England and Wales High Court (Administrative Court) Decisions

B & Q v Secretary of State for Transport, Local Government & the Regions & Anor [2002] EWHC 551 (Admin) (25th March, 2002)

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

		Royal Courts of Justice Strand, London, WC2A 2LL
		25th March 2002

His Honour Judge Bartlett QC

1. This is an appeal under section 288 of the Town and Country Planning Act 1990 against a decision of the First Defendant dismissing an appeal against the deemed refusal by the Second Defendant of the Claimant’s application for planning permission for the erection of an A1 non-food retail warehouse and associated garden centre, bulky goods stock area, A3 restaurant premises and ancillary car parking and landscaping on land at the junction of Anchor and Hope Lane and Woolwich Road, Charlton, SE7. An inspector of the Planning Inspectorate held a local inquiry into the planning appeal over 10 days and in his report he recommended that permission should be refused. In accepting this recommendation the Secretary of State said that he agreed with the inspector’s identification of the main considerations and his conclusions on them, except to the extent described in particular paragraphs of the decision letter. The Claimant, B&Q, says that he erred in law in a number of respects in failing to take account of material evidence. It is also said that, in certain respects, his reasons were inadequate and that B&Q have been substantially prejudiced as a result. Further it is said that he failed properly to apply his own policy on retail development.
2. The main element of the proposed development is a B&Q DIY Warehouse store with a net sales area of about 102,000 sq ft. In addition there would be a garden centre, a bulk store and a restaurant and parking for 510 cars. It would represent the largest type of DIY outlet currently operating in the UK. The appeal site is about 4 ha gross and lies within a defined Industrial area (Charlton Riverside) as shown in the Greenwich Borough UDP. It contains two main parts. The larger part, 2.7 ha, is vacant and cleared but formerly housed a rope works, Bridon Fibres, a predominantly industrial, B2, use. The smaller part, 0.9 ha, is occupied by Cleveland Cables and is in use mainly for warehousing, B8, purposes.
3. The appeal site surroundings are predominantly in industrial, warehousing or retail uses. They include several industrial estates of varying ages, character and condition, principally to the north, towards the River Thames. Immediately to the east is Stonelake Retail Park, a recently developed area of retail warehousing; and to the west is Charlton Business Park, a substantial area of retail warehouses and light industrial and warehouse uses. It includes a site, the Schroders site, which, at the time of the inquiry, was the subject of two applications for mixed non-food retail and industrial uses, one of which included a large DIY store. Slightly further to the west is a 76,500 sq ft net DIY store that at the time of the inquiry was occupied by Homebase/Jewson. Before the Secretary of State gave his decision this store had been closed and then re-opened as a B&Q store on what in post-inquiry representations B&Q said was a temporary basis pending the outcome of the appeal.
4. The inspector said that there were 8 main considerations on which the decision should be based. They were: (a) UDP and other industrial/employment policies and strategy; (b) industrial land supply and demand; (c) employment generation; (d) UDP retail policies and strategy; (e) retail need; (f) retail format and “flexibility”; (g) the sequential approach and alternative sites; and (h) transport accessibility.
5. On (a), industrial/employment policies and strategy, the inspector concluded that there was a very substantial policy objection to the appeal proposal. On (b), industrial land supply and demand, he said that the site could readily be developed for B8 uses without grant aid, that he broadly accepted that there was no obvious shortage of industrial/employment land in Greenwich, but that industry might be a realistic alternative to B2 use. On (c), job creation, he concluded that there was no good reason to prefer the appeal proposal to a potential industrial use.
6. On consideration (d), UDP retail policies and strategy, the inspector concluded that there would be partial compliance with UDP shopping policies but he said that the extent of non-compliance did nothing to support the proposal. On (e) retail need, he accepted that there was both a quantitative and a qualitative need for the proposal. On (f) retail format and flexibility, he said that he agreed with the council that the proposal exhibited virtually no flexibility as required by PPG6 but he concluded, as he put it, “with some uncertainty”, that this was not necessarily contrary to PPG6 and, if that was so, that it did not constitute grounds for refusal. On (g), the sequential approach set out in PPG6 and alternative sites, he concluded that there was at least one site, the Schroders site, that might be thought to be sequentially preferable to the appeal site; that there was no need for both proposals in that location; but that there was no certainty that the Schroders proposal would be permitted or implemented. Finally, on (h) transport accessibility, the inspector concluded that, while the proposed development would be accessible by a choice of means of transport, it would not be easily so accessible, and the vast majority of customers would still arrive by car. Overall he concluded that there were several arguments both for and against the proposal; but on balance he considered that the appeal should be dismissed.
7. In his decision letter the Secretary of State observed that section 54A of the Town and Country Planning Act 1990 required that the appeal be determined in accordance with the development plan unless material considerations indicated otherwise. He agreed with the inspector that, for the purposes of the appeal, the UDP in general was not significantly out of date. He, the Secretary of State, had also had regard to all relevant national and regional planning policies. He went on:

“7. The Secretary of State has considered the Inspector’s report, the evidence submitted by the parties, including those who appeared at the inquiry and the written representations received, including those received as a result of the reference back exercise. He agrees with the Inspector that the 8 main considerations upon which the decisions should be based are as set out in IR 230 and accepts the Inspector’s conclusions on all these matters, except to the extent described in paragraph 9-13 below.

