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
		17 April 2014

Mr Justice Lindblom:

Introduction

1. The Community Infrastructure Levy ("CIL") enables a local planning authority to raise funds from the development of land in its area to pay for infrastructure of various kinds. It was introduced under the provisions of Part 11 of the Planning Act 2008 ("the 2008 Act"), as amended by the Localism Act 2011. Some landowners and developers will regard it as an unnecessary and unwelcome tax on development. Authorities, however, will see it as an effective and fair means of ensuring that new infrastructure is provided for communities that need it. If that debate goes on, the outcome of this claim for judicial review is not going to bring it to an end. Whether Parliament was right to enact the statutory scheme for CIL is not a question for the court. Nor is the level at which CIL is charged for one kind of development or another in any authority's area.
2. The claimant, Fox Strategic Land and Property ("Fox") owns a large amount of land in the north-west of England. On some of its sites in Central Lancashire it is promoting schemes of housing development. It wants to make sure that the value of its land is not unduly reduced by CIL. In these proceedings it challenges the CIL charging schedule for residential development adopted by the defendant, Chorley Borough Council ("Chorley"), and by the two interested parties, Preston City Council ("Preston") and South Ribble Borough Council ("South Ribble"), which are the neighbouring authorities in Central Lancashire. Each of the three councils is a charging authority under section 206(2) of the 2008 Act.
3. The three councils consulted on their proposed CIL charges in 2012 and in February 2013 submitted their revised draft charging schedules for examination. Fox objected to the proposed rate of CIL for residential development, excluding apartments, which was £65 per square metre. An examination into the submitted charging schedules was held by an examiner appointed by the councils, Mr Simon Berkeley, in April 2013. Fox was represented at the hearing. It argued that the evidence upon which the £65 figure was based was flawed, and that if CIL were charged at this level it would threaten the viability of housing development in Central Lancashire. In June 2013 the examiner submitted his report on the examination to the councils. He concluded that the charge of £65 was justified, and that, subject to modifications not relevant in these proceedings, the charging schedules be approved. The councils accepted that recommendation. Chorley and South Ribble adopted the charging schedule under regulation 25 of the Community Infrastructure Levy Regulations 2010 ("the CIL regulations") in July 2013, Preston in August 2013. The charging schedules came into effect in September 2013 and have been applied by the councils since then.
4. Fox seeks an order to quash Chorley's charging schedule for residential development. Its claim is based on various allegations of unlawfulness in the examiner's approach to the issues he had to consider in deciding whether the proposed charge was acceptable. The claim was issued on 27 August 2013. Similar proceedings have been launched against Preston and South Ribble, but those proceedings have been stayed until this claim has been heard and decided. On 9 October 2013 H.H.J. Pelling Q.C. granted permission to pursue three of the four grounds originally pleaded. The application for permission on the other ground has not been renewed.

The issues for the court

5. This claim is not going to establish whether Fox was right to seek a lower CIL charge for residential development in Central Lancashire than the three councils thought appropriate. That is not what this case is about. The court is concerned only with the lawfulness of the process by which the charge came to be set at the level it was.
6. The focus of the claim is on the examiner's report. Some parts of the report are said to betray an unlawful approach. The councils are also criticized for adopting a charge that is said to be incompatible with development plan policy for residential development.
7. The grounds for which permission was given by H.H.J. Pelling Q.C. raise three main issues:

(1) whether the examiner's approach to the evidence before him on the likely value of residential development land and, in particular, the data in reports produced by the Valuation Office Agency and the information he was given about individual transactions, was irrational (ground 1 of the claim);

(2) whether the examiner failed to understand the evidence on the size of dwellings, density, and the cost of development, and took into account an immaterial consideration – the mistaken idea that cost was directly proportionate to the size of a dwelling (ground 2); and

(3) whether it was unlawful to adopt the charging schedule for dwelling-houses without allowing for the potential effects of a requirement in development plan policy, due to come into effect in January 2016, that new housing must meet Level 6 of the Code for Sustainable Homes (ground 4).

Evidence

8. Both Fox and Chorley have provided the court with extensive evidence about the issues the examiner had to deal with: Fox in the two witness statements of Richard Heathcote, the Land Director in the Development Team at G.L. Hearn in Manchester, dated 27 August 2013 and 17 February 2014, and the witness statement of Jeremy Edge, a chartered surveyor and chartered town planner and the Principal Partner of Edge Planning & Development LLP, dated 17 February 2014; Chorley in the two witness statements of Michael Molyneux, a chartered town planner employed by Preston, dated 11 December 2013 and 3 March 2014, the witness statement of Steven Brown, a chartered town planner employed by South Ribble, dated 16 December 2013, and the witness statement of Matthew Whiteley, a chartered town planner employed by Peter Brett Associates LLP, dated 17 December 2013. Fox's solicitors, Irwin Mitchell, wrote to the court on 3 March 2014 objecting to the filing of Mr Molyneux's second witness statement and stressing, rightly, as Chorley had done in earlier correspondence, that the purpose of these proceedings is not to review the evidence that was put before the examiner.

The relevant statutory provisions

Part 11 of the 2008 Act

9. Section 205 of the 2008 Act provides that the Secretary of State may, with the consent of the Treasury, make regulations providing for the imposition of CIL.
10. Under section 206(1) of the 2008 Act a charging authority may charge CIL "in respect of development of land in its area".
11. Section 211(1) of the 2008 Act requires a local charging authority that proposes to charge CIL to set a charging schedule for its area. Section 211(2) provides that in setting rates a local charging authority must have regard to three things: "(a) actual and expected costs of infrastructure …", "(b) matters specified by CIL regulations relating to the economic viability of development (which may include, in particular, actual or potential economic effects of planning permission or of the imposition of CIL)", and "(c) other actual and expected sources of funding for infrastructure".
12. Section 211(3) provides that "CIL regulations may make other provision about setting rates or other criteria". Section 211(4) provides that such regulations may permit or require charging authorities to do various things, one of which, under subsection (4)(d), is "to produce charging schedules having effect in relation to specified periods (subject to revision)". At the time when the councils approved their charging schedules the CIL regulations did not contain such a power.
13. Section 211(7A) states that a charging authority "must use appropriate available evidence to inform [its] preparation of a charging schedule".
14. Section 211(9) provides that a charging authority "may revise a charging schedule".
15. Section 212 requires a draft charging schedule to be formally examined by a person who is independent of the charging authority before it is approved. Section 212(7) requires an examiner to consider whether "the drafting requirements", which are the relevant requirements of Part 11 and the CIL regulations, have been complied with, and to make recommendations in accordance with section 212A and give reasons for his recommendations. Section 212(8) requires the charging authority to publish the recommendations and reasons. Section 212(9) provides that CIL regulations must require a charging authority to allow anyone who makes representations about a draft charging schedule to be heard by the examiner.
16. Section 212A(2) provides that if the examiner considers that there is any respect in which the drafting requirements have not been complied with, and that the non-compliance cannot be remedied by the making of modifications to the draft, he must recommend that the draft be rejected. If, however, the examiner considers that any non-compliance can be remedied by modifications, sub-section (4) requires him to recommend modifications and the approval of the draft either with those modifications or with others sufficient and necessary to remedy the non-compliance. Section 212A(5) provides that, subject to sub-sections (2) and (4), the examiner must recommend that the draft be approved.
17. Section 213(1) provides that a charging authority may approve a charging schedule only if the examiner has recommended approval or, if he has made recommendations under section 212A(4) or (5), it has had regard to those recommendations and the examiner's reasons for them. Section 213(1A) provides that a charging authority may not approve a charging schedule if, under section 212A(2), the examiner has recommended its rejection. Under section 213(1B), if the examiner has identified a failure to comply with the drafting requirements, the charging authority may only approve the charging schedule if it has had regard to his recommendations and reasons and has made such modifications as are necessary to secure compliance.
18. Section 214(3) provides that a charging authority "may determine that a charging schedule is to cease to have effect". Section 214(4) states that "CIL regulations may provide that a charging authority may only make a determination under subsection (3) in circumstances specified by the regulations".
19. Section 221 provides that the Secretary of State "may give guidance to a charging authority or other public authority (including an examiner appointed under section 212) about any matter connected with CIL; and the authority must have regard to the guidance".

The CIL regulations

20. The CIL regulations were made under Part 11 of the 2008 Act.
21. Part 3 of the CIL regulations relates to charging schedules. Regulation 12(2)(b) provides that a draft charging schedule submitted for examination in accordance with section 212 of the 2008 Act must contain "the rates (set at pounds per square metre) at which CIL is to be chargeable in the [charging] authority's area".
22. Regulation 14(1) provides:

"In setting rates … in a charging schedule, a charging authority must aim to strike what appears to the charging authority to be an appropriate balance between –

(a) the desirability of funding from CIL (in whole or in part) the actual and expected estimated total cost of infrastructure required to support the development of its area, taking into account other actual and expected sources of funding; and

(b) the potential effects (taken as a whole) of the imposition of CIL on the economic viability of development across its area".

23. Regulations 15 to 27 provide for the several stages in the process of production, consultation upon, examination, approval and publication of a charging schedule. Regulation 17 states that "[any] person may make representations about a draft charging schedule which a charging authority proposes to submit to the examiner". Regulation 20 requires the examiner to "consider any representations made in accordance with regulation 17 before complying with section 212(7) of [the 2008 Act]". Regulation 21(1) provides that a person who makes representations about a draft charging schedule in accordance with regulation 17 "must (if [he] so requests) be heard by the examiner". Under regulation 21(12)(a) it is for the examiner to decide how the hearing is to be conducted. Regulation 23 requires the examiner's recommendations and reasons to be submitted in writing to the charging authority, and that as soon as practicable after it has received the recommendations and reasons it must comply with the requirement to publish them under section 212(8) of the 2008 Act. Regulation 25 states that as soon as practicable after the charging authority approves a charging schedule in accordance with section 213 it must publish the charging schedule on its website.
24. Regulation 28(1) provides that a charging schedule "takes effect at the beginning of the day specified for that purpose in the charging schedule". Regulation 28(3) states that a charging schedule "has effect" until either "(a) the beginning of the day on which that charging authority determines that it should cease to have effect" or "(b) the end of the day before the day a revised charging schedule issued by that charging authority takes effect".
25. Regulation 123(2) provides that a planning obligation under section 106 of the Town and Country Planning Act 1990 may not constitute a reason for granting planning permission for development "to the extent that the obligation provides for the funding or provision of relevant infrastructure". The definition of "relevant infrastructure", in regulation 123(4) is either "(a) where a charging authority has published on its website a list of infrastructure projects or types of infrastructure that it intends will be, or may be, wholly or partly funded by CIL … , those infrastructure projects or types of infrastructure" or "(b) where no such list has been published, any infrastructure." Regulation 123(3) deals with the situation in which a number of separate planning obligations for infrastructure have been entered into on or after 6 April 2010. A planning obligation may not constitute a reason for granting planning permission "to the extent that" it provides for the funding of an infrastructure project or type of infrastructure and five or more obligations provide for the funding or provision of that project or type of infrastructure.

The Government's guidance on CIL

26. In April 2013 the Government issued a guidance document on CIL, entitled "Community Infrastructure Levy – Guidance". The guidance in that document was current at the time when the three councils were preparing the charging schedule challenged in these proceedings. It has now been superseded by the Community Infrastructure Levy Guidance issued in February 2014.
27. Paragraph 8 of the guidance document dealt with the balance that has to be struck under regulation 14 of the CIL regulations. It answered the question "What is meant by the appropriate balance?", in this way:

"By providing additional infrastructure to support development of an area, the levy is expected to have a positive economic effect on development across an area. In deciding the rate(s) of the levy for inclusion in its draft charging schedule, a key consideration is the balance between securing additional investment for infrastructure to support development and the potential economic effect of imposing the levy upon development across their area. The [CIL] Regulations place this balance of considerations at the centre of the charge-setting process. In meeting the requirement of regulation 14(1), charging authorities should show and explain how their proposed levy rate (or rates) will contribute towards the implementation of their relevant Plan and support the development of their area. As set out in the National Planning Policy Framework ["the NPPF"] in England, the ability to develop viably the sites and the scale of development identified in the Local Plan should not be threatened."

