.”

Issue 1: the fall-back position

38. The first issue concerns the Secretary of State's treatment of the fall-back position constituted by the Wyncote permission.
39. There is no dispute about the principles relevant to consideration of a fall-back position (as to which, see New Forest District Council v. Secretary of State for the Einvronment [1996] JPL 935 and Brentwood Borough Council v. Secretary of State for the Environment (1996) 72 P&CR 61). The decision-maker must ask himself whether there is a real likelihood or real possibility that the fall-back permission will be implemented, such that the prospect of implementation is real and not merely theoretical. If there is a real prospect of the fall-back permission being implemented, then it is a material consideration. If it is a material consideration, the decision-maker must have regard to it. But the weight to be given to it is a matter for him, subject only to challenge on the ground of irrationality.
40. It is primarily an irrationality challenge that Mr Elvin advances in this case. His starting-point, which is plainly correct, is that the proper application of the fall-back position was critical to the Secretary of State's decision since it was the sole reason for the grant of planning permission, outweighing the conflict with national and local policies. He submits that the Secretary of State's approach to the fall-back position was simply illogical. If, as was stated in the FDL, the Secretary of State could not predict or anticipate the outcome of any modification proceedings, then he could not rationally assess the fall-back position at all. At any rate, if he did not know one way or the other whether the Wyncote permission would be modified, he could not rationally proceed on the assumption that there was no real prospect that it would be modified. Yet that is just the assumption upon which he did proceed. By considering the matter on the basis that the Wyncote permission would be implemented in unmodified form, he assumed that there was no real prospect of it being modified.
41. In developing that submission, Mr Elvin points out that the background to the question of modification was an undisputed error in the original grant of planning permission. It was an error going to the heart of the public interest, namely the impact of the Wyncote development on shopping centres. The view evidently taken by the Secretary of State was that it was a serious error. That view was evidenced both by the attempts to negotiate a s.106 agreement and by GOEM's letters of 30 January 1998 and 13 June 1999: the Secretary of State would not have considered exercising his powers of modification unless he had considered that the grant of planning permission without the bulky goods condition was capable in principle of being judged "grossly wrong". The issue of concern remained as valid at the time of FDL as in 1996 and there was no suggestion at any stage that the Secretary of State had resiled from his previous view. Against that background, it is difficult to see how the fall-back position could rationally be assessed unless on the basis of a modified permission. But if the modification issue could not be judged without full consideration of all relevant factors, then the SS ought to have gone through the modification procedure itself or, alternatively, ought to have invited further representations, to the extent necessary, on the substance of the modification issue in order to assess whether he would or would not be likely to modify if the procedure were gone through. Indeed, the letter of 14 June 2001 had invited reps on the question whether the Wyncote permission should be modified. The FDL does not, however, answer the question on which those reps were invited.
42. Another way in which Mr Elvin puts the point is that the Secretary of State had to choose between two possible fall-back positions, namely implementation of the Wyncote permission in modified form or implementation of that permission in unmodified form. If he could not say which the fall-back position would be, he could not rationally proceed on the basis that there was a real prospect of it being implemented in unmodified form. Whichever way the point is put, it comes down to the submission that there is a hole in the reasoning in paragraphs 7-9 of the FDL.
43. A further aspect of Mr Elvin's submissions concerns the reference in paragraph 8 of the FDL to the s.106 agreement under which Asda had agreed not to implement the Wyncote permission if permission was granted for the Asda development. Mr Elvin submits that the s.106 agreement could not rationally assist on the correct fall-back position or therefore on the question whether the Asda permission should be granted. It would come into play if and only if permission were granted for the Asda development and it could not help in determining the likelihood of the Wyncote permission being modified or the effect of this on whether permission for the Asda development should be granted. Although Asda's representations had pushed the existence of the s.106 agreement as dealing with the problem of modification, it could not logically deal with that problem.
44. Mr Elvin's submissions also contain traces of an argument that the Secretary of State fettered his discretion. The position adopted in the IDL was that Secretary of State could not consider the outcome of modification proceedings because that would be to fetter his discretion in relation to any such proceedings. It is submitted that the FDL does not repudiate such reasoning, which was erroneous, and that even if the FDL represents a move away from such reasoning the approach still comes close to a fettering of discretion.