8. In paragraph 8 the Secretary of State addressed consideration (a), industrial/employment policies and strategy. He said that there was a very substantial policy objection to the appeal proposal and this constituted an overriding reason for not allowing the appeal. He said that he attached significant weight to the inspector’s acceptance that the site was very suitable for industrial use.
9. Paragraphs 9 to 13 referred to considerations (e), (f) and (g), and what the Secretary of State said in them forms an important area of the challenge that B&Q mounts to this decision. The first three grounds of challenge advanced by Mr Richard Phillips QC on their behalf, however, concern the industrial and employment issues, considerations (a), (b) and (c), and the application of section 54A.
10. Mr Phillips’s first ground is that, in considering whether there were any factors that outweighed the proposal’s substantial conflict with the UDP (since it would be contrary to the allocation of the appeal site for industry), the Secretary of State confined himself to the retail issues, (e), (f) and (g), that he dealt with in paras 9 to 13, and failed to have regard to a number of other material considerations. I will identify in a moment particular considerations that the Secretary of State is said to have left out of account; but Mr Phillips’s submission contains the general assertion that, since the Secretary of State only made particular observations on some of the issues, he left out of account the matters raised in the issues that he did not deal with in this way. Alternatively, it is said, since he made no particular observations on them, he failed to give adequate reasons for his decision. Mr Phillips points out that, although in paras 9 to 13 the Secretary of State was expressing and explaining the different view he took to the inspector on retail issues, he did not confine himself to these points of difference. In paragraph 8 he expressed views agreeing with the inspector on consideration (a), industrial/employment policies and strategies. He said:

“8. On consideration (a) Industrial/employment policies and strategy, the Inspector did not accept your clients’ assertion that the appeal site no longer forms part of a coherent industrial area or that its suitability for industrial use is contradicted or nullified by abortive land swap negotiations (IR 237-238) and the Secretary of State agrees with his view. The Secretary of State also agrees with the Council’s view that this is one of the very best potential industrial sites in Greenwich (IR 241) and accepts the Inspector’s opinion that the range and quality of industrial and employment sites would be limited in Greenwich if the appeal proposal were to be permitted (IR 245). As pointed out by the Inspector, paragraph 3.23 of PPG6 advises that retail development should not normally be allowed on land allocated for industry and employment where this would limit the range and quality of sites available for those uses (IR 245). The Secretary of State therefore accepts the Inspector’s conclusions that, not only would the proposal be contrary to various industrial and employment policies in the development plan and to the plan’s employment strategy, but it would also be contrary to the main thrust of the Government’s policies to protect industrial and employment land where it would meet an identified need and, indeed, harm the objectives of those policies (IR 246). He also accepts the Inspector’s finding that this constituted a very substantial policy objection to the appeal proposal and the Secretary of State regards this as an overriding reason for not allowing your clients’ appeal. He attaches significant weight to the Inspector’s agreement with the Council that, in physical and locational terms the site is very suitable for industrial use (IR 234)”

11. I cannot accept Mr Phillips’s argument that, because the Secretary of State in his decision letter made specific reference to particular conclusions of the inspector’s, there is an implication that he left out of account matters that he did not deal with in this way. The decision letter is, in my view, quite clear in this respect. The Secretary of State says in paragraph 7 that he accepts the inspector’s conclusions on all the eight matters except to the extent described in paragraph 9 to 13, which are concerned with retail issues. When in paragraph 8 he expresses himself in relation to issue (a) he does so in order emphasise and add force to the inspector’s conclusions on this issue. It does not in any way take away from the general acceptance of the inspector’s conclusions that he has stated in paragraph 7.
12. Mr Phillips identified six material considerations that he said had been left out of account. The first was the acceptance by the council’s witness at the inquiry that the council had no strong objection in principle to a B8 (storage and distribution) use of the appeal site. This, he said, completely undermined the council’s case that the proposal would result in the loss of industrial land and the contention that the site was particularly important as a site for industry. The inspector, however, not only recorded (at paragraph 37) the acceptance by the council’s witness that it had no strong objection in principle to B8 use, but he dealt with it in his conclusions at paragraph 239, where he said:

“239. As for the Council’s avowedly more flexible stance towards B8 uses for the site, which follows recent LPAC advice, I am not convinced that this represents the significant concession alleged by the appellants. In my view, it does nothing to undermine the site’s intrinsic suitability for industrial uses, nor their high level of policy support in the UDP, in national and regional policy guidance, or in the SRB 6 bid.”