28. Paragraph 9 said that an examiner should establish four things: first, that the charging authority has complied with the requirements of Part 11 of the 2008 Act and the CIL regulations; second, that the draft charging schedule is "supported by background documents containing appropriate available evidence"; third, that the proposed rates "are informed by, and consistent with, the evidence on economic viability across the charging authority's area"; and fourth, that "evidence has been provided that shows the proposed rate (or rates) would not threaten delivery of the relevant Plan as a whole".
29. Paragraph 25 referred to the requirement in section 211(7A) of the 2008 Act that charging authorities should use "appropriate available evidence" to inform their draft charging schedules, but recognized that "the available data is unlikely to be fully comprehensive or exhaustive". A charging authority would need to be able to show that its proposed CIL rate had been "informed" by such evidence and was "consistent with that evidence across there area as a whole". Paragraph 26 said that a charging authority "should draw on existing data wherever it is available", and "may consider a range of data", including land values and property prices. Paragraph 27 advised charging authorities to "sample directly an appropriate range of types of site across its area in order to supplement existing data …".
30. In paragraph 28 the guidance document referred to the requirement in section 212(4)(b) of the 2008 Act that a charging authority must use "appropriate available evidence" to "inform" the charging schedule. A charging authority's proposed levy rate "should be reasonable given the available evidence, but there was no requirement for a proposed rate to exactly mirror the evidence, for example, if the evidence pointed to setting a charge right at the margins of viability". It added that there is "room for some pragmatism."
31. Paragraph 29 indicated the range of matters a charging authority has to consider in ensuring that CIL does not threaten the delivery of the development plan. The considerations included "development costs arising from existing regulatory requirements", "any policies on planning obligations in the relevant [plan]", and "the potential impact of exemptions or reductions relating to social housing …".
32. Under the heading "Reviewing and revising the charging schedule", paragraphs 79 and 80 of the guidance document stressed the need to support development in charging authorities' areas with CIL set at appropriate levels:

"79. Charging authorities are strongly encouraged to keep their charging schedules under review. This is important to ensure that levy charges remain appropriate over time – for instance, as market conditions change, and also so that they remain relevant to the gap in the funding for the infrastructure needed to support the development of their area.

80. The Act allows charging authorities to revise a part of their charging schedule. However, any revisions, in whole or in part, must follow the same process as that applied to the preparation, examination, approval and publication of the initial schedule, as specified under sections 211 to 214 of the [2008 Act] and Part 3 of the [CIL regulations]."

The NPPF

33. A footnote to paragraph 9 of the Government's guidance document on CIL referred to paragraph 173 of the NPPF, the first of five paragraphs under the heading "Ensuring viability and deliverability". Paragraph 173 says this:

"Pursuing sustainable development requires careful attention to viability and costs in plan-making and decision-taking. … To ensure viability, the costs of any requirements likely to be applied to development, such as requirements for affordable housing, standards, infrastructure contributions or other requirements should, when taking account of the normal cost of development and mitigation, provide competitive returns to a willing land owner and willing developer to enable the development to be deliverable."

34. On the same theme paragraph 175 says that CIL "should support and incentivise new development …".

The Central Lancashire Core Strategy

35. In July 2012 the three councils adopted the Central Lancashire Core Strategy for the period from 2010 to 2026. The core strategy promotes the development of a total of 22,000 new dwellings and the provision of 454 hectares of land for employment in the plan period.
36. Policy 7 of the core strategy, "Affordable and Special Needs Housing" provides for "sufficient provision of affordable and special housing to meet needs", in several ways. These include:

"(a) Subject to such site and development considerations as financial viability and contributions to community services, to achieve a target from market housing schemes of 30% in the urban parts of Preston, South Ribble and Chorley … ."

37. Policy 27, "Sustainable Resources and New Developments", sets out several measures by which "sustainable resources" are to be incorporated into new development. It states:

"All new dwellings will be required to meet Level 3 (or where economically viable, Level 4) of the Code for Sustainable Homes. This minimum requirement will increase to Level 4 from January 2013 and Level 6 from January 2016. …"

Explaining this policy, paragraph 12.7 of the core strategy says this:

"… The Code for Sustainable Homes and the BREEAM standards apply to all schemes as set out in Policy 27 irrespective of their scale. The requirement to meet the higher than national minimum Code Level and all other provisions of Policy 27 will apply unless the applicant can demonstrate, including through the use of open book accounting, that an individual site's circumstances are such that development would not be economically viable if the policy were to be implemented."

The councils' CIL process

Consultation on the councils' preliminary draft charging schedule

38. The councils consulted on their preliminary draft charging schedule between 31 January 2012 and 30 March 2012. Meetings were held with developers and their agents. 61 representations were received. These were displayed on the councils' websites. The councils considered the representations and took advice from their consultants Roger Tym & Partners. A developers' workshop was held on 10 February 2012. Housebuilders and developers active in Central Lancashire, including Fox, were invited to attend. One of the main points raised at the workshop was that residential land prices were generally lower than Roger Tym & Partners had assumed.
39. In October 2012 the councils produced a summary of the responses they had received in response to consultation on the preliminary draft charging schedules. Some housebuilders had said that a CIL rate of £70 per square metre would make residential development, or at least residential development on previously developed land, unviable. Having considered these representations, the councils proposed a reduction to a charge of £65 per square metre.

The councils' background paper of October 2012

40. In October 2012 the three councils issued a background paper to explain the approach they had adopted in preparing their draft charging schedules.
41. The background paper referred to the viability evidence that had been collected by the councils' consultants. The consultants had been engaged to assess the economic viability of a wide range of different types of development in the "broad locations for growth" envisaged in the Central Lancashire Core Strategy, to inform the CIL rates in the draft charging schedules. They had taken account of "recent property transactions, relevant costs of implementing developments and the current expected rates of return on investment that finance lending institutions expect". A "reasonable market land value was applied and the need to avoid charge rates being set at the ceiling limit of viability was taken into account". The consultants had sought the views of "a number of locally active developers and agents" on "the development market in different parts of Central Lancashire". They had taken account of the work done by Three Dragons on the viability of housing development, which had been used in setting the targets for affordable housing in the core strategy. They had also had regard to "the local application of the Code for Sustainable Homes and the likely estimated levels of [section] 106 requirements for different types of development".

The draft regulation 123 list

42. In October 2012 the councils also published their list of infrastructure projects under regulation 123 of the CIL regulations. This had been based in part on "the background supporting documents" prepared for the core strategy process, which had identified the infrastructure needed to deliver the development planned for the period to 2026, and in part on Lancashire County Council's "Strategy and Implementation Plan", which identified "a comprehensive programme of transport projects that will be implemented in the three years to 2013/14". The infrastructure projects have various timescales, all of them within the period of the core strategy, none extending beyond 2025.

Roger Tym & Partners' final draft Technical Note on Assumption Inputs – October 2012

43. In October 2011 Roger Tym & Partners had produced a note on the assumptions they had made in testing the viability of development with the proposed CIL charges. This was revised in October 2012. It set out the evidence supporting the assumptions made as "the basis for broad assessments of viability" in Chorley. A parallel exercise was undertaken both for South Ribble and for Preston (paragraph 1.1). After the consultation for the preliminary draft charging schedules, revised viability appraisals had been produced (paragraph 1.2). The assessment of residential land values was "based on analysis of new-build homes on the market, data on residential build costs from Davis Langdon, assessment of HVS and the applicability of assumptions, and consultations with house-builders" (paragraph 1.3).
44. On residential sales values, Roger Tym & Partners said they had sought "to establish typical per [square metre] sales values of recent and ongoing developments of new housing" in each of the three councils' areas. They said it was important, when coming to a view of typical values across an area, "to ensure that dwellings of comparable size are used". In their analysis they had focused on "four [bedroom], two storey houses, because they are the most common type of unit and reflect the middle of the range in terms of per [square metre] values" (paragraph 1.5). Values "typically in the range between £1,800 per [square metre] and £2,700 per [square metre]" had been achieved on three sites: at Buckshaw Village, Eccleston Park and Sandhurst Gardens.
45. Appendix 1 to this document, "Residential Property Evidence – Chorley", gave details of a number of individual terraced, semi-detached and detached houses, many of them houses with four or more bedrooms. The average area was 114 square metres.
46. Appendix 3, "Draft Consultation Viability Appraisals (October 2012)", included four viability appraisals for residential development. Several assumptions were made, some of them – including the size of the site, land costs and value per square metre – differed from one appraisal to another. The assumed density of 39 dwellings per hectare and the assumed average size of dwelling – 120 square metres – were used in all of them. In one of the appraisals a land cost of £750,000 per hectare was assumed, with a section 106 obligation cost per dwelling assumed at £2,000. This produced a residual margin of 22.5%. That appraisal was later referred to as the "reference case".

Roger Tym & Partners' Addendum viability evidence report – October 2012

47. Also in October 2012 Roger Tym & Partners produced evidence for the draft consultation stage, in their "Addendum viability evidence report". In this document they explained that a "reference case" viability assessment had been produced, in which the land cost had been reduced to £750,000 per hectare, from the land costs of £1.2 million and £1.5 million per hectare previously assumed (paragraph 2.1). This was "marginally above that stated by a house builder during the stakeholder consultation event hosted in February 2012". The average dwelling size had been increased from 90 square metres to 120 square metres, "based on further research and analysis of our data". Sales values had been reduced from £2,150 per square metre to £2,050 per square metre, "to take account of discounts offered by house builders from the asking price". The assumed density of residential development was 39 dwellings per hectare "based on evidence by the charging authorities". The cost of "on-site secondary infrastructure" had been reduced from £300,000 to £250,000 per hectare, "which is more realistic for a site of 1 hectare". With the assumptions of £2,000 per dwelling for the costs of section 106 obligations and section 278 agreements "to address on-site and development specific issues", the residual margin, before any CIL charge, was assessed as being 27% of total development costs. This suggested that the maximum CIL charge consistent with retaining a residual margin at or above 20% was £105 per square metre (paragraph 2.2).
48. Each of those points was amplified in subsequent text, which referred to the different assessments that had been undertaken with different assumptions from the reference case. These all showed residual margins comfortably above 20%.
49. In the "Summary of residential assessment", at paragraph 2.9, Roger Tym & Partners said several representations had "suggested that higher levels of development margins were required than those previously assumed as a benchmark level of return". Although no evidence had been provided to support these assertions, they accepted that "the greater risk and cost of development in an economic climate where finance is expensive and demand is limited may be reflected in margin requirements", and they had therefore "sought to maintain margins at or close to 22.5% of cost, after the proposed CIL charge". They recommended a CIL charge for dwelling houses of £65 per square metre (paragraph 2.11).

Consultation on the draft charging schedules

50. Between 19 October 2012 and 4 December 2012 a further consultation exercise was carried out. The draft charging schedules now included a proposed charge of £65 per square metre for residential development, excluding apartments. The same approach to consultation and publicity was followed as in the first consultation exercise. The councils received 38 responses to this consultation.

Savills' representations of November 2012

51. In November 2012 Savills submitted representations to the councils on behalf of a consortium of four housebuilders – Taylor Wimpey North West, Barratt Homes, Miller Homes and Wainhomes. They concluded by asserting that the "present evidence" of Roger Tym & Partners, did not "convincingly demonstrate" that the proposed CIL levels for residential development would be viable throughout the councils' areas (paragraph 5.4). The values assumed in the councils' appraisals were "too high", a "sufficient viability buffer" had not been demonstrated, and a "sufficient developer profit" had not been allowed for (ibid.). Savills took issue with the assumed average unit size of 120 square metres (paragraph 4.12), and with the principle of setting the developer's profit at 22.5% of cost, contending for a higher level of profit on cost at 25% to 27% (paragraph 4.15). But several of the assumptions adopted by the councils, including the assumption for land values, were not seriously in dispute. Savills described the values of £600,000 to £900,000 per hectare as "rather broad", and said a contaminated site requiring remediation might well have a value much less than £600,000. But they accepted that the proposed land values were "reasonably realistic and not overly optimistic" (paragraph 4.8). The sales values assumed by Roger Tym & Partners were "as a starting point … not too unrealistic" (paragraph 4.9), the assumed sales rate of about three units a month "within acceptable limits …" (paragraph 4.10), the assumed density of 39 dwellings per hectare "acceptable" (paragraph 4.11), the development area ratio of 60% "reasonable" (paragraph 4.13), and the build costs of £1,151 per square metre "realistic" (paragraph 4.14).