45. For the Secretary of State, Mr Sales submits that there is no error of approach or irrationality in the FDL. The FDL does not carry through the point in the IDL that the Secretary of State would fetter his discretion if he considered the question of modification of the Wyncote permission. In the light of the representations on the IDL the Secretary of State had changed tack and had invited further representations on the likely actual fall-back position. Paragraph 7 of the FDL, especially when read against that background, makes clear that he is not proceeding on the basis of the fetter argument but is considering the actual prospects on the fall-back position, though he points out that it cannot be assumed that the result of any modification proceedings would be in favour of modification. The subsequent reasoning is that it would be inappropriate to delay the Asda decision until the outcome of modification proceedings was known (paragraph 8); the Secretary of State does not consider that the result of modification proceedings would be a foregone conclusion in favour of modification; in his judgment there is therefore a real prospect that the Wyncote permission would continue in unmodified form if the Asda application were rejected; and it is therefore appropriate for him to assess the impact of the fall-back position on that basis (paragraphs 9-10). That, submits Mr Sales, is a sufficiently reasoned and entirely rational approach.
46. As to the alleged illogicality of the Secretary of State's approach, Mr Sales submits that the Secretary of State was correct on the authorities to ask himself whether there was a real prospect of the Wyncote permission being implemented in unmodified form. He reasonably decided that there was such a prospect. The existence of doubt about the outcome of modification proceedings was entirely consistent with the view that there was a real possibility of implementation of the permission in unmodified form. The question was one of real possibility, not likelihood or certainty. Definitive resolution was not required. And once the Secretary of State reasonably decided that there was a real possibility of implementation in unmodified form, he was entitled to give that consideration such weight as he thought appropriate.
47. On analysis, submits Mr Sales, the claimant's case is that it was incumbent on the Secretary of State to go through the full modification procedure or to carry out an equivalent exercise before reaching a view on the fall-back position. But nothing in the authorities on fall-back required the Secretary of State to adopt that course. His decision not to go down the modification procedure route was a rational decision based on the weighing of relevant considerations, including the undesirability of further delay. As to delay, Mr Sales points out that Asda had complained about further delay and that the Secretary of State was under an obligation pursuant to Article 6 ECHR to determine the issue within a reasonable time. He also submits that it is difficult to say now that the Secretary of State was irrational not to pursue the modification procedure when this was the very position adopted in GOEM's letter of 3 November 1999 which no-one had challenged.
48. As to the argument on the s.106 agreement, Mr Sales accepts that the agreement could not help on the question whether the Wyncote permission should be modified, but submits that the Secretary of State did not fall into any such error. On a fair reading of paragraphs 36-37 of the IDL, the Secretary of State was relying on the s.106 agreement only as one of a number of indicators that the Wyncote permission was likely to be implemented. In the FDL, the s.106 agreement is referred to in paragraph 8 not as a reason for concluding that the Wyncote permission would not be modified, but in the context of the separate issue of the timing of the modification proceedings (i.e. whether a decision on the Asda application should be delayed until the outcome of modification proceedings was known). In that context it was a legitimate factor to take into account. At no point does the Secretary of State rely on the s.106 agreement in the illicit way attributed to him by Mr Elvin.
49. Mr Dinkin QC for Asda adopts Mr Sales's submissions. He contends that in relation to the fall-back the Secretary of State directed himself correctly as to the law and properly concluded that there was an actual unmodified planning permission which satisfied the legal test. The Secretary of State decided against using the modified Wyncote permission because the question of modification was too speculative without going through the modification procedure and to go through that procedure would cause undue delay. He addressed himself to the issues and gave adequate and intelligible reasons for his conclusion, and the conclusion itself was rational.
50. Having set out the rival submissions at some length, I can state my conclusions on them relatively briefly. In short, I accept Mr Sales's submissions. In my judgment the Secretary of State's reasoning did not suffer from a logical flaw or the other errors as contended for by Mr Elvin. Without repeating all the submissions I have accepted, I would place emphasis on the following points:

i) On the undisputed authorities it is plain that the Secretary of State did not need to reach a definite view on the fall-back position. It was sufficient for him to decide whether a particular fall-back was a real possibility. A judgment on fall-back will often have to be made against a background of uncertainty.

ii) As things stood at the time of the decision, the Secretary of State was entitled to conclude that implementation of the Wyncote permission in unmodified form was a real possibility. Despite the history of the matter, including the earlier "minded to modify" letters, it was far from self-evident that the Wyncote permission would be found to be grossly wrong and to justify modification in the circumstances prevailing at the time when an assessment on modification fell to be made. The Secretary of State had received competing representations on whether a modification should be made. Having considered those representations and taking into account that the modification procedure would involve full representations, a public inquiry and full consideration by an inspector, he was reasonably entitled to conclude that the outcome was uncertain. It was uncertain whether the Wyncote permission would be modified at all and, if it were modified, what the exact extent of any modification would be. It followed logically, or at least it was a rational finding in the light of those considerations, that there was a real possibility of implementation of the permission in unmodified form.

iii) No doubt there was also a real prospect of implementation of the Wyncote permission in modified form. But the Secretary of State did not need to spell this out or to dwell on its implications, since the "worst case" fall-back position was implementation of the Wyncote permission in unmodified form and it was rational to compare the effects of the Asda proposal with that worst case fall-back position in deciding whether to grant permission for the Asda proposal. It was for the Secretary of State to decide what weight to place on any particular fall-back. The fact that he chose to place very considerable weight on the fall-back of implementation of the Wyncote permission in unmodified form is understandable and not open to challenge.

iv) It would in principle have been open to the Secretary of State to defer a decision pending modification proceedings or the receipt of yet further representations so as to put himself in a better position to judge the likely outcome of modification proceedings. The decision not to delay further was, however, a reasoned and rational decision. The third reason given in paragraph 8 of the FDL, that it would be unreasonable and contrary to good administration to delay further, strikes me as a strong and sufficient reason in itself, given the already very lengthy decision-making process in this case. The point is underpinned, as Mr Sales observed, by the obligations imposed by Article 6 ECHR. I accept Mr Elvin's submission that none of this would help if the Secretary of State had been unable rationally to decide the application without a further delay; but as already explained, I consider that a rational decision was possible without a further delay. I do not place weight on the lack of any challenge to the earlier decision to defer a decision on modification until after the Asda application had been determined (letter of 3 November 1999), since the key importance of the modification issue for the Asda proposal was not clear at that time. But the fact that a decision to defer had been made some two years previously reinforces the concern about the delay that would result from a decision to go down the modification procedure route after all.

v) As regards the s.106 agreement, in my view the Secretary of State did not fall into the error of relying on it as a reason why the Wyncote permission would not be modified, but relied on it legitimately in the context of whether a decision on the Asda application should be delayed until the outcome of modification proceedings was known.

vi) Finally, in my view there is no force in the point on fettering of discretion. In the FDL the Secretary of State had moved away from that line of reasoning. The general references to the IDL and to the reasoning in it are not sufficient to amount to an adoption of what was said in the IDL about fetter. The specific passages of the FDL that relate to modification of the Wyncote permission are based on fresh thinking and not on the view that to consider the outcome of modification proceedings would be to fetter the Secretary of State's discretion in relation to any such proceedings.