13. The view he there expressed was, quite evidently it seems to me, fed into his overall consideration of issue (a) and his conclusion (at paragraph 246) was that the proposal would be contrary to various industrial and employment policies, so that there was a very substantial policy objection to it. The Secretary of State, accepting as he did the inspector’s conclusion on the matter, consequently, in my judgment, cannot be said to have left out of account the point on B8 use.
14. The second material consideration that is said to have been left out of account is the agreement noted by the inspector at paragraph 248 that “there is a fairly buoyant demand at present for B8 use, and that the whole site could readily be developed for that purpose without recourse to grant aid.” That, Mr Phillips says, is a highly material consideration in the context of the likelihood of the appeal site being developed for industrial purposes in accordance with the UDP and thus the significance of the proposed departure from the UDP allocation. The fact, however, is that the inspector did expressly take this matter into account and equally, for the reason that I have given, the Secretary of State did also.
15. The third consideration said to have been omitted was the inspector’s findings at paragraph 250 and 251 that there was no obvious shortage or scarcity of industrial/employment land; that he was not convinced that this substantial site would very likely be developed for industry within a reasonably short timescale; and that, on the other hand, B8 users would probably materialise very quickly. Again, however, these matters were expressly referred to by the inspector on the way to his conclusion at paragraph 253 that industry might be a realistic alternative to B8 use. Neither the inspector nor the Secretary of State regarded these as sufficient, alone or in combination with other considerations, to justify a departure from the UDP. The same goes for the other three considerations that Mr Phillips says were not taken into account. These were the fact that the appeal proposals would produce a much greater number of jobs than a B8 development; the fact that the relocation of Cleveland Cables might entail a small employment gain as well as the regeneration of an older industrial site; and the fact that the council had previously indicated the acceptability of a land-swap under which the appeal site would go for retail development and other land elsewhere in Greenwich would change from retail to industry. All these matters were referred to by the inspector, in particular at paragraph 259 and 260, 225 and 238 respectively and appear to have been taken into account by him in reaching the conclusions that the Secretary of State accepted. There was, therefore, no need for the Secretary of State to deal expressly with them in his decision letter. I therefore reject Mr Phillips’s first ground of challenge. The matters he refers to cannot be said to have been left out of account.
16. However, as I shall say shortly, certain of the considerations to which Mr Phillips refers have importance to another ground of challenge, ground 3. This relates to the issue of SRB funding and the overall conclusion that the inspector and the Secretary of State came to on industrial/employment policy and the loss of industrial land.
17. Mr Phillips’s second ground of challenge is that the inspector misunderstood B&Q’s case on the land swap discussions. He says that the effect of their evidence and submission was that those discussions supported the view that the site was not strategically important for industrial development. The council had contended that the appeal site was the most prominent, accessible and readily developable major industrial site currently available within the borough’s defined industrial areas. The inspector specifically referred to the reliance placed by B&Q on the land-swap discussions. He recorded it at paragraph 60. In his conclusions the inspector said in paragraph 234 that he agreed with the council that, in physical and locational terms, the site was very suitable for industrial use. At paragraph 238 he said:

“238. Nor do I accept the appellants’ contention that the site’s suitability for industrial use is in some way contradicted or nullified by the abortive land swap negotiations. Whatever the burden or outcome of those discussions, the site remains suitable for continued industrial/employment use.”

He gave a reference to paragraph 60.

18. The council’s preparedness to release the land for retail under a land-swap arrangement appears to sit somewhat uneasily with their contention that this was the most prominent, accessible and readily developable major industrial site in the borough. On the face of it, either the site was not as good as they contended or they ought not to have contemplated its loss to industry. But the inspector had this point drawn to his attention and, as he put it, “whatever the burden or outcome of those discussions”, his view was that the site was a suitable one. He did not see those discussions as showing that the site was not in physical and locational terms very suitable for industrial development. I do not think, therefore, that either he or the Secretary of State can be said to have left out of account the contentions of B&Q on the land-swap discussions.
19. Ground 3 concerns the inspector’s handling of the issue of SRB funding. B&Q’s case on this was recorded by the inspector at paragraph 86, where he said:

“86. Single Regeneration Budget Round 6. A SRB 6 bid was submitted (by the Council and others) and approved in 2000, aimed at creating employment in manufacturing industry. The bid includes 4 sites to be brought forward for manufacturing, including the Bridon Fibres site (part of the appeal site). However, Doc 6J shows that although the appeal site falls within an area eligible for public funding, it is unlikely to attract such funds as it is certainly capable of development without grant aid. In these circumstances, grant aid would be a waste of public money. Thus the existence of the bid has little relevance to this appeal.”

20. At paragraph 252 in his conclusion the inspector said:

“252. There is, of course SRB 6 funding. In theory, assistance from this could well make the site, which is singled out in the bid, attractive to industrial use(s). Despite the various uncertainties surrounding it, it would be unwise to rule out this possibility. This could make industry a realistic alternative to B8 use.”