The representations of Redrow Homes Ltd.

52. Redrow Homes Ltd. submitted representations. They said the proposed charge of £65 per square foot for residential development was "too high", and its "impacts for housing delivery and economic growth in the area could be severe, because the housing market is still recovering and the proposed CIL charge will act as a further constraint on development contrary to the advice at paragraph 173 of the NPPF". Many of the assumptions in the councils' appraisals were in their view unrealistic, including the assumption on density. But they said the land cost of £750,000 per hectare was "considered to be the most realistic value to assume across all three Central Lancashire districts for the purposes of undertaking a high level viability assessment".

G.L. Hearn's letter to Chorley dated 23 November 2012

53. One of the responses to the councils' consultation on the draft charging schedules was made by Fox's consultants, G.L. Hearn, in a letter from Mr Heathcote to Mr Brown dated 23 November 2012. The gist of Mr Heathcote's letter was that the level of CIL proposed for residential development had been wrongly assessed, and would impede housing development in Central Lancashire. He argued that the density of 39 dwellings per hectare was not achievable, and a more realistic density would be 31 dwellings per hectare. He also disagreed with the assumptions made by Roger Tym & Partners on the cost of sales, discounts from asking prices for new housing, sales rates, contingencies on construction, and the development margin.
54. G.L. Hearn had analysed the information in the final version of the "Technical Note on Assumption Inputs", and were making their "main comments on the assumptions which have been used". They had concluded that "the level of tariff proposed has been incorrectly assessed and … would have a significant adverse effect on the delivery of new housing in the area". He referred to "a sample of housing layouts" – for eight residential development sites with densities of between 2,803 square metres and 3,703 square metres per hectare. These densities were much lower than the figure of 4,313 square metres per hectare, which Mr Heathcote said was the corrected density for the appraisals prepared by Roger Tym & Partners. In Appendix A to his letter he gave the densities of residential development on the eight sites to which he had referred, and in Appendix B he provided four appraisals – two for a residential development on a one hectare site, two for a site of 10 hectares – showing the different levels of profit for the different densities.
55. Mr Heathcote went on to say this:

"Taking an average of these schemes, the realistically achievable development density which should be incorporated into the housing appraisals would be in the region of [3,260 square metres] per hectare … To analyse the impact of this variable, we have inputted [sic] Roger Tym & Partners appraisal and assumptions into Argus Developer, a widely recognized industry standard appraisal software package. We have then re-run the appraisal on the basis of a realistic development density of [3,260 square metres per hectare] … with all other variables unaltered. This results in a reduction in residual margin to 14.13% on cost.

The same principle applies to the appraisals for a typical 10 hectare site. … This results in a reduction in residual margin to 11.64% on cost.

Similar analysis of the other sample appraisals with the various assumed land values would have a similar substantial impact on margin. …"

56. There were several other points too. Mr Heathcote said the figure of 3% for the cost of sales was too low; funders would normally expect 4%. The discount of 5% for marketing prices was too low; a figure of about 10% of the gross asking price would be more accurate. The assumed sales rates were too optimistic in current market conditions. The development margin should be considered against Gross Development Value ("GDV") rather than Total Development Costs. Although the minimum return would vary, margins of an average of 20% of GDV, about 24% of Total Development Costs, had prevailed for the last two or three years. A contingency on construction costs of 5% ought to have been allowed for, but had not.
57. Mr Heathcote's conclusion was that "[given] the significant impact on the Roger Tym & Partners appraisals of the reduction in development density to a realistic level[,] … on this point alone any level of CIL charge in this area would have a significant effect on the viability of residential schemes and therefore the delivery of the required housing supply".

The revised draft charging schedule

58. The revised draft charging schedule, the version put before the examiner, proposed to set the CIL rate for dwelling-houses at £65 per square metre, and for apartments at £10 per square metre. CIL would be charged "on the total net additional floorspace created (measured as a gross internal area) …".

The councils' documents for the examination

59. The councils submitted their documents for the examination on 1 February 2013. On 20 February 2013 the examiner sent them his questions, 21 in all. On 11 March 2013 they sent him their response, in a document entitled "Clarifications for the CIL Examiner".
60. In that document Roger Tym & Partners explained the assumptions used in the viability appraisals, in similar terms to the documents produced in October 2012. The appraisals in the October 2012 version of the "Technical Note on Viability Assumptions" had superseded the previous appraisals (paragraph 1.2). At the consultation stage for the preliminary draft charging schedules developers had said that the assumed land value of £1.5 million was satisfactory as a gross figure, but that the costs of complying with policy and other costs ought to be taken into account and "a broader range of options" reflected in the appraisals. The appraisals had now been "revised to reflect consultation feedback" (paragraph 1.3).
61. The effect that policy requirements would have on viability had been considered, including the effect of having to comply with the requirements of Policy 27 of the core strategy. The appraisals had assumed the requirement to meet Level 4 of the Code for Sustainable Homes, which would apply from January 2013 onwards, not the requirement to meet Level 6, which would apply from January 2016 (Table 1).
62. A note in Table 2, "Summary of appraisal assumptions inputs", said the average "market unit" size of 120 square metres was based on a review of all houses being marketed at the time of the "original research", which was "a total of 52 different units" across Central Lancashire. The average size of these units was 119.99 square metres.
63. In a section headed "Measure of developer profit" Roger Tym & Partners explained the approach they had taken in establishing an appropriate level of developer's profit. They said that in seeking to achieve a residual margin of 20% on building costs they had treated market and affordable housing in the same way, but that in measuring performance on the basis of development value they had treated market housing and affordable housing "in line with the guidance provided by the HCA (i.e. 20% … GDV for market and 6% GDV for affordable housing)". So there was little difference between their approach and that based on GDV.
64. On 19 March 2013 the examiner provided a list of the issues he wished to cover at the examination.
65. In April 2013 Roger Tym & Partners produced a note, "Central Lancashire's CIL Examination Matters and Issues note for Examination". This summarized the councils' case for the hearing in the light of the documents produced for them in the process thus far. On the question of whether the residential levy rates were justified by appropriate evidence it said:

"1.2 … Our reference case scenario conservatively adopts a value of £750,000, with other scenarios ranging from [£450,000] for major strategic sites, to £900,000 for a [one hectare] site in a higher value area. It should be noted that these values … are the return to the land owner, net of the policy requirements.

1.3 We note the [support for] the assumptions used in respect of sales values and land values … in the most recent representations from Savills on behalf of a consortium of house-builders.

1.4 In determining the proposed residential charge rates, we have sought to identify the maximum possible rates that are consistent with maintaining the viability of development, before drawing down substantially from these theoretical maxima in recommending the rates proposed that are between 50%-60% of the identified maximum charge rates. This approach provides the necessary balance between the need to maintain the viability of development … with the need to fund the infrastructure that is required to enable the planned level of growth."

The examination hearing

66. The examination hearing took place on 23 and 24 April 2013. Several landowners and developers attended. Mr Heathcote represented Fox. The proposed charges for residential development were discussed on 23 April.
67. In his witness statement Mr Brown gives a lengthy account of what happened at the examination. It is not necessary to refer to all of it, but some of the salient points will provide a context for the discussion of the issues raised by the claim.
68. Mr Brown says the discussion of the charge for dwelling-houses covered five matters: the need for a mechanism for reviewing the charges once they had been set, land values and costs, the model used to calculate the profit on development, the density of development, and the size of dwellings (paragraph 30).
69. The examiner said it was not within his power to impose a timescale for the review of the charging schedules. Mr Brown said the councils intended to review the CIL rates during 2015 before the requirement in Policy 27 for new dwellings to comply with Level 6 of the Code for Sustainable Homes came into effect (paragraph 31).
70. Mr Brown says there seemed to be a general consensus among the developers represented at the examination that the land values used in the councils' viability assessment were too low, though this was not the view Savills had expressed in their response to consultation on behalf of the four housebuilders (paragraph 35). For the councils Mr Whiteley said the assumed land values had at first been too high but lower values had now been used in view of the costs likely to be incurred in meeting policy requirements. The Valuation Office Agency had not produced data for Lancashire in 2011. But the data for Merseyside and Manchester had been used as a starting point, which Mr Whiteley had used his "informed judgement" to adjust (paragraph 36). The developers challenged the basis of the councils' land values and said there were other sources of information they could have used. However, there seemed to be some agreement that there was "only a small gap between the parties" on this matter (paragraph 37). The examiner said that since the cost of meeting the CIL charge would ultimately come from the price of the land, previous transactions were not "the ultimate determining factor" (paragraph 38).
71. The approach the councils had used in estimating profit on development was disputed. Roger Tym & Partners had used a different model from the developers. The councils maintained that there was "sufficient buffer, given the margin between the CIL as proposed and the theoretical maximum level, to accommodate profit margins for the differing model types discussed". The developers did not accept this. The point was debated at the hearing (paragraph 39).
72. The developers criticized the small number of sites and dwellings relied on by the councils in making their assumptions (paragraph 40). The councils recognized that the housing market in Central Lancashire had been stagnant since the recession began, but said the evidence they had used, small though the sample was, reflected development that was going ahead when the evidence was gathered. To have used out of date information about development that had gone ahead when the economy was more buoyant would have been misleading. The developers did not accept that. But again, the point was discussed (paragraph 41).
73. The developers also criticized the councils' assumption for the density of development. The councils said a density of 39 dwellings per hectare reflected development being undertaken when the information was collected (paragraph 43). Whether the density figure used by the councils was for the gross developable area or the net was discussed. Some common ground seemed to emerge. The examiner was told there was "not much distance between the parties" (paragraph 44).
74. The size of dwellings used in the councils' assessment was also discussed. The developers said that an area of 120 square metres per dwelling, which equated to the area of a four bedroom dwelling, did not reflect what was actually being built. The councils said this assumption was based on the size of dwellings under construction when they were doing their viability assessment (paragraph 46). This was discussed. But the councils also told the examiner that the size of dwellings did not make any material difference to their assessment because developments of larger dwellings would generally be at a lower density, and the density of developments of smaller dwellings would generally be higher (paragraph 48).
75. Mr Brown says that when the examiner brought to a close the session at which the proposed CIL rates for residential development had been considered he "asked the house builders and their agents whether he was to conclude that in their view viability was such that he should not recommend the imposition of any CIL charge for residential development". There was, says Mr Brown, "categorical agreement from these parties that that was the case and that there should be no CIL charge imposed on residential development even though no supporting viability evidence had been presented to the [examination] to support this view". The examiner also asked whether everyone had had the opportunity to raise all the points they wanted to, and was told that they had (paragraph 49).

The examiner's report

76. The examiner submitted his report to the councils on 24 June 2013.
77. In paragraph 1 of his report, in the "Introduction", he said the basis for his assessment had been section 212 of the 2008 Act. He had considered whether the charging schedules were "compliant in legal terms and whether they are economically viable as well as reasonable, realistic and consistent with national guidance set out in [the April 2013 guidance document]". In paragraph 2 he recalled the requirement of regulation 14 of the CIL regulations that "a local charging authority has to submit what it considers to be a charging schedule which sets an appropriate balance between helping to fund necessary infrastructure and the potential effects on the economic viability of development across the area".
78. The examiner described the evidence on economic viability in paragraph 11 of his report:

"11. The Councils commissioned CIL Viability Assessments to inform the formulation of the charging schedules. The assessments use a residual valuation approach taking standard assumptions for a range of factors such as land costs, building costs and profit levels. Both the model and the assumption inputs were discussed at workshops and meetings with developers and others. I note that there is disagreement about the views expressed at these events. The robustness of the assessments, including the key variables and assumptions made, and the degree to which the appraisals justify the CIL levy rates proposed in viability terms, are central to this examination and are explored below."