51. Accordingly the claimant's case on the first issue fails.

Issue 2: procedural fairness

52. The second issue relates to procedural fairness. The claimant's case is put on a broad basis, though concisely expressed. An argument that the Secretary of State acted in breach of rule 16(4) of the Town and Country Planning (Inquiries Procedure) Rules 1992 is not pursued. The complaint pursued is that the Secretary of State changed his mind on a key issue, that of retail impact, without inviting representations. The inspector had said at paragraphs 118 and 119 of his report that the Asda development was likely to affect the vitality and viability of Thurmaston and Syston town centres, with an impact of 18%-27% on Syston and of 43% on Thurmaston. In paragraph 26 of the IDL the Secretary of State said that he agreed with the inspector's conclusion on the adverse impact of the proposed development on the vitality and viability of Thurmaston and Syston centres, and paragraph 27 stated in terms that no further representations were sought on that issue. Nor were any further representations invited thereafter on this part of the IDL. Yet at paragraph 15 of the FDL the Secretary of State reached a different conclusion and substituted significantly different figures from those of the inspector accepted in the IDL: 8-10% for 19-27% and 21-27% for 43%. To say one thing and then to do another was unfair. The fact that the claimant thereby lost the chance to seek to persuade the Secretary of State on the issue is sufficient to make the claimant a person aggrieved. It is not necessary for the claimant to show that it would have made a difference if representations had been invited: see Hibernian Property Co Ltd v. Secretary of State for the Environment (1974) 27 P&CR 197 at 217-8 and Performance Cars Ltd v. Secretary of State for the Environment (1977) 34 P&CR 92.
53. Mr Sales's response is equally concise. He submits first that it is necessary to look at paragraphs 14-15 of the FDL as a whole. Paragraph 14 makes clear that the Secretary of State is looking at the comparative retail impact of the Asda proposal on the one hand and the unmodified Wyncote permission on the other. Paragraph 15 sets out the reasons why he considers that the Asda proposal would have less impact. The conclusion that the Asda proposal would have less impact is the same as in the IDL, though the reasoning has changed to some extent. It has changed as a result of a consideration of the representations made on this very issue. The letter of 14 June 2001, referred to in paragraph 14, had expressly invited representations on the question whether the Wyncote permission, in modified or unmodified form, would be worse than the Asda proposal. Representations were made by the parties, including the claimant, as also mentioned in paragraph 14. The opening words of paragraph 15 state that the Secretary of State has considered those representations very carefully. In the light of those considerations it can be seen that there is nothing in the point on unfairness.
54. Here too Mr Dinkin adopts the submissions of Mr Sales. He contends that in its representations the claimant made various criticisms of the PRS and put forward its own impact figures. These criticisms and figures were reconsidered by the Secretary of State and rejected in paragraph 15 of the FDL. In that paragraph the Secretary of State gives his reasons for doing so and for not accepting the conclusions in paragraphs 118-119 of the inspector's report notwithstanding his previous acceptance of those conclusions in the IDL. Mr Dinkin further submits that the impact figures in paragraphs 118-119 of the inspector's report are not to be compared with those referred to by the Secretary of State in paragraph 15 of the FDL. The inspector was dealing only with impact in respect of convenience goods, whereas the figures in paragraph 15 of the FDL are the overall impact figures for convenience and comparison goods. On this issue the Secretary of State exercised his own planning judgment as he was entitled and required to do, and did so in the light of the further representations made. The FDL gives good reasons for he conclusion reached.
55. On this issue, too, I accept Mr Sales's submissions. The decision-making process in this case involved a remarkable number of opportunities to make representations on relevant issues and I am not persuaded that there was any unfairness in relation to this one matter identified by Mr Elvin. It is true that in the IDL the Secretary of State indicated his acceptance of the inspector's conclusions on the retail impact of the Asda proposal and did not invite further representations on that issue. At the same time, however, he provisionally concluded that the Asda proposal would have less impact than implementation of the Wyncote permission and he invited and received representations on that issue. The invitation was renewed and elaborated in the letter of 14 June 2001, to which the claimant again responded. Thus the claimant had ample opportunity to make representations on the question of comparative impact and took that opportunity. The Secretary of State was entitled and required to take into account all the representations received and to exercise his own judgment on them in reaching a final conclusion. He did just that. The fact that it involved a degree of change in his view as to the appropriate figures to take for the purposes of assessment of the adverse impact of the Asda proposal, and that he had not signalled that he was minded to change his view to that extent, did not give rise to any unfairness.
56. I am also inclined to accept Mr Dinkin's point that the reason for the different figures in the FDL is the adoption of a different basis of comparison (looking at the overall figures, rather than convenience goods alone), but acceptance of that point is not necessary for my rejection of the claimant's case on unfairness.
57. The claimant's case therefore fails on the second issue as well.

Conclusion

58. For the reasons given the claim is dismissed.

Order:

59. Application dismissed
60. Claimant to pay costs of First Defendant but not those of Third Defendant.
61. Leave to appeal refused.
(Order does not form part of the approved judgment) - - - - - - - - - - - - -

MR JUSTICE RICHARDS: I am handing down judgment in this case. For the reasons given in the judgment, the claim is dismissed.

MR SALES: I make the application that my client's costs should be paid by Mr Elvin's clients.

MR ELVIN: I make the equally important concession that I agree.

MR JUSTICE RICHARDS: Do I have a schedule of costs?

MR ELVIN: At the end of argument, we did say we would agree to a detailed assessment.

MR JUSTICE RICHARDS: As far as the Secretary of State's costs are concerned, I will order the claimant to pay the costs to be subject to detailed assessment if not agreed.

MR DINKIN: I am instructed to make an application for costs in favour of the third defendant. We accept that your Lordship has a discretion about the matter. Your Lordship will no doubt be familiar with the Bolton decision. Would your Lordship wish to see it again?