That conclusion, Mr Phillips says, flies in the face of the evidence recorded at paragraph 86 and shows that it was left out of account. Alternatively no reasons have been given for rejecting the evidence.

21. The importance of the availability of SRB funding is clear. Earlier in his report the inspector had recorded the council’s concession on B8 use:

“37. At this inquiry, the Council confirmed that, while it regarded the appeal site as entirely suitable and available for industrial development (B1(c) and B2 use), it had no strong objection in principle to B8 (storage or distribution) use. This point had previously been in some doubt. I was told that the Council’s stance followed a more flexible approach towards warehousing in recent LPAC advice [Doc 11.9], but was not incorporated in the development plan or other Council policy statements. Thus the Council was not seeking to safeguard the site solely for industrial use, although that remained its preferred use, at least for the former Bridon Fibres site. Under UDP policy J24, the Cleveland Cables site could be redeveloped for B8 use in any event.

38. In short, the Council’s objection is not to B8 use (not part of this proposal), but to retail (Use Class A) uses. This report is written with that clarification in mind.”

22. In paragraph 251, in a passage I have already referred to, the inspector said in relation to demand that he was not convinced that the site would be developed for industry at an early date but, on the other hand, B8 users would probably materialise relatively quickly. He then went on to say in paragraph 252 that SRB funding could make industry a realistic alternative to B8 use. Previously at paragraph 248 he had said that there was agreement that there was a fairly buoyant demand at present for B8 use, and that the whole site could readily be developed for that purpose without recourse to grant aid.
23. In treating the industrial/employment policy objection to the proposed development as an overriding reason for not allowing the appeal, the Secretary of State was evidently particularly concerned about the loss of the land as a site for industrial development. At paragraph 8 he agreed that it was one of the very best potential industrial sites in Greenwich and he said that he attached significant weight to the inspector’s agreement with the council that, in physical and locational terms, it was very suitable for industrial use. The inspector’s conclusion, however, amounted to this: that without SRB funding industrial development would not take place. Instead B8 development, for which there was a buoyant demand and which the council considered acceptable, would be carried out.
24. Thus the availability of SRB funding for industrial development on the site was crucial to the strong industrial/employment policy objection that the Secretary of State saw to the development. The inspector recorded the council’s evidence on this as follows:

“173. In 2000 the Council and other bodies secured SRB 6 funding. The appeal site is located in the SRB area, and is specifically identified in the bid document as one of two strategic sites in the borough. [Doc 12.3]. It is therefore potentially eligible for SRB funding to bring it forward for industrial use. This could only increase the likelihood that the appeal site would be developed for industry in the near future.”

25. As recorded that evidence does not purport to deal with the evidence on behalf of B&Q that the appeal site was unlikely to attract funding as it was capable of development without grant aid. The inspector does not at any point say whether he rejects the B&Q evidence, although paragraph 252 appears to suggest an assumption on his part that such funding would be available. Nor does he say, if he does reject that evidence, why he does so. Similarly the Secretary of State does not provide any explanation to make good this deficiency in the inspector’s report.
26. On this important issue, therefore, the decision fails, in my judgment, to give reasons that are adequate. It is necessary that the appropriate explanation should be given so that it can be seen whether there is any substantive basis for the Secretary of State conclusion that the appeal should be refused in order to preserve the site for industrial development. On this ground therefore, the appeal must be allowed.
27. This brings me to the grounds of challenge that relate to the Secretary of State’s conclusions on retail policy and need. It was in this area that the Secretary of State found himself at odds with his inspector and sought to explain why he differed from the inspector in a series of paragraphs that I will quote in full.

“9. The Secretary of State has carefully considered whether there are any factors which would outweigh the proposal’s substantial conflict with the UDP. With regard to consideration (e) Retail need, the Secretary of State has taken account of the arguments relating to whether it can be demonstrated that there is a quantitative and qualitative need for the appeal proposal in this location. The Inspector took the view the evidence established that there is a quantitative need for the amount of DIY floorspace proposed (IR 269) and the Secretary of State sees no reason to disagree with that view.

10. If the nearby Homebase/Jewson store closed, without replacement by another DIY store, the Council felt there would then be a demonstrable qualitative need (IR 271). The Inspector also accepted that, in the circumstances, there may be a qualitative need for a DIY store of comparable size to the appeal proposal (IR 271). From the post-inquiry representations the Secretary of State notes that your clients confirmed the Homebase store had closed shortly after the inquiry (the Jewson store had already closed at the time of the inquiry) and both sites had been acquired by B&Q. They nevertheless contend that there is a demonstrable quantitative and qualitative need in this area for the scale and form of development proposed (IR 104). The Homebase/Jewson site has since opened as a B&Q store, although your clients stated this was only on a temporary basis while the outcome of this appeal is awaited, as it falls well short of satisfying the need identified in the area. Nevertheless, the opening of the B&Q Warehouse at the Homebase/Jewson site somewhat weakens your clients’ arguments on the qualitative issue. The Secretary of State takes the view that, even though the development might provide improved DIY shopping facilities in the area, he does not attach any significant weight to this consideration compared to the weight he accords to the site’s allocated use and locational principles against which the proposed development should properly be tested, as set out in the development plan and national planning guidance.