79. The examiner considered "[whether] the residential economic viability evidence is appropriate and justifies the proposed charging schedules" in paragraphs 12 to 43 of his report. There were three topics: "[the] levy rate for dwelling houses (excluding apartments)", "[the] levy rate for apartments", and "[the] levy rate for dwelling houses in the Inner Preston Zone". Only the first of these is relevant in this claim.
80. On the scope of the councils' viability assessments on residential development the examiner said this, in paragraph 12:

"For residential developments, the viability assessments examine a range of development type scenarios in terms of site size and value levels. To reflect the general spectrum of residential development likely, the selection considered is influenced by an analysis of schemes coming forward at the time of the assessments and by the [core strategy]."

81. He dealt with land costs in paragraphs 13 and 14:

"13. The appraisals assume land costs in the range of £450,000 to £900,000 per hectare (net). A reference case scenario is used, with a land value of £750,000. Valuation Office Agency … Property Market Reports have been drawn on to inform these assumptions. I am told that the last [Valuation Office Agency] report specifically relating to Central Lancashire was that from 2009 and that the geographically closest areas covered by the [Valuation Office Agency's] 2011 report are Greater Manchester and Liverpool. The Councils do not dispute that the latter report indicates a residential land value of £1.35 million per hectare. This is clearly rather higher than the range assumed.

14. However, the difference between the land cost for Central Lancashire and that for Greater Manchester and Liverpool in 2009 has been considered in effectively arriving at a differential to apply to the 2011 figures. While it is not clear whether any alteration in the degree of divergence between Greater Manchester/Liverpool and Central Lancashire has been reflected, this is a broadly appropriate approach."

82. In paragraph 15 the examiner considered the prospect of developers having to meet the requirements of local policy:

"I note the points about whether or not the [Valuation Office Agency] reports take into account the cost of meeting local policy requirements, such as the provision of affordable housing. I recognise that if they are solely based on transactions, such costs will effectively be reflected in the figures, indicating a lower base land cost than that considered in the councils' analysis. Conversely, as the Councils pointed out, the land prices in the [Valuation Office Agency] reports may well also reflect other factors which have the opposite effect, such as affordable housing grants."

83. On the "comparative transactions" analysed by the councils the examiner said this, in paragraph 16:

"The [Valuation Office Agency] reports are not the only sources of information informing the land value assumptions. An analysis of comparative transactions current at the time the appraisal work was undertaken has also been used. The Councils conceded that the number of sites examined is limited to 'less than a handful', apparently because these were the only current transactions at the time of the evidence gathering exercise. While not ideal in scope, this evidence nonetheless introduces an element of wholly local information with a firm basis in reality. Whether it is entirely representative is questionable, given the sample size. Nevertheless, it lends a reasonable, local reality check to the more theoretically derived understanding of land costs in Central Lancashire reached through scrutiny of the [Valuation Office Agency] reports."

84. The examiner's conclusion on land costs, in paragraph 17, was this:

"It may be that the land costs appraised do not reflect the full range of prices paid in individual land deals. But this will vary considerably from one project to the next, and the amount a developer is prepared to pay will depend on a wide spectrum of factors. Furthermore, it is expected that the cost of meeting a CIL charge will ultimately come from the price of land. With this in mind, it is not unreasonable for the appraisals to consider lower land costs than may have been previously experienced. Overall, in the context of the assessments' high level, inevitably broad brush consideration of the variables affecting viability, and in the light of the Regulations and the national guidance, the evidence on land cost is sufficiently robust and appropriate."

85. The conclusions on build costs are not controversial in these proceedings. The councils had used information drawn from the R.I.C.S. Building Costs Information Service database, with allowances for external works and contingencies, and for commitments in section 106 obligations. As is clear from paragraph 18 of his report, the examiner was content with this.
86. In paragraphs 19 and 20 of his report the examiner considered the likely effect on viability of the requirements of Policy 27 of the Central Lancashire Core Strategy:

"19. Policy 27 of the [core strategy] requires all new dwellings to meet Level 4 of the Code for Sustainable Homes from January 2013. The appraisals are based on the assumption that the [Building Costs Information Service] data includes schemes built to Code Level 4. The appraisals also add a little over £150 [per square metre] to the [Building Costs Information Service] derived base build costs. This lends confidence that the costs of meeting [core strategy] Policy 27 have been adequately accounted for. The degree to which the appraisals reflect this policy requirement should be regarded as appropriate, for the time being at least.

20. From January 2016, [core strategy] Policy 27 will demand that all new dwellings meet Code Level 6. This has not been included in the viability assessments, and the councils intend to review the CIL charge in 2015, ahead of this requirement 'kicking in'. It is clear to me that a review will be essential at that time. If it is not, the Councils will risk either development not being delivered or the Code Levels sought by [core strategy] Policy 27 not being met. While it is beyond the scope of this examination and the recommendations I am able to make, there is no reason to suppose that the Councils, as responsible public authorities, will not undertake such a review in a timely fashion."

87. The examiner concluded in paragraph 21 that the requirements for affordable housing in Policy 7 of the core strategy had been "sufficiently incorporated into the appraisals". That conclusion is not challenged in these proceedings.
88. The examiner's conclusions on costs likely to be incurred in professional fees, sales and marketing, stamp duty and land purchase fees, in paragraph 22 of his report, are not contentious.
89. In paragraphs 23 to 26 the examiner dealt with the assumptions the councils had made on the size of dwellings and the density of development:

"23. The dwelling size and density assumptions made have been criticised. An average house size of 120 square metres has been assumed. The Councils agree that this is roughly the area of a typical four bedroom house. That being so, it seems improbable that this is representative of the residential development likely to be delivered. The Strategic Housing Market Assessment 2009, which underpins the [core strategy], points to a preference/demand for two, three and four bedroom market housing.

24. That being said, the Councils say that this does reflect the average size of the homes that were being marketed at the time of the evidence gathering exercise. In this context, while this sample amounts to only 56 dwellings, it does represent appropriate, available evidence. Even if it is the case that a more comprehensive survey could have been possible, this does not render the Councils' data invalid. In any event, the viability appraisals have analysed sales values for each scenario on the psm basis. In isolation, therefore, the unit size considered has little effect on the amount of CIL payable, or viability.

25. At the hearing, the Councils clarified that the 39 dwellings per hectare density figure used is gross, and that the net figure used, which takes into account the provision of open space and other non-developable areas on sites, is 31 dwellings per hectare. On the face of it, as a discreet factor, this seems appropriate.

26. In effect, the various scenarios appraised all assume that an average of 31 dwellings (net) per hectare of 120 square metres each on average will be delivered. Some suggest that this combination is not feasible or realistic in the present market. It may be that it is not representative of what is reasonably likely to be delivered across the three local authority areas. But if it is an overestimation of the level of residential floor space, and hence sales value, it is equally an overestimation of the cost of meeting the CIL. In the context of the appraisals' methodology, particularly the use of a flat psm sales value for each scenario irrespective of unit size, these are directly proportionate factors. Consequently, the degree to which the combination of the dwelling size and density assumptions reflects the kinds of developments one could expect to take place of the [core strategy] plan period has little or no effect on the assessment of viability. Given the generic value of viability appraisals of this kind, this should not be regarded as inappropriate."

90. In paragraphs 27, 28 and 29 the examiner referred to the assumption on the funding of development, the assumption that house builders would discount sales values, and the adequacy of the residual margins in the councils' appraisals:

"27. It has been assumed that all schemes will be debt funded through finance. That is not always the case. This aspect is one which suggests that the viability margins for each of the scenarios considered are not presented as 'best case' illustrations.

28. Sales values have been reduced by £100 [per square metre] in the appraisals to take account of discounts offered by house builders from asking prices. This is an assumption, and I have been given no clear evidence to suggest that house builders in the area offer a discount or, if so, what level of discount might be typical. In this context, the figure used seems appropriate, if not generous.

29. The adequacy of the residual margin has been questioned. But the Councils' evidence indicates that even after the proposed CIL charge has been taken, the margin for the various scenarios ranges from 22.5% to 24.2% on cost. This strikes me as reasonably healthy, and a level at which many developers could realistically be expected to proceed."

91. Bringing these conclusions together, the examiner found that he could support the proposed CIL charge for residential development in Central Lancashire. In paragraphs 30 and 31 of his report he said:

"30. Moreover, it is clear that in setting the levy rate for dwelling houses, the Councils have not sought to 'push the boundaries' or levy the maximum level of CIL that the appraisals show to be theoretically possible. Indeed, according to the Councils, the theoretical maximum charge for the applicable scenarios analysed range from £102 to £132 [per square metre]. In striking the balance between the need to fund new infrastructure and the effects on economic viability, the approach taken in appropriately measured. Given the nature of the appraisal work undertaken, dealing as it must with a range of variables and unknown factors, and making numerous assumptions, this is a commendable path. It significantly bolsters confidence that the rate proposed will not put at serious risk the overall development of dwelling houses across the three local authority areas envisaged in the [core strategy].

31. I conclude that the levy rate for new dwelling houses (excluding apartments) is justified by appropriate available evidence and strikes an appropriate balance between helping to fund new infrastructure and its effect on the economic viability of dwelling houses (excluding apartments) across the three local authority areas."

92. In the "Conclusion" of his report, in paragraph 78, the examiner said the three councils had "tried to be realistic in terms of achieving a reasonable level of income to address an acknowledged gap in infrastructure funding, while ensuring that a range of development remains viable across the three local authority areas". This objective had been met for dwelling-houses, excluding apartments, subject to the modification he was recommending for the redefinition of the Inner Preston Zone, where a differential rate for dwelling-houses would apply. In paragraph 79 the examiner said the rate of CIL proposed for apartments, and for some other uses, would not meet the requirement in the NPPF that they "support and incentivize new development", and he was therefore recommending the reduction of those rates to nil. In paragraph 80 he said that, subject to his recommended modifications being made, the councils' CIL charging schedules satisfied the requirements of section 212 of the 2008 Act and met the requirements in the CIL regulations, and he therefore recommended that they were approved.

The adoption of the charging schedules

93. The councils each considered and accepted the examiner's recommendation. Chorley adopted the charging schedules, incorporating the examiner's proposed modifications, at a meeting of its full council on 16 July 2013, South Ribble at a meeting of its full council on 24 July 2013, and Preston at a meeting of its full council on 22 August 2013.
94. Chorley and South Ribble resolved to begin charging CIL on 1 September 2013, Preston on 30 September 2013. Since those dates, the three councils have been levying CIL under the adopted charging schedules.

Issue (1) – irrationality

Submissions

95. For Fox Mr Paul Tucker Q.C. submitted that the examiner had failed to see the shortcomings in the evidence on which the councils' viability appraisals were based – in particular their use of data in the Valuation Office Agency reports and the sparse evidence of individual transactions, which was contradicted both by Fox and other landowners and developers. The 2009 Valuation Office Agency report included information for Central Lancashire. The 2011 report did not. One could not derive from those reports any relevant trend showing how land values had moved in the relevant period. The average land value in Greater Manchester had fallen, but in Merseyside it had risen. The councils' consultants had taken the fall in Greater Manchester and applied it to the land values for Central Lancashire. The examiner did not express any view on the appropriateness of using only part of the Valuation Office Agency data, or on the robustness of the "differential" given the divergence in land values between Central Lancashire and Greater Manchester and Merseyside. To conclude, as he did, that the approach adopted was "broadly appropriate" was irrational.
96. Mr Tucker also submitted that paragraph 15 of the examiner's report shows a misunderstanding of the effects of factors such as affordable housing grants on the figures taken from the Valuation Office Agency reports. The examiner seems to have thought grants would be available more widely than in fact they would.
97. Although the examiner referred in paragraph 16 of his report to the very small amount of information the councils had given him about actual transactions, Mr Tucker said he ought to have dealt with the contrary evidence produced by other parties at the examination. He reached contradictory conclusions in paragraphs 16 and 17: that the councils' evidence was not "representative" because the sample was so small, but that nevertheless it provided a "reasonable, local reality check" and was "sufficiently robust and appropriate".
98. For Chorley Mr David Elvin Q.C. submitted that this is no more than an attack on the examiner's judgment. Its objective is to show that the conclusions in this part of his report were perverse. It falls far short of that. The examiner did not misunderstand or misapply the data on land values in the Valuation Office Agency Reports, which supported the councils' assumptions. He did not misunderstand the position on affordable housing grants. And he did not overstate the significance of the information he was given about transactions, limited though it was. The examiner's conclusions were entirely reasonable, and were soundly based on "appropriate available evidence".