MR JUSTICE RICHARDS: No, I have a copy with me.

MR DINKIN: My submission is that we did have a separate interest here, an important interest and one which required separate representation. The points I would make are as follows. First, obviously we had a valuable planning permission which we needed to protect. We were, in my submission, certainly justified in turning up to do that. Secondly, I draw your attention to the wide-ranging attack which was made in the claim form which went beyond the two key points which my learned friend, Mr Elvin, pursued at the hearing. If your Lordship recalls there was a wide-ranging attack which raised a large number of points before they were whittled down. It was first whittled down in the claimant's skeleton and then even further whittled down before your Lordship. Certainly, particularly in relation to the impact matters, even if your Lordship took the view that the other matters could have been dealt with by the Secretary of State, nevertheless in my submission the wide-ranging attack on impact matters in the claim and in the skeleton, albeit whittled down actually before your Lordship, required and justified my client's presence in order to protect their position. As far as retail impact is concerned, they were similarly in a position to deal with those matters. The central issue in the Secretary of State's position was the preliminary retail study which their advisers had prepared and my Lord was taken to the Secretary of State's decision. In my submission, it was right for my clients to be represented here in order to assist your Lordship in relation to impact matters. As it happened, it was rather watered down by the time it got to the actual hearing. Nevertheless there were impact matters still to be covered and your Lordship has noted them in the judgment.

MR JUSTICE RICHARDS: It was essentially a procedural fairness point on the impact matters side. The argument was that the Secretary of State had acted in a procedurally unfair manner and/or in breach of the rules.

MR DINKIN: That was how it ended up.

MR JUSTICE RICHARDS: Did you put any evidence in on that side of things?

MR DINKIN: There was a long witness statement from Mr Dyer. When the claim was served it was served with two large bundles of documents. Mr Dyer obviously looked at those. He made a long witness statement and your Lordship has that. If your Lordship wishes to be reminded of it, it is in the bundle at page 15 where Mr Dyer's witness statement begins. My Lord, we would submit that it put the matter properly in context. There were a number of documents which had not thus far been produced by the claimant in their bundles. This is a pre-hearing bundle stage, pre-trial bundle stage; a large number of points being made including representations from Mr Dyer in relation to the impact matters.

MR JUSTICE RICHARDS: Did that add to the documentation before the court beyond the witness statement itself. Were there additional documents put in?

MR DINKIN: There were original documents put in in the trial bundle which had not featured in the bundle as submitted by the claimants. There was a good deal of discussion about the trial bundles and the order of them and so on. Yes, we certainly contributed to the trial bundle. I would remind your Lordship that in the Secretary of State's skeleton several times he referred to the witness statement of Mr Dyer. So, my submission is that, certainly, it was important for Mr Dyer to have made that witness statement. There was a lot of work involved in it and a great deal of documentation to be gone through. Certainly, if your Lordship were not with me on an outright order for the third defendant's costs, I would ask for your Lordship to consider a more limited order for costs up to, but excluding, the date of the hearing itself, essentially to reflect the large amount of documentation, now information, which had to be prepared, collated and instructions taken by Mr Dyer on behalf of the third defendant.

May I just make the point also that, despite our efforts, we were not able to discern what the Secretary of State's position was until very close to the hearing. I think the Secretary of State's skeleton was actually received on 9 May and then, obviously, we were able to see the way in which the Secretary of State was defending matters, but that was two or three days before the hearing. Up to then, we were not in a position to know on what basis the Secretary of State would resist. Indeed we did not know he would resist, but we assumed he would. Again, I would ask your Lordship to take that into account. Had we perhaps been aware earlier about it, we could have reconsidered whether we needed to be here at all, but in the circumstances I have to say that, even in the light of Secretary of State's skeleton, I would have been instructed to be here, particularly because of our concerns about the impact matters.

The other point I would ask your Lordship to note is that we did write to the claimant on 12 February inviting them to withdraw the claim on the basis that there was no merit in it, in the third defendant's view of the matter. My Lord, we drew attention to the fact that if the case proceeded we would take part and we would make an application for our costs.

MR JUSTICE RICHARDS: Can such a letter logically help you?