11. With regard to considerations (f) Retail format and flexibility and (g) Sequential Approach and Alternative Sites, your clients acknowledged that his type of store, i.e. a B&Q Warehouse, generally conforms to a standard size and format and therefore could be described as “format-driven” (IR 273). The Inspector agreed with the Council that it exhibits virtually no “flexibility”; it stands or falls on the acceptability of the standard Warehouse format (IR 277). The Council maintained that a deliberate lack of flexibility was tantamount to a simple evasion of the sequential approach (IR 278). The Inspector concluded, albeit with some uncertainty, that the proposal’s lack of flexibility was not necessarily contrary to PPG6 (Planning Policy Guidance note 6 Town Centres and Retail Developments) and, if that was so, it is not grounds for refusing planning permission (IR 279).

12. The Secretary of State disagrees with that conclusion and does not accept it. He remains very firmly of the view that all retailers should be flexible about the format, design and scale of any retail proposal in accordance with paragraph 1.12 of PPG6. This was further clarified in May 2000 in The Government’ Response to the Environment, Transport and Regional Affairs Committee: Second Report on the Environmental Impact of Supermarket Competition (Cm 3950) which confirmed that PPG6 does not propose exceptions to the sequential approach.

13. In this case, the Secretary of State notes that your clients did not seriously consider other smaller sites in the Charlton area in terms of smaller formats and from the outset were seeking a site large enough to accommodate the very large Warehouse type of store. He also notes that there had never been any question of separating truly bulky goods – for which warehouses were originally designed – from the very many unequivocally non-bulky goods which B&Q Warehouses normally sell (IR 276). He notes the Inspector’s conclusion that there is at least one other site – the nearby Schroders site – which might be thought sequentially preferable to the appeal site, although evidence of its availability was inconclusive (IR 283-284). Other sites mentioned here included the Homebase/Jewson site, located about 0.5km from the appeal site, and considered by the Council as the main competing facility to the appeal proposal. In order to show that the policies in PPG6 have been applied flexibly, the Secretary of State considers that alternative sites cannot be dismissed merely because they are of insufficient size to accommodate the whole of the proposed development and this applies equally to format type retail proposals. Furthermore, the Secretary of State does not agree that the possible quantitative or qualitative benefits of siting the proposed store on the appeal site would outweigh the distinct advantages of disaggregating certain components of the development into more centrally located town centre locations. After carefully assessing the evidence before him, the Secretary of State considers your clients have failed to demonstrate any flexibility because they have not adequately shown that they have assessed all the potential alternative sites within the catchment area or indicated reasons why the majority of the goods could not be sold from a town centre, and the failure to do so was contrary to Government policy on shopping developments.”

28. Mr Phillips submits that in approaching the matter as he did in these paragraphs, the Secretary of State failed properly or reasonably to apply his own policy guidance set out in PPG6 Town Centres and Retail Development. He refers to the following paragraphs in PPG6:

“1.10 In drawing up their development plans, local planning authorities should, after considering the need for new development, adopt a sequential approach to selecting sites for new retail development. Both local planning authorities and developers selecting sites should be able to demonstrate that all potential town centre options have been thoroughly assessed before less central sites are considered for development for key town centre uses. If, however, there is no need or capacity for further development, there will be no need to identify additional sites in the town.

1.11 Adopting a sequential approach means that first preference should be for town centre sites, where suitable sites or buildings suitable for conversion are available, followed by edge-of-centre sites, district and local centres and only then out-of-centre sites in locations that are accessible by a choice of means of transport.

1.12 The Government recognises that the approach requires flexibility and realism from local planning authorities, developers and retailers. Developers and retailers need to be more flexible about the format, design and scale of the development, and the amount of car parking, tailoring these to fit the local circumstances. Local planning authorities should be sensitive to the needs of retailers and other town centre businesses and identify, in consultation with the private sector, sites that are suitable, viable for the proposed use and likely to become available within a reasonable period of time.”

29. Mr Phillips also draws attention to paragraph 3.3 of PPG6:

“3.3. Some types of retailing, such as large stores selling bulky goods, may not be able to find suitable sites either in or on the edge of town centres. In such cases, the local planning authority should still seek to ensure that such developments are located where they will be easily accessible by a choice of means of transport.”