Discussion

99. I cannot accept Mr Tucker's submissions on this issue.
100. This is a claim for judicial review. In these proceedings the court does not hear an appeal against the conclusions the examiner reached. A claimant may not re-argue a case presented and rejected at a CIL examination, or pursue a case on the merits put forward for the first time, or enhanced, in evidence and submissions before the court. The court cannot interfere with the examiner's judgment on matters of valuation or planning merit. Its jurisdiction is confined to the ambit of public law (see the observations made by Sullivan J., as he then was, in Newsmith Stainless Steel v Secretary of State for the Environment, Transport and the Regions [2001] EWHC Admin 74, at paragraph 6).
101. A challenge based on an allegation of irrationality in an examiner's conclusions is particularly ambitious. As Lord Bingham C.J. said – though in a very different context – in R. v Secretary of State for the Home Department , ex p. Hindley [1998] QB 751 (D.C.), at p.777A:

"This is because responsibility for making the relevant decision rests with another party and not with the court. It is not enough that we might, if the responsibility for making the relevant decision rests with us, make a decision different from that of the appointed decision-maker. To justify intervention by the court, the decision under challenge must fall outside the bounds of any decision open to a reasonable decision-maker."

102. In this case I shall assume – which I think may be generous to Fox – that all of the points it now makes about the councils' approach were raised, one way or another, during the CIL process. But even if they were, these proceedings do not provide a platform for discussing them again.
103. Both sides have put before the court a good deal of evidence in witness statements – on Fox's side attacking the examiner's assessment, on Chorley's defending it. The value of such evidence in a claim for judicial review is limited. It is useful to the court only if it illuminates some error of law, or serves to confirm that none has been committed. I have read all of the evidence submitted on either side, and I shall refer to some of it. I can say now that in my view none of it discloses any error of law. Whether any of it would have supported a different judgment from the examiner's on any of the contentious matters before him is a not a question for the court.
104. Regulation 14 of the CIL regulations requires a charging authority to make a number of judgments when setting rates in a charging schedule. The charging authority must aim to strike what appears to it to be "an appropriate balance" between two things: the desirability of funding the cost of necessary infrastructure and the possible effects of CIL on the viability of development. Within that broad balance there are other questions to be considered: whether it is desirable to fund the total cost of infrastructure wholly from CIL, or only in part; what infrastructure is required "to support the development of [the charging authority's] area", and when it will have to be provided; what other sources of funding there are likely to be; and the likely ability of development to bear the burden of CIL and still provide enough profit for developers to make it worthwhile. Each of these questions requires an exercise of judgment by the charging authority. Mr Elvin said it would be hard to find a provision more heavily laden with questions of judgment for an authority making an administrative decision. I agree.
105. The statutory requirement, in section 211(7A) of the 2008 Act, for a charging authority to use "appropriate available evidence" does not specify what or how much evidence this may be in a particular case. The nature of the exercise for the charging authority is made clear in the Government's guidance document. The guidance stresses the need for decisions to be informed by appropriate evidence, which will not necessarily be comprehensive, and it allows for a pragmatic approach (see paragraphs 26 to 32 above).
106. The judgments to be made under regulation 14 are ultimately for the charging authority. But under the statutory scheme an examiner has to consider, in the light of the evidence and representations before him, whether an appropriate balance has been struck by the charging authority in formulating its charging schedules. That is what the examiner did in this case.
107. The questions the examiner had to deal with were matters on which information of various kinds and valuations based on several assumptions were before him, but on which, in the end, he had to come to a view of his own. He did not have to be certain about everything. On some points he was likely to be more confident, on others less so. He had to weigh the competing submissions on material that was no doubt less than perfect and less than complete. He was not obliged to deal with every point raised at the examination, every fact or dispute, or every disagreement on matters of opinion. He was not adjudicating in litigation between two parties. He was considering whether the councils' proposed CIL charges were justified under the statutory scheme, not whether he would have set those charges at a different level had it been his task to fix them. What was required of him was a judgment on the acceptability of the charges proposed by the councils. It was then for the councils to decide whether to accept the recommendation to which that judgment had led (see paragraphs 15 to 17 above).
108. This was, therefore, a classic exercise in judgment of the kind that independent inspectors are able to make, but the court is not. And it is not a judgment with which the court will interfere except on Wednesbury grounds.
109. Mr Tucker did not say that in this case the process was unfairly conducted. He could hardly do that. The councils complied throughout with the relevant statutory requirements and followed the Government's guidance. Fox and others affected by the proposed charging schedules had the opportunity to state their views. Fox made representations and took part in the examination. They were able to comment on the approach taken by the councils' consultants in their work on valuation and on the conclusions that emerged from that work, and they did so. They and others urged the examiner to reject the councils' case in support of the charge of £65 per square metre for the development of dwelling-houses. But he was not persuaded.
110. I do not think it can be suggested that the examiner failed to understand what he had to do. In paragraph 1 of his report he acknowledged that he had to establish whether the charging schedules satisfied the relevant statutory requirements, and "whether they are economically viable as well as reasonable, realistic and consistent with national guidance …". This was what section 212 of the 2008 Act required. In paragraph 2 the examiner referred to the balancing exercise set for charging authorities in regulation 14 of the CIL regulations – in his words, producing a charging schedule "which sets an appropriate balance between helping to fund necessary new infrastructure and the potential effects on the economic viability of development across the area".
111. Paragraph 11 of the examiner's report, where he described the evidence he had received on economic viability, shows that he understood why the viability assessments had been prepared. The assessments had been commissioned by the councils to "inform the formulation of the charging schedules". This was their purpose, described by the examiner in language consistent with the advice in paragraphs 25 and 28 of the Government's guidance document. The approach to assessment was residual valuation, using assumptions as to "land costs, building costs and profit levels". The assumptions had been discussed in the course of the process. Unsurprisingly, some of them had been disputed. The examiner acknowledged that. He knew that the results of the councils' viability appraisals depended on the data used and the assumptions made. He said that the "robustness of the assessments" and "the degree to which the appraisals justify the CIL levy rates proposed in viability terms" were "central" to his examination. And he went on to consider the data and assumptions in as much depth as he thought was right.
112. I do not find Mr Tucker's submissions on paragraphs 13 and 14 of the examiner's report convincing.
113. Mr Whiteley confirms in his witness statement that the councils had used several sources of information in arriving at the land values used in the viability appraisals (paragraphs 25 to 44). At the examination he told the examiner that the councils' assumptions on land value had been informed by all of the evidence available at the time (paragraph 39). Information on land values in the affordable housing viability studies used in the preparation of the core strategy had been considered, and the assumed land values were "central within the range of values identified" (paragraphs 26 to 28). Valuation Office Agency data on existing and alternative use values in Central Lancashire, Manchester and Liverpool suggested residential land values of about £780,000 per hectare "broadly in line with the reference case land value assumed as part of the CIL viability assessments" (paragraphs 30 and 31). The information on land values provided by consultees was also taken into account. Some who had attended the "Developer Workshop" had said the councils' land value assumptions were too high. But Savills, on behalf of the four housebuilders whom they represented, had not disagreed with them; neither had Redrow (paragraph 36). This "broad-based support" for the land value assumptions on behalf of several major national house-builders was, says Mr Whiteley, "a very relevant consideration" (paragraph 37). Finally, as a "cross-check", the councils' assumptions on land value were compared to the assumptions made in the setting of CIL in neighbouring administrative areas where market conditions were likely to be similar – Lancaster, West Lancashire, and Bolton – and were found to be "broadly in line with sub-regional comparators" (paragraph 38). Fox made no comment on the councils' land value assumptions in their representations in November 2012, or after the draft charging schedule had been submitted (paragraph 41).
114. I do not accept that the examiner failed to deal appropriately with the conflicts in the evidence before him on land values. He went as far in considering those matters as he needed to, and without any unfairness to Fox or other opponents of the proposed CIL charge for housing development.
115. The councils' viability assessments had embraced a variety of types of residential development of differing size and value. As the examiner said in paragraph 13 of his report, the assumed land costs spanned a range between £450,000 and £900,000. In the "reference case" the land value was assumed to be £750,000. These assumptions had been informed by data from the Valuation Office Agency reports. There were limitations in the Valuation Office Agency data. In particular, as the examiner said, there was no information about values in Central Lancashire in the 2011 report. So, as Mr Tucker put it in paragraph 25 of his skeleton argument, there were "no direct trend data that showed how land values had altered over time". The examiner recognized this. But in his view it was clearly not a shortcoming of any real significance for the judgment he had to make.
116. The examiner was also aware that the 2011 report indicated a land value – £1.35 million per hectare –higher than the upper end of the range assumed by the councils; he said this in paragraph 13. But in paragraph 14 he said the land cost for Central Lancashire in 2009 and that for Greater Manchester and Merseyside in the same year had been allowed for by applying a "differential" to the figures in the 2011 report. He accepted that this might not have reflected "any alteration to the degree of divergence between Greater Manchester/Liverpool and Central Lancashire". But he judged the approach adopted by the councils as "broadly appropriate".
117. This was not to say that it was a perfect approach, free from any possible criticism or doubt. But the examiner saw it as reliable enough for the purposes of the assessment he had to make. He did not neglect the points made at the examination by those who criticized the councils' assumptions. He reached a view in the light of those points and the councils' response to them. Another examiner might have taken a different view. But I cannot see how, in a claim for judicial review, the conclusion to which the examiner came, expressed in the way that it was, can be regarded as unreasonable.
118. I do not accept that the examiner either misused or misunderstood the data in the Valuation Office Agency's reports. He did not rely unquestioningly on that material. As he emphasized in the first sentence of paragraph 16 of his report, this was only one element of the evidence on which he was able to base his conclusions on the councils' land value assumptions. There were other "sources of information" as well. He noted in paragraph 13 that the reports had been drawn on "to inform" the assumptions in the appraisals, which is a long way from saying that they had dictated what those assumptions must be.
119. In my view the absence of information in the Valuation Office Agency reports about the trend in land values in Central Lancashire over the relevant period did not prevent the councils' consultants from using the data in those reports in the way that they did. As the examiner said, he could not be certain that any change in the divergence between land values in Greater Manchester and Merseyside and land values in Central Lancashire had been reflected in the "differential". But he did not have to be sure about that. He had to look at all of the evidence on land values presented to him by the councils and ask himself whether it was reasonably reliable. He did that, and he found the evidence could be relied on.
120. I do not think that was a perverse conclusion for the examiner to reach. Nor, in my view, is it undermined either by the fact that in the relevant period land values had apparently risen in Merseyside and fallen in Greater Manchester or by the doubts over the councils' consultants' view that the figures for Greater Manchester better reflected the position in Central Lancashire. The examiner did not state a view of his own on those points. But his conclusion on land values is not weakened by that. It is in my view a legally valid conclusion as it stands.
121. In his witness statement of 27 August 2013, Mr Heathcote says that a simple analysis of the data for "bulk land" in the Merseyside area indicates that average land values rose from £780,000 per hectare in 2009 to £1.35 million per hectare in 2011, an increase of about 73% (paragraph 11.4); that the data for "bulk land" in the Greater Manchester area (including Manchester, Bolton, Rochdale, Stockport and Trafford) indicates that in the same period land values fell from about £2.2 million per hectare to £1.5 million per hectare, a decrease of about 32% (paragraph 11.5); and that if a reduction of 32% is applied to the 2009 values in Central Lancashire the average land value in 2011 would reduce to about £950,000 per hectare, which is "still higher than the highest value adopted by Roger Tym & Partners in any of their appraisals" (paragraph 11.7).