MR DINKIN: It is simply that we made our position totally clear to the claimant. We took the view that there was no merit in it. We took the view, and we still do, that this is essentially a commercial challenge to try and seek to save their position so far as impacts are concerned. We never thought there was merit in the claim. Your Lordship has of course dismissed the claim, in my respectful submission clearly and decisively so. Having put them on notice about our costs, the very least your Lordship should take that into account as a factor. In all the circumstances, I would ask your Lordship to consider making an order for our costs, if not on a wholly recoverable basis at least on a partial basis, to reflect the good deal of work connected with the witness statement.

MR JUSTICE RICHARDS: What do you say about that Mr Elvin?

MR ELVIN: The fact that a developer has a separate interest, that was the position rejected in Bolton.

MR JUSTICE RICHARDS: It would have to be an interest that would require a separate representation.

MR ELVIN: In this case your Lordship will recall, and does in the judgment, that Mr Dinkin adopted Mr Sales' submissions. This was a sort of case, whether we pursued all the grounds or only the ones we did pursue, where the Secretary of State was not in a position of requiring another defendant to come in and assist. Can I remind your Lordship that much is made of the grounds that were not pursued. There are two short matters on page 9 of the bundle. In paragraphs 32 and 33 your Lordship will see that thereafter there is a challenge relating to the difference in the figures and the fact that this agreement was not suggested, which was the ground I did pursue. Those are not matters which are so technically detailed that the Secretary of State could not deal with them by himself. The third defendant failed to take account of disposed impact and the third defendant has failed to take account of the difference in the type of comparison of goods. They are matters that appear in the Inspector's reports and decision letters. If one looks at those grounds, in my submission, even if we had pursued them and lost, the third defendant should not have had its costs. The fact that we saved everybody's time by not pursuing them in court, should not be a matter of penalty.

As far as the witness statement is concerned, I can understand that in the abstract there might be more attraction to that, save for the fact that in the witness statement the grounds that are abandoned comprise only about 6 paragraphs. If your Lordship turns to page 36 it is ground D32 and D33. It is about 5 or 6 paragraphs. One does not blame him, but the question is whether he should get the costs of doing so, of rehearsing opposition to the entirety of the claim form. So far as the cost of the witness statement is concerned, he goes too far. I come back to the point that, even had we pursued the grounds and failed, as we failed on the other grounds, the third defendant would still not be in a position of saying the Secretary of State could not deal with the matter unassisted and their attendance was required. They were entitled to attend, but in my submission, neither in terms of the witness statement nor in terms of general appearance where the Secretary of State's submissions were adopted, should the general rule be abrogated in favour of the third defendant.

MR JUSTICE RICHARDS: I make no order as to the third defendant's costs. I reject the submission that the claimant should pay those costs. I understand that it was in the commercial interest of the third defendant to put in evidence and to appear, but I am not satisfied that the third defendant is entitled to a second set of costs in accordance with the principles laid down in Bolton. In my judgment, the Secretary of State was able to cover all the issues, and in fact did cover all those issues. There was here no interest which required a separate representation. The circumstances of this case were not of a special exceptional character such as to call for the payment of a second set of costs.

MR ELVIN: I am grateful. I am instructed to seek permission to appeal. I do not seek it on the second ground, only on the first main ground relating to the irrationality series of arguments relating to the inter-relationship between the question of whether early permission should be modified and the decision in this case. If your Lordship recalls, I put the argument two ways. One related to the absolute rationality of that position and the other related to the way the Secretary of State approached the matter. He asked for submissions on the point so he could reach a view as to the likelihood of modification. Whilst accepting the points your Lordship makes, there are still, in my submission, reasonable arguments that the Secretary of State both acted irrationally and failed to answer the question he set himself during the submissions which was, in effect, to the likelihood of modification. In my submission, there still remains a reasonable argument that the Secretary of State failed to answer his own question and simply put the matter to one side and proceeded on the main issue. It is an important issue to this extent. The fall-back position and inter-relationship in these particular circumstances does call for careful thought, because, be it as your Lordship has found as he has, there is a difficult inter-action, particularly where the Secretary of State has gone on record at least twice during the course of the proceedings leading up to the decision (inaudible). I do not seek permission on the second basis.

MR JUSTICE RICHARDS: Permission is refused. I reached a clear view for the reasons given in my judgment. I do not think that there is a real prospect of success of an appeal, nor is there any issue of wider importance in the instant case. You will have to seek to persuade the Court of Appeal there is a good prospect of success.

MR ELVIN: Very well.

MR JUSTICE RICHARDS: I endorse the form accordingly.