30. Mr Phillips submits that the requirement of PPG6 to apply the sequential approach and consider alternative and sequentially preferable sites arises only after need has been identified. Here, he says, both the council and the inspector accepted the need for a DIY retail warehouse; and the Secretary of State, although not attaching significant weight to qualitative need, accepted in paragraph 10 that there was a quantitative need. Therefore, Mr Phillips says, in applying the sequential test, the requirement was to identify a site suitable for a retail warehouse development to meet the identified need. In terms of paragraph 1.12 the proposed use for which a site had to be found was a retail warehouse of the type proposed, although not necessarily of precisely the same size. Since the inspector had concluded that there was no sequentially preferable site (apart possibly from the Schroders site, a matter that I will return to later), the approach required by PPG6 had been followed, and the Secretary of State erred in concluding that the development was contrary to the policy that was there set out.
31. Paragraph 12 of the decision letter refers to a clarification of the Government’s policy contained in the May 2000 response to the Environment, Transport and Regional Affairs Committee Second Report on the Environmental Impact of Supermarket Competition. Mr Phillips did not refer me to this statement of policy. Mr Corner drew my attention to a short summary of it in the Encyclopaedia of Planning at paragraph 5-101, the introduction to PPG6. Having now looked out the White Paper (it is Cm 4722), I believe that the relevant paragraphs should be quoted in full:

“5. The Government agrees that there should be a consistent interpretation of the sequential test. Paragraph 1.12 of PPG6 states clearly that the Government expects ‘developers and retailers will need to be more flexible about the format, design and scale of the development, and the amount of car parking, tailoring these to fit the local circumstances.’ The Government has a clear policy that new retail investment should be used to strengthen existing centres and expects this paragraph of PPG6 to be read in that light.

6. Research recently published by the National Retail Planning Forum, and part-funded by the Department of the Environment, Transport and the Regions, considered how the sequential approach is being applied in practice and its effects on retail development. This showed an inconsistency in the application of the sequential approach and contrasts two approaches taken:

i. the format-driven approach, where the developer has a preferred format, which, in their view does not fit into town centres and should be exempted from the policy; or

ii. the ‘class of goods’ approach, where the key question is whether there is any reason why such goods cannot be sold from town centres.

7. The Government’s policy – as stated in PPG6 – is to take the latter approach, as most goods can be sold from town centres. PPG6 does not propose exceptions to the application of the sequential approach.

8. The Select Committee has suggested that there is a need to clarify how the policy should apply to large-format developments. The Government considers that PPG6 is clear – it expects developers to demonstrate flexibility. It recognizes that the need to demonstrate flexibility will have consequences for retailers who insist on the need for very large formats.”

32. In my view it is clear, when one reads these paragraphs together with PPG6, why it is that the Secretary of State rejects the two-stage approach for which Mr Phillips contends (establish a need for a large DIY store and then see if there is any better site for it than the appeal site). The Secretary of State’s approach is to focus on the range of goods that would be sold and to ask in relation to those the compendious question whether the need to sell these from a large store on the appeal site has been made out. In answering that question he is evidently concerned to see the extent to which the goods could be sold from a town centre, since, under the sequential approach, the first preference is for town centre sites. The extent to which smaller sites might be used to accommodate disaggregated parts of the proposed development is also relevant. This is part of what the Secretary of State has in mind when he refers to flexibility. There is an evident acceptance on his part that large stores selling bulky goods have a role to play in retailing (see PPG6 paragraph 3.3). The retailer will no doubt see qualitative benefits in his own preferred format. Also, as Mr Phillips points out, there may be implications for the case on quantitative need in providing for the sale of certain types of goods in particular retail formats or in particular retail locations. Such matters are, however, under the approach spelt out by the Secretary of State, no more than considerations to be weighed in the overall balance. They neither dictate a particular approach to the sequential test nor do they diminish the need for flexibility. The sequential approach and the need for flexibility apply to all types of retailing, and there are no exceptions to it. In my judgment the approach adopted by the Secretary of State in his decision letter, so far from being contrary to his published policy, as Mr Phillips contends, appears to be entirely in accordance with it. In his paragraphs 12 and 13 he was roundly rejecting the two-stage approach that Mr Phillips suggests is what the policy requires. He was entitled to do so: I can see no basis on which it could possibly be argued that, in doing so, he had interpreted his own policy in a way that he could not reasonably have done.
33. I should add two points on this ground of challenge. Firstly, although Mr Phillips contends that there was an acceptance by the Secretary of State of the need for a DIY retail warehouse, this seems an inappropriate description of the views that he in fact expressed. In paragraph 9 he accepted that there was a quantitative need for the amount of DIY floorspace proposed; but in paragraph 10 he said that he attached no significant weight to the fact that the development would provide improved DIY shopping facilities in the area. To describe this as an acceptance that the proposed store was needed hardly seems appropriate. Of course, on the approach that the Secretary of State adopts in accordance with his policy, no question of need, as an absolute concept, arises. The qualitative improvements to shopping in the area that would be produced by the proposal in issue are simply considerations to be weighed in the balance with other considerations. In the present case the Secretary of State does not consider that any significant weight should be attached to the qualitative benefits, and that, as Mr Phillips accepted, was a view that he was entitled to take.
34. The second point concerns the reliance that Mr Phillips sought to place on something that I said in Virgin Cinema Properties Ltd v Secretary of State for the Environment (1997) 1 PLCR 1 at 15. That case concerned an application for a multiplex cinema on an edge-of-town site and among the matters in issue was the applicant’s examination of smaller, more central sites. In his decision letter the Secretary of State had said that “In his view, the sequential test should initially have examined potential sites for cinema development of any size rather than concentrate on sites to accommodate development on the scale proposed.” I said that, in challenging this part of the decision, counsel for the appellants had submitted that, by saying this, the Secretary of State