122. Mr Molyneux contends, for the reasons he gives in his witness statement of 11 December 2013, that the councils were right to rely on the trend in Greater Manchester. Between 2009 and 2011 there was an increase of 44% in residential land values in Merseyside, leaving aside Bootle (paragraphs 15 and 16). But values in Merseyside had been lagging behind those in the North-West region as a whole (paragraph 17). Until 2008 values had risen steeply in the North-West region and then began to fall. Values in Merseyside went up steadily throughout the relevant period but would have still been well behind values in the rest of the region had it not been for the fall in values in the North-West from 2008. Mr Molyneux says that in his opinion it would have been "wrong to place too much emphasis on the increase in land values in Merseyside" (paragraph 18). The figures for the parts of Greater Manchester referred to by Mr Heathcote show a similar trend to the figures for the North-West (paragraph 19). It was reasonable, says Mr Molyneux, "to regard the Greater Manchester trend as being more relevant to Central Lancashire land values than the Merseyside figures", and it is "likely that the land value trends in Central Lancashire have continued to follow the downward trend in Manchester since 2009" (paragraph 23). Mr Molyneux adds that these conclusions, and thus the land values assumed by the councils' consultants, were supported by "the empirical evidence" presented by housebuilders and their representatives before the [examination]" (paragraph 24). The "empirical evidence" was that the land values used by the councils were "broadly in line with developer expectations" (paragraph 25).
123. It is not the role of the court to resolve the parties' differences on those questions. Neither Mr Tucker nor Mr Elvin asked me to try. Nor did the examiner have to do so if he was to come to a legally defensible conclusion on the land value assumptions in the councils' viability appraisals. I have considered the evidence Fox has provided to the court on the Valuation Agency Office data and on the use the councils' consultants made of it, and Chorley's evidence in response. Having done so, even if I ignore Mr Molyneux's witness statement of 3 March 2014, I do not think any error of law has been identified in the examiner's judgment on the land value assumptions. In my view, that judgment is legally sound.
124. I turn to the examiner's conclusions on "local policy requirements" in paragraph 15 of his report. In that paragraph he dealt with the question of whether those requirements, and in particular those governing the provision of affordable housing, had been taken into account in the figures set out in the Valuation Office Agency reports.
125. Again, in my view, the examiner clearly had regard to the points made on either side. He recognized that if the figures were based only on transactions they would necessarily include the effect of developers having to meet the requirements of local policies, and that this would indicate a "lower base land cost" than had been included in the councils' analysis. But, as the councils had said, there might be factors pulling the other way, such as the availability of affordable housing grants.
126. Mr Heathcote points out in his witness statement of 27 August 2013 that grants are not available to subsidize the provision of affordable housing on sites developed by private developers, but only when a registered social landlord is seeking to buy and develop a site entirely for affordable housing (paragraph 11.8). He says that, because the level of grant funding has been cut, those sites "only tend to produce a land value of around £750,000 per hectare and would therefore not artificially raise the levels of value reported in the [Valuation Office Agency] Property Market Reports" (ibid.).
127. It is true that affordable housing grants would not generally have been available for the residential developments to which the figures in the Valuation Office Agency reports related, and that in many cases there would have been no grant. But that fact does not negate the principle to which the examiner was referring in paragraph 15 of his report. He had clearly taken account of the points made to him on either side. I do not think he had to decide which was more likely to be correct. He was satisfied that the Valuation Office Agency reports were a reasonably dependable source in spite of the lack of certainty about the influence, if any, of local policy requirements in the data they contained. Fox may disagree, but such disagreement is not a good ground in a claim for judicial review.
128. I therefore reject Mr Tucker's criticism of the examiner's conclusions in paragraph 15. The general proposition in that paragraph, which is that the costs of meeting local policy requirements would be reflected in figures for actual deals, and that this would suggest a lower land cost than the councils' analysis had assumed, is reasonable. So is the concept that other factors might have the opposite effect. The requirement to provide affordable housing was an example to illustrate the general point.
129. I also reject Mr Tucker's submission that the examiner was at fault in not stating his view on the evidence he was given about individual transactions.
130. Mr Heathcote refers in his witness statement of 27 August 2013 to the evidence the examiner had on transactions (paragraph 11.9). He says Roger Tym & Partners did not disclose details of those transactions either in their reports or at the examination, and it was therefore impossible for the examiner to tell whether or not they supported the assumptions on land value. Fox had referred to the land values of more than £1.2 million achieved on their site at Clayton-le-Woods. Similar values had been achieved in deals in which another landowner, Grasscroft Properties, had been involved. These transactions were not mentioned by the examiner in his report.
131. Mr Whiteley concedes in his witness statement – as did the councils at the examination – that the evidence on comparable land transactions was "somewhat limited", and did not, on its own, enable firm conclusions to be drawn (paragraph 34). This evidence was used to inform the making of appropriate assumptions, rather than to dictate them (ibid.). Although the councils had asked for details of the transactions relied on by other parties, the detail provided was scant and some of it submitted only at the examination (paragraph 35). Fox and others mentioned transactions on which they relied, but the information they gave about them was incomplete (paragraph 42). So this evidence – if it can truly be called that – was not a proper basis for adjusting the assumptions on land value used by the councils.
132. In paragraph 16 of his report the examiner acknowledged that the evidence on transactions was "not ideal in scope". He did not dismiss it altogether. But he gave it no more weight than he thought he should. He saw two benefits in it. First, it was "wholly local". And secondly, it was based firmly in the reality of actual deals. The examiner could not conclude that this evidence was "entirely representative" of land values in Central Lancashire at the relevant time. It was useful, however, as a "local reality check" on the information one could glean from the Valuation Office Agency reports. Those conclusions seem sensible to me. Contrary to Mr Tucker's submission, there is nothing inconsistent between them.
133. Mr Tucker suggested that the examiner should have explored the evidence on transactions more deeply than he did. I disagree. Without more detail than he had, the examiner could hardly have been expected to go further than he did. He could not have found out everything there was to know about every transaction. He did not refer to particular deals. He did not have to. As he said in paragraph 17 of his report, the "full range of prices paid in individual land deals" might not have been revealed. But he recognized that the price of land would vary according to the "wide spectrum of factors" in play. This is plainly right. The value of land will depend on the size and shape of the site, the policies relevant to it in the development plan, ground conditions, the quality of local infrastructure and services, and so forth – as Mr Whiteley says in his witness statement (at paragraph 32).
134. The other point made by the examiner in paragraph 17 of his report, that "the cost of meeting a CIL charge will ultimately come from the price of the land", also seems sound. The examiner did not confine himself to the realm of residual valuation. He could see that in the real world the price paid for a development site would be likely to be agreed at a level allowing for CIL. Developers would bid for land knowing that CIL would have to be paid. This would tend to produce lower land costs than would have been paid had CIL not been introduced. Thus, as the examiner put it, it was "not unreasonable" for the councils' appraisals to be based on land costs lower than might have been experienced before.
135. That conclusion accords with common sense, and with the way in which one might expect the market to work.
136. As Mr Molyneux says in his witness statement of 11 December 2013, although the land values shown in the councils' appraisals were shown as a cost to the developer, they would also be a receipt to the landowner (paragraph 27). So, if the developer assumed the liability to pay CIL, he would aim to recover that cost, or some of it, in his negotiation with the landowner on the price of the land (paragraph 28). If, on the other hand, the CIL charge were borne by the landowner, "the developer could pay a higher price for the land up to the full value of the CIL charge and maintain the residual margin set out in the scenario" (ibid.). The price paid for the land in the reference case could then be about £920,000 – the land price plus the CIL charge – rather than £750,000. As Mr Molyneux goes on to say, the use of lower land values in setting a CIL charge "benefits rather than disadvantages landowners who are ultimately responsible for paying the CIL charge", and "viability at a low land price will ensure viability at higher land prices" (paragraph 31). The court cannot carry out its own viability assessment, or test the councils' assessment by substituting different assumptions. But I can see the force of Mr Molyneux's comment that "setting a worst case reference scenario ensures that a CIL charge is set that is not at the limits of viability" (paragraph 33).
137. All of this detail has to be seen in the context of what the examiner said was a "high level, inevitably broad brush consideration of the variables affecting viability", the requirements in the CIL regulations and the Government's guidance. It was in this context that he concluded that "overall" the evidence he had been given by the councils on land costs was "sufficiently robust and appropriate".
138. That, I believe, was a reasonable conclusion in the circumstances in which the examiner had to exercise his judgment. It was reinforced by what the examiner said in paragraph 30 of his report. He said there that in setting the CIL rate for dwelling-houses the councils had not sought to levy "the maximum level of CIL that the appraisals show to be theoretically possible", which would have been a charge of more than £100 per square metre.
139. I think the examiner was entitled to conclude, as he did, that in striking the balance between the need to fund new infrastructure and the likely effects of CIL on the viability of development, the councils had taken an "appropriately measured" approach. He applauded that approach. In undertaking their viability appraisals the councils had had to contend with "a range of variables and unknown factors", and had had to make "numerous assumptions". In the light of the appraisals the examiner was confident that the proposed charge would not jeopardize housing development in the councils' areas. In his judgment, the councils had plainly left enough scope for housing development to bear the burden of CIL and remain viable. He clearly had well in mind the balance called for in regulation 14 of the CIL regulations and the need to encourage the development of housing in Central Lancashire.
140. I do not see how any of the examiner's conclusions challenged in this ground of the claim can be said to be irrational. They were both reasonable and sufficiently reasoned, and were at least adequate for the purposes of the assessment he had to make. They were founded on "appropriate available evidence", in accordance with section 211(7A) of the 2008 Act, and they were, in my view, both realistic and complete. The fact that they were framed in general terms, and without more detail than the examiner's duty required, is not a vice.
141. For those reasons this ground of the claim must fail.

Issue (2) – immaterial consideration

Submissions

142. Mr Tucker submitted that paragraphs 23 to 26 of the examiner's report show that he did not understand the evidence about the councils' assumptions on the size of dwellings, the density of development, and cost. The examiner was wrong to conclude that "unit size" in itself would have little effect on the amount of CIL that would have to be paid. This was a misconception, and an immaterial consideration. It was impossible to get an average unit size from the sample of only 56 dwellings used by the councils. This was not "appropriate available evidence". As the examiner seems to have realized, it was not representative of the development being built in Central Lancashire or likely to be built in the future. The assumed dwelling size of 120 square metres was too large. And it was wrong to think the error did not matter because values had been calculated per square metre in the councils' viability appraisals and costs would go up or down in direct proportion to the size of a dwelling. This conclusion was contrary to the evidence that neither site yields nor site costs were proportionate to the total area of a development.
143. Mr Tucker also submitted that the examiner failed to grapple with Mr Heathcote's assertion, in his letter of 23 November 2012, that if one were to assume a "realistically achievable density" in assessing the viability of development, leaving all other variables as they were in the councils' appraisals, the residual margin would be about 14%, well below the 20% regarded as an acceptable level of developer's profit by Roger Tym & Partners. Nowhere in his report did the examiner come to grips with that point.
144. Mr Elvin submitted that this ground of the claim is misconceived. There is no legal error in paragraphs 23 to 26 of the examiner's report. To assess the viability of residential development, as the councils did, on the basis of high levels of chargeable floorspace was suitably cautious. It would ensure that the charge could be borne by a development whose chargeable area was smaller. The examiner was aware that the combination of an assumed average density of 31 dwellings per hectare and an assumed average area of 120 square metres per dwelling were unlikely to represent what would be built in the councils' areas. But he also accepted that if this was an over-estimate of the level of residential floorspace and sales value, it would also be an over-estimate of the cost of CIL.
145. Development costs would indeed vary from site to site. The Government had advised charging authorities to use an "area-based approach" and a "broad test of viability" (paragraph 23 of the guidance document). The examiner was entitled to conclude that in forming their assumptions on dwelling size and density the councils had used "appropriate available evidence". He did not find that the unit size assumed by the councils was a mistake, or that this did not matter. Nor did he have regard to any immaterial consideration. He did not conclude that values or costs would, in fact, be directly proportionate to the area of development. But he accepted that in the context of "generic" viability appraisals the councils' use of "a flat sales [per square metre] sales value for each scenario irrespective of unit size" was appropriate.
146. As the examiner said in paragraph 30 of his report, the councils' proposed CIL charge of £65 per square metre was well below the theoretical maximum indicated by their appraisals. There was no evidence before him to demonstrate that changing the assumption on dwelling-size would narrow that gap significantly. Mr Tucker's complaint that he failed to confront the residual margin of about 14% referred to in Mr Heathcote's letter of 23 November 2013 is unjustified. That residual margin came out of an appraisal in which a lower density of development was assumed than in the councils' appraisals. It does not undermine the examiner's conclusions. He was not at fault in saying nothing about it.