“was ignoring that paragraph 1.12 sought the identification of ‘sites that are suitable, viable for the proposed use and likely to become available within a reasonable period of time’. The reference to these factors implied, Mr Sullivan said, that there was no need to search for sites of any size unless there was some evidence that the sites might meet these requirements.”

35. Dealing with that point, I said that it was, I believed,

“…too stringent a reading of the paragraph to suggest that the Secretary of State, in saying that the search should have examined sites ‘of any size’, was implying that this should be done regardless of whether the sites fulfilled the tests of suitability, viability and availability. His point was simply that small sites should be examined as well as large ones.”

36. Mr Phillips suggested that I was there accepting the submission of counsel on the interpretation of PPG6, but, as this passage makes clear, I was not saying anything about the interpretation of PPG6; I was simply concerned with the meaning to be attached to a particular part of a paragraph in the decision letter.
37. Mr Phillips submitted further that the Secretary of State had misunderstood B&Q’s evidence and contentions on the sequential test and alternative sites. He said that the evidence of Mr C Goddard of CB Hillier Parker specifically considered a range of smaller sites within the Charlton area and elsewhere, so that the conclusion in paragraph 13 of the decision letter that the Claimant did not seriously consider other smaller sites was unfounded. As Mr Timothy Corner points out, however, the important word here is “seriously”. It is indeed the case that Mr Goddard’s evidence discussed all the sites to which the council had drawn his attention. But Mr Goddard’s approach was – as he put it in paragraph 6.7 of his evidence – that “the search for alternative sites can only be realistically confined to sites which would be capable of accommodating the form of development which is needed.” The inspector at paragraph 276 of his report recorded B&Q’s argument that “where there are no sequentially preferable sites of sufficient size (i.e. on the edge of existing town centres) there is neither a requirement for, nor any point in seeking or achieving ‘flexibility’.” I agree with Mr Corner that the conclusion that B&Q did not seriously consider smaller sites was one that, in the light of the evidence and the argument, was the product of a judgment that the inspector and the Secretary of State were entitled to make.
38. Another contention advanced by Mr Phillips related to the nearby Schroders site. At paragraph 13 the Secretary of State said that he noted inspector’s conclusion that there was at least one other site, this one, which might be thought sequentially preferable to the appeal site, although evidence of its availability was inconclusive. The inspector had said this in his report:

“282. This leaves 2 sites in the Charlton Business Park: the Deutsche Bank site, and the adjacent Schroders site. Both are in a UDP preferred location for retail warehousing, but outside any town centre or edge of centre location. While the former already enjoys planning permission for a reconfiguration of its retail use, the Schroders site is the subject of 2 current applications. One of these includes a DIY store of comparable size to the appeal proposal. TheCouncil says that it has no industrial/employment policy objection to it.

283. Given the uncertainties involved, not least the fact that planning permission has yet to be granted, I am not in a position to judge either the viability of this scheme, or its likelihood of implementation; all I can say is that it would appear to be ‘sequentially preferable’ to the appeal site, if only by virtue of being in a preferred location for retail warehousing in the development plan. That said, the advice in PPG6 does not support the idea that out-o-centre sites can themselves be ranked in order of sequential preference.

284. Despite that caveat, I conclude that there is at least one site – the nearby Schroders site, similarly located within the catchment area and currently subject to a DIY store proposal – which, in development plan terms, might be thought sequentially preferable to the appeal site.”

39. Mr Phillips said that the inspector and the Secretary of State were in error in regarding the Schroders site as potentially preferable under the sequential approach in PPG6. Under that approach the sequence of sites to be considered was one based purely on location in relation to a town centre, and on that basis the Schroders site would enjoy no priority over the appeal site. In my judgment, there is nothing in this criticism. That the inspector said that it would appear to be “sequentially preferable” has no bearing, it seems to me, on the substance of the view that he was expressing. He recognised that PPG6 does not suggest that out-of-centre sites can be ranked in order of sequential preference. His point was simply that the Schroders site might be thought to be preferable to the appeal site by reason of the fact that it fell within a preferred location for retail warehousing in the UDP.
40. In any event paragraph 13 does not suggest that the Secretary of State based his decision on the potential preferability of the Schroders site. He expressly recognised that the evidence about its availability was inconclusive, and it does not seem to me to be possible, in the light of this, to say that he placed any reliance upon it as a factor.
41. The final argument that Mr Phillips advances in relation to the Secretary of State’s conclusions on retail issues is that there was no evidence before him on which he could conclude, as he put it in paragraph 13, that there were “distinct advantages” in “disaggregating certain components of the development into more centrally located town-centre locations.” On the contrary, he says, the evidence on behalf of B&Q was that a theoretical combination of smaller stores distributed in a variety of locations would fail to allow innovation or effective competition.
42. I think that the argument that is advanced is based on a misunderstanding of what the Secretary of State was saying. When he referred to “the distinct advantages of disaggregating certain components of the development into more centrally located town-centre locations” he was referring to his own view, which forms the foundation of his retail policy, that new retail investment should be used to sustain and enhance existing centres. This is set out clearly in paragraph 2 of Cm 4722.