Discussion

147. Mr Tucker's argument on this ground does not, in my view, succeed in demonstrating any error of law in the examiner's report. I accept the submissions of Mr Elvin.
148. I do not think the examiner failed to understand the evidence before him on the size of dwellings and the density of development, or that he committed any error of law in the conclusion to which he came on these matters.
149. Again, the examiner had to exercise his judgment. He did not have to decide whether the councils' assumptions on the size of dwellings and the density of development were demonstrably correct. He had to understand the effect of those assumptions on the councils' assessment of viability. He had to ask himself whether he could rely on the councils' appraisals even if the assumptions themselves were questionable or arguably wrong. He found that he could. The appraisals were reliable – despite being, as he described them, "generic in nature". If the examiner was satisfied that the assessment was basically sound – which clearly he was – he did not have to consider what the effect of making different assumptions might have been. He did not have to tackle the argument that if one reduced the assumed average dwelling size by a given amount, or took an average density for residential development at a particular level below what the councils had assumed, the residual margin would fall below 20%. There would have been no point in doing that. The outcome would have been what it was, but it would not have shown the councils' assessment was false.
150. I cannot see any error of law in the examiner's conclusion, in paragraph 24 of his report, that the information on which the councils' assumptions on dwelling size and density were based was "appropriate, available evidence". Nor do I accept that his reasons for this conclusion are unclear. I do not think they could be any clearer.
151. The examiner acknowledged in paragraph 23 of his report that the councils' assumptions had been criticized. And he did not simply endorse them. The assumed average size of a dwelling, at 120 square metres, was about the area of a typical four-bedroom house. Dwellings as large as this were not the only kind of housing likely to be developed in Central Lancashire – obviously not. The Strategic Housing Market Assessment of 2009 showed demand for houses of different sizes, including those with two or three bedrooms. The sample was small, only 56 dwellings. And it related to only one site. But in the examiner's view, as he made clear in paragraph 24, it was relevant evidence. The lack of "a more comprehensive survey" did not make it irrelevant. The examiner did not conclude that the councils had been wrong to use this information but that this did not matter. The information was accurate. Even if it was not "representative" or "comprehensive", it was "available" and it was "appropriate" to an assessment of the viability of development if CIL were to be charged at the rate the councils proposed. That in my view was a conclusion the examiner could reasonably reach.
152. Mr Whiteley refers in his witness statement to the information Mr Heathcote had provided about the amount of floorspace per hectare in eight recent developments (paragraph 65). He says it was not possible to tell how representative this small sample of sites might be of "the wider development market in the area". However, the average dwelling size was 119.1 square metres. This was very close to the average size of the 56 houses in the councils' evidence – 119.9 square metres – which had provided the basis for their assumption on the average size of a dwelling (ibid.). The average density of the schemes referred to by Mr Heathcote, at 30 dwellings per hectare, was lower than the density Mr Whiteley had assumed, but two of the eight schemes had been developed at more than 40 dwellings per hectare. The available evidence showed the councils' assumption for the size of dwellings was "entirely robust" and reflected market conditions prevailing at the time when the evidence was gathered. The assumption for the density of development was "also well founded in appropriate available evidence" (paragraph 66).
153. In any event the examiner accepted in paragraph 24 of his report that, on its own, the assumed average house size would have had "little effect" on the amount of CIL that would be due, or on the significance of the proposed level of CIL in the assessment of viability. In the councils' viability appraisals sales values in each scenario had been analysed on the basis of an assumption of value per square metre, rather than on the basis of value for dwellings of particular sizes. Clearly, in the examiner's view, this was not a complete answer to the complaint that the councils had only used information about larger dwellings – hence his finding that the size of dwellings the councils had considered had "little effect", as opposed to "no effect", on the assessment. But it was a good enough answer for him. Here again he was exercising his own judgment on the material before him. And again I do not think it was an unreasonable judgment on the evidence. Fox disagrees with it. But that disagreement is not a reason for upholding its claim on this ground.
154. There can be no criticism of the examiner's conclusion on the density of development, in paragraph 25 of his report. That conclusion was simply stated. The councils' density figure of 39 dwellings per hectare was a gross density, which did not allow for the need to provide open space and to avoid building on some other parts of a development site. The net figure was 31 dwellings per hectare. The examiner found this "appropriate". He was entitled to do so.
155. The examiner brought these two matters together in paragraph 26 of his report. He noted the objection that a development with a net density of 31 dwellings per hectare, with an average dwelling size of 120 square metres, was neither "feasible" nor "realistic" in the market as it was at that time. He acknowledged, again, that such developments were unlikely to be delivered throughout the councils' areas. But he made the logical point that if this turned out to be more residential development, and thus more value, than would actually be achieved on a site, the amount of CIL payable on that site would be less. This is clearly what he meant when he referred to an "overestimation" of the cost of meeting the CIL.
156. Those conclusions were not tainted by any immaterial consideration. The examiner did not conclude, or assume, that in reality costs or sales values would always be "directly proportionate" to the area of an individual dwelling – or to the density of development on a site. He did not find that there would necessarily be a linear relationship between size or density and cost. That misapprehension does not appear in his report. Nor is it implicit. What the examiner said was that "[in] the context of the appraisals' methodology", the factors to which he had referred were "directly proportionate". In such an analysis the size and value of development and the liability to CIL would be in direct proportion to each other. Thus the assumed density and type of development would not in themselves have any significant effect on the assessment of viability. He saw that this was a feature of the kind of valuation exercise on which the councils had relied. As he said, appraisals such as this are of a "generic" nature. They are not specific to a particular development on a particular site. But in his view this did not mean that it was inappropriate to assess viability in this way when considering the future development of housing in an area as large as he had to consider. I see nothing legally wrong with that conclusion.
157. I do not believe the examiner ought to have gone further than he did in his discussion of dwelling size and density in paragraphs 23 to 26 of his report. The evidence on which he based his conclusions in those paragraphs was not agreed between the councils and at least some of those who contended for a lower rate of CIL. But the conclusions themselves are not vulnerable in a claim for judicial review.
158. In his witness statement of 27 August 2013 Mr Heathcote argues that the examiner ought to have reached different conclusions on the relationship between costs and revenues, and on the effect of the councils' assumptions about dwelling size and density upon their assessment of viability (paragraph 11.10). He says this is "clearly demonstrated" by the representations he made in his letter of 23 November 2012 and at the examination on 23 April 2013. He says there are some costs that remain fixed regardless of the density of development, the main one being land value (paragraph 11.11), and other costs, such as the provision or upgrading of services, site remediation, and the construction of roads and drainage, that do not vary in direct proportion to the floorspace in the development (paragraph 11.12).
159. In Mr Whiteley's view, however, the examiner was right to conclude that the value of development and liability to CIL are proportional because they both relate to the amount of floorspace in a development (paragraph 48 of his witness statement). Mr Whiteley goes on to say that in the councils' reference case more than 88% of the costs would be "directly proportional to floorspace", leaving less than 12% of costs as "fixed" (paragraph 51). It is therefore clear, he says, that "the value implications of increasing the amount of floorspace on any given site will, to that extent, be counteracted by increased costs". The examiner's approach, he says, was "both correct and appropriate" (paragraph 52).
160. Mr Molyneux's evidence in his first witness statement is to the same effect. In his opinion, by using low land values and relatively large dwelling sizes, the councils' consultants had "set a worst case scenario for the purposes of calculating a CIL charge in order to ensure a charge that in reality is viable" (paragraph 29). If development would be viable when assessed on the basis of high levels of chargeable floorspace, it is likely that development with less chargeable floorspace would also be viable (paragraph 39). Mr Molyneux adds that he would also expect a development of smaller dwellings to be built at a higher density than one of larger houses (paragraph 40). He presents an analysis of the eight sites referred to by Mr Heathcote in his letter of 23 November 2012, which shows densities closer to those in the councils' appraisals than Mr Heathcote had accepted (ibid.). Development costs would vary from site to site, but charging authorities must adopt an "area-based approach" involving "a broad test of viability across their area" (paragraph 41). This, says Mr Molyneux, is reflected in the examiner's conclusions in paragraphs 23 to 26 of his report (ibid.). The examiner could reasonably conclude that there is "a proportionate link between size of dwelling, sales value and CIL" (paragraph 43).
161. Once again, as one can see, both Fox and Chorley have sought to impress on the court the strength of their evidence and argument before the examiner. But, as I have said, it is not for the court to test the examiner's judgment in the light of that evidence and argument. It is enough to conclude, as I do, that his conclusions were lawfully reached on relevant evidence.
162. I must deal now with a point that came to the fore in Mr Tucker's oral submissions. This was Mr Heathcote's contention in his letter of 23 November 2012 that if one were to use more realistic densities in appraising viability the residual margin would fall to 14%, which would not be enough to enable a developer to go ahead. Mr Tucker said the examiner had to address this point in his conclusions, and, because he did not his recommendation to the councils and their reliance upon it must be unlawful.
163. I do not think that is right.
164. Residual valuation will produce different outcomes on different assumptions. But, as I have said, once the examiner was content that the councils' assessment was basically sound, he did not have to consider what the effect of feeding different assumptions into those appraisals would have been, or what results a different model might have produced if it had been used to assess viability. If one were to change the assumptions in any of the councils' appraisals, the resulting residual margins would be liable to change. No doubt a wide range of results could have been produced if the assumptions on average dwelling size and density were moved up or down. In some cases the residual margin would have been more than 20%, in others less than that.
165. The examiner did not get into an exercise of that kind. He did not find it necessary to do so, because he was content that the disputed assumptions had not distorted the assessment of viability, and because in his view the assessment as a whole was solid. He allowed for the fact that the appraisals were not specific to any particular project or any particular site – though the assumptions used in them had been based on objective evidence. They were, in this sense, "generic". They did not pretend to be anything else. The examiner understood this. But he found the appraisals reliable. Having found them reliable, he did not have to go on and investigate the effects of changing the assumptions the councils had made. The conclusions he stated in his report were, in my view, a sufficient answer to the criticism Mr Heathcote had made of the councils' assumptions on dwelling size and density.
166. The examiner's acceptance of the councils' approach was not, as Mr Tucker submitted, "fundamentally flawed". That submission is untenable. Having considered the valuation work undertaken on behalf of the councils, the examiner was confident enough in it to be able to conclude as he did. It is not for the court to go behind that judgment unless there is some manifest error of law. In this case there is no such error.
167. One should not split the examiner's conclusions in paragraphs 23 to 26 from the rest of this part of his report.
168. There is no legal error in his conclusions on the councils' assumption that developments would be debt funded (paragraph 27 of his report), the assumed reduction in sales values to reflect the discounts housebuilders would be prepared to offer prospective purchasers (paragraph 28), and the adequacy of the assumed "residual margin" at which developers would be willing to proceed (paragraph 29).
169. On the first of these three matters, debt finance, the examiner acknowledged that development would not always be funded in this way, and he took this into account in considering the viability of development in each of the scenarios (paragraph 27). There is nothing wrong in law with that.
170. As for the effect of discounts on sales values, in the absence of relevant evidence the examiner found the assumed reduction of £100 per square metre "appropriate, if not generous" (paragraph 28). There is no unlawfulness there.
171. The examiner's conclusion in paragraph 29 of his report that residual margins of 22.5% to 24.2% on cost, allowing for the proposed CIL charge were "reasonably healthy and a level at which many developers could realistically be expected to proceed" – was also, in my view, reasonable. It was hardly a surprising one. The examiner did not conclude that every developer with every scheme would always be willing to commit himself if he expected a profit at that sort of level. His conclusion was less certain than that. But he was clearly satisfied that the councils' appraisals showed a sufficient return for developers after CIL had been paid, and that the proposed CIL charge would not inhibit the building of the new housing needed in Central Lancashire. This was consistent with the "area-based approach" referred to in paragraph 23 of the Government's guidance document, in which a "broad test of viability" is applied across a charging authority's area as "the evidence base to underpin [its] charge".
172. The examiner expanded on that conclusion in paragraph 30 of his report. The important point there is that the councils had not sought to fix the CIL charge at a level anywhere near as high as it could have been set before threatening the viability of development. Setting the CIL charge at £65 per square metre for residential developments (excluding apartments) would be to put it well below what the examiner referred to as the "theoretical maximum charge". On the councils' appraisals that would have been between £102 and £132. This is no more than 60% of the theoretical maximum. Here, in my view, one can judge the reasonableness of the examiner's conclusions on that assessment. I think his conclusion that the councils' approach was "appropriately measured" is unimpeachable. So is his conclusion, in the final sentence of paragraph 30, that the CIL rate proposed for housing development would not hinder the progress of such development in the councils' areas. The same goes for his conclusion, in paragraph 31, that an "appropriate balance" had been struck between the need to fund new infrastructure and the need to ensure that new housing development in Central Lancashire would not be rendered unviable by CIL being charged at the level proposed.
173. None of the examiner's conclusions in this part of his report were unlawful.
174. This ground of the claim therefore fails.

Issue (3) – whether the councils could lawfully adopt a charging schedule that would endure beyond 2016

Submissions

175. Mr Tucker submitted that the examiner ought either to have required from the councils evidence to justify the CIL charge of £65 per square metre continuing beyond January 2016, when the requirement under Policy 27 of the core strategy for new dwellings to comply with Level 6 of the Code for Sustainable Homes would come into effect, or, in the absence of such evidence, to have recommended the rejection of the charging schedule as proposed. In the statement of facts and grounds it was suggested that the charging schedule could have been made to apply only to development for which planning permission was granted before January 2016 (paragraph 5.4.6).
176. The examiner regarded a review of the CIL charge as being "essential" in 2015. But under the statutory scheme he could not compel the councils to undertake a review. An unenforceable intention to review was not enough. Nor was the councils' suggestion that, assuming the CIL charge of £65 were to remain in place after January 2016, an exception to Policy 27 could be made if the developer was able to show that his development would otherwise be unviable. The councils would have no discretion to waive or reduce liability to CIL. They would have adopted their CIL charge knowing that compliance with Policy 27 was going to become much more expensive but without considering whether development would still be viable when that happened. Developers would then have to show that the charge had made it impossible for them to comply with Policy 27. This was in conflict with the requirement under both legislation and guidance that CIL should not be a disincentive to development.
177. Mr Elvin submitted that Mr Tucker's argument was ill founded. Paragraph 12.7 of the core strategy already enables the councils to consider the viability of proposed housing developments and, if a proposal is unviable, to exempt it from the requirements of Policy 27. This flexibility in the core strategy exists now. Any proposal would have to be considered in the light of current market conditions. When the charging schedules for residential development were being prepared, the building cost assumptions in the viability appraisals reflected current market conditions and the requirements of Policy 27 as they were at the time. The data for building costs included schemes that had had to meet the requirements of Level 3 of the Code for Sustainable Homes and, in some cases, the greater cost of meeting Level 4. As the examiner said in paragraph 19 of his report, the appraisals also included an amount in addition to the basic building costs to allow for the operation of Policy 27. The proposed CIL charge was thus in line with the requirements of the statutory scheme and government guidance. The examiner's conclusions in paragraph 21 of his report, which envisage a timely review of the charging schedule, are consistent with the advice in paragraph 79 of the Government's guidance document. The councils could not have limited the life of the charging schedule to the end of 2015. No such power had been created in any regulation made under section 211(4)(d). The effect of section 214(3) and (4) and regulation 28 of the CIL regulations was that the charging schedule for residential development would apply until the councils decided it should not. Their commitment to an early review was reasonable, and did not invalidate the charge they adopted.

Discussion

178. I think Mr Elvin's argument on this issue is right.
179. In my view there was no need for the examiner to ask the councils for evidence to show that a CIL charge of £65 per square metre would not prejudice the viability of housing development after January 2016, when it would have to meet Level 6 of the Code for Sustainable Homes if it was to comply with Policy 27 of the core strategy. Nor did he have to recommend against the adoption of the proposed charging schedule because he had not been given such evidence. Nothing in the statutory provisions made this necessary, nor did the Government's guidance.
180. The first answer to Mr Tucker's argument on this issue, and a powerful one, lies in the core strategy itself. Policy 7, "Affordable and Special Needs Housing", qualifies the general requirement for affordable housing in "market housing schemes" by making it subject to considerations such as "financial viability and contributions to community services" (see paragraph 36 above). In a similar way the text supporting Policy 27, in paragraph 12.7, makes the requirements of that policy subject to the viability of the development proposed (see paragraph 37 above).
181. Just as the examiner was able to conclude, in paragraph 21 of his report, that the requirements of Policy 7 had been "sufficiently incorporated into the appraisals", he was able to reach a similar judgment about the requirements of Policy 27.
182. When Policy 27 of the core strategy reaches its full effect in January 2016 the cost of building new housing will go up – assuming that the effect of any other changes in the meantime is not to outweigh that increase. Whether the increase in cost will affect the viability of development, and how, remains to be seen.
183. The examiner did not fail to address the argument that the CIL charge would automatically become more difficult for housing development to bear once the cost of meeting the heightened requirement in Policy 27 comes into force, and that the councils ought to have anticipated this in the current process rather than waiting for their promised review in 2015. He dealt with that argument in the four conclusions he expressed in paragraphs 19 and 20 of his report.
184. First, in paragraph 19, he concluded that the councils had taken an appropriate course in setting their CIL charge at a level corresponding to current market conditions and current policy requirements. The particular requirement of Policy 27 current at the time of the examination, in April 2013, was for new dwellings to meet Level 4 of the Code for Sustainable Homes, which had come into effect in January 2013 and would remain in effect for three years until January 2016.
185. Secondly, the examiner was satisfied that the councils' viability appraisals had accounted for the current requirements of Policy 27 "adequately". This was because the appraisals had not simply been based on assumptions for building costs obtained from the R.I.C.S. Building Costs Information Service data for developments including schemes that had had to comply with Level 4, but had been raised by about £150 per square metre. The examiner was therefore able to conclude that "for the time being at least" the appraisals were compatible with Policy 27. This conclusion does not seem to be in dispute. It is supported in the evidence of Mr Whiteley. In paragraph 70 of his witness statement he says that, in accordance with "good practice", market conditions at the time of the councils' assessment of viability were reflected in the assumptions for building costs and "sustainability standards", that "the build cost data on which [the] CIL viability assessments were based covers at least the requirements of [Level 3] and at least some proportion of the additional costs of meeting [Level 4]", and that "an uplift over basic build costs to take account of the potential additional costs of the Code for Sustainable Homes was also applied …".
186. Thirdly, although the full requirements of Policy 27 had not been included in the viability assessments, the examiner did not see this as a reason to seek further evidence, or to recommend any change to the charging schedule. The councils' intention to review the CIL charge in 2015, before the relevant requirement in Policy 27 rose to Level 6, was enough. The examiner knew he could not formally recommend this. But he went as far as he reasonably could in saying that it would be "essential". He did not say "essential now". He said "essential at that time". It would be essential because, as he could see, the councils might then be facing a dilemma – the choice between development not being delivered and Level 6 not being met. He did not describe it as a dilemma. He used the word "risk". But it comes to same thing. It was a risk because a developer may escape the requirements of Policy 27 if he can show that complying with them would leave his proposal unviable. Liability to CIL would be one element of the "open book accounting" by which the developer might demonstrate that his "development would not be economically viable if the policy were to be implemented". It would therefore be prudent for the councils to review their CIL charge before the risk became a reality. The examiner was satisfied that if the review was carried out when the councils said it would be, they would be able to avoid the danger of new housing not being built and the danger of the requirements of Policy 27 not being met. Both could be avoided, so long as the councils got on with the review in 2015.
187. Fourthly, the examiner also concluded that there was no reason to expect the councils, "as responsible public authorities", not to carry out a timely review of the charge. It was in the councils' own interest to do it. A CIL rate too high to be borne by proposals complying with development plan policy for sustainable housing would be counterproductive. The councils knew this. So did the examiner.
188. Those conclusions are in my view reasonable, and consistent both with the statutory requirements in sections 211, 212 and 213 of the 2008 Act, regulation 14 of the CIL regulations, and the corresponding advice in the Government's guidance document. Section 211(9) provides the power for a charging authority to revise a charging schedule (see paragraph 14 above). Paragraphs 79 and 80 of the guidance document encourage authorities to "keep their charging schedules under review" so that they continue to reflect market conditions (see paragraph 32 above).
189. The advantage of a review in 2015 is that by that stage the whole picture of costs and values in and after January 2016 would be less speculative than it was in 2013. It should then be possible to gauge the true effects that the present CIL charge, or a charge set at a different level, would have on the viability of residential development built to comply with Level 6. This point was made by Mr Elvin in his submissions. And it seems to be the point Mr Whiteley is making in paragraph 72 of his witness statement, where he says that "ex ante estimates" of building costs "have been shown … to significantly over-estimate the cost implications of sustainability requirements …".
190. As Mr Elvin pointed out, the need for a charging authority to put in place CIL charging schedules that will remain up to date is, in part, a consequence of the provisions in regulation 123 of the CIL regulations, limiting the use of planning obligations entered into under section 106 of the 1990 Act (see paragraph 25 above). There is a strong statutory incentive for a charging authority to keep its CIL effective as a means of securing, through development, the funding it needs for the provision of infrastructure in its area. This point was not lost on the examiner. Though he did not refer to regulation 123, paragraph 20 of his report shows he was aware of the need for developers not to be deterred by unrealistically high rates of CIL.
191. For those reasons I cannot accept Mr Tucker's argument on this issue. There is no error of law in paragraphs 19 and 20 of the examiner's report. And the councils' charging schedules for the development of dwelling houses were not unlawfully adopted.
192. This ground of the claim therefore also fails.

Discretion

193. Mr Elvin and Mr Tucker both made submissions on the way in which the court's discretion to withhold a remedy should be exercised if any of the grounds of the claim were to succeed. In view of my conclusion that none of the grounds does succeed, I do not need to consider those submissions. However, I cannot imagine there would be many cases, if any, in which a claim for judicial review of a CIL charging schedule is held to be well founded and the court is nevertheless persuaded that the charging schedule should not be quashed. I do not think this would have been such a case, even though Chorley may fairly complain about Fox's failure to tell any of three councils that it was contemplating proceedings before it issued its claim on the last day of the six week period. That was, I agree, regrettable, but I do not think it would have prevented me from granting a remedy.

Conclusion

194. For the reasons I have given the claim is dismissed.