“2. The Government remains firmly committed to the objectives of PPG6, which seeks to sustain and enhance the vitality and viability of our existing city, town, district and local centres and to make them the focus for retail investment. PPG6 helps to promote an urban renaissance, more sustainable patterns of development and social inclusion. The Government believes that focusing retail development in existing centres improves their competitiveness, and provides a planning framework common to all retailers in which they can compete.”

43. Those were the advantages that the Secretary of State was referring to in paragraph 13. No evidence was required from any party in relation to them. Disaggregation of components of the development, with at least some being provided in existing centres, was what would produce the distinct advantages that the Secretary of State had already identified in his policy statements. This final ground of challenge therefore fails.
44. Accordingly one ground of challenge, alone among those advanced by the Claimant, succeeds. The Secretary of State failed to give adequate reasons in one particular but important part of his conclusions on the industrial/employment policy issue. It was what he found to be the proposal’s substantial conflict with the UDP’s industrial/employment policies that formed the principal basis for his dismissal of the appeal, and the Claimant has thus been substantially prejudiced by the failure. The appeal is allowed.

MR GEORGE BARTLETT QC: For the reasons set out in the judgment, which I now hand down, the appeal is allowed.PRIVATE 

MR EDWARDS: My Lord, in the light of the decision to quash the Secretary of State's decision in this matter, I ask that there be an order that the Secretary of State pay the claimant's costs.

MR CORNER: My Lord, with regard to that, what I would say is this. We have had some time to read your judgment, and I want to repeat my thanks to you for putting it down in writing. But, my Lord, you have upheld the challenge on one only ground, ground 3, out of six grounds which were the basis of the challenge.

MR GEORGE BARTLETT QC: Plus an extra one that was added in the course of the hearing.

MR CORNER: Plus an extra one -- I had forgotten that -- indeed, you are right -- the Schroder point, which makes it seven. And my Lord, all those other grounds, of course, took not only court time but also counsel's preparation time. My Lord, in those circumstances, I suggest, it would not be appropriate that the claimants should recover all of their costs in accordance with their application. I would suggest that at least some reduction should be made to reflect the fact that they have won on one and one point only and indeed a point which took a relatively short part of the argument and which takes a relatively short part of your judgment.

MR GEORGE BARTLETT QC: Yes. Mr Edwards.

MR EDWARDS: My Lord, the relief that the claimants were seeking through the application that was heard by the court was an order that the Secretary of State's decision be quashed. That is the relief that your Lordship has found is appropriate to be granted at the end of the day, and in those circumstances, my Lord, in my submission there ought to be a full order for costs in favour of the claimant.

My Lord, on the detailed point about the number of grounds, as your Lordship will be aware, albeit there were six grounds set out in the notice of claim -- part 8 claim form -- grounds 4 and 5 were dealt with as one in the course of argument. Your Lordship will see that is how it is set out in the skeleton argument. In relation to the Schroder point, of course your Lordship will be aware that was essentially a subpoint raised in the context of grounds 4 and 5. In my submission, so far as your Lordship is minded to follow the suggestion made by my learned friend, there were essentially were five grounds, rather than six.

MR GEORGE BARTLETT QC: Thank you. It seems to me the fact that the claimant has succeeded only on one of the grounds that was argued does merit a reflection in the order of costs that I make. The appeal has succeeded but, in view of the amount of time devoted to the issues upon which the claimant has not been successful, it seems to me that the right order to make is that the first defendant should pay one half of the claimant's costs of the appeal.

MR CORNER: My Lord, I am obliged. One more point, if I may. My Lord, I put it this way frankly to protect our position. We have not really had a chance to reflect on the judgment. That is absolutely no criticism of you, but, my Lord, I do, I think, need to apply for permission to appeal to the Court of Appeal.

MR GEORGE BARTLETT QC: Yes. Do you wish to advance any --

MR CORNER: My Lord, of what I have seen so far, all I would say is that there is clearly an arguable case to say that your decision is wrong on that matter.

MR GEORGE BARTLETT QC: This does not seem to me to be a case in which I ought to grant permission to appeal.

MR CORNER: Much obliged, my Lord.

MR GEORGE BARTLETT QC: Thank you.