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
		21 March 2014

Mr Justice Collins :

1. This claim seeks to quash a planning permission granted by the Defendant to the interested party (IP) on 6 February 2013. It enabled the IP to erect a Freight Distribution Centre (FDC) over some 28.6 hectares of land at Carlisle Airport. The permission included the raising and re-profiling of the main runway. The construction of the FDC was contrary to the relevant plan but the planning committee of the defendant was persuaded to grant permission because the work to the airport runway, part of the development applied for, would enable commercial flights to operate from the airport and would keep the airport, which was making a loss, open and so preserve the jobs of the number of persons working there. Essentially, the runway works involved raising and strengthening it so that it could be used by passenger aircraft which needed a runway with a capacity to accommodate aircraft weighing more than its existing capacity. The grant of permission was subject to a legal agreement. This agreement to be made pursuant to s.106 of the Town & Country Planning Act 1990 was to ensure that the IP would maintain the airport for commercial flights in the short to medium term and would only be able to close it down if its non- commercial use was not economically viable. It was recognised that the airport could not operate at a profit, whether for commercial or non-commercial use, but income derived from the FDC would be used to cover the losses until they became too great.
2. The claimant is the managing partner of his family farming business. His father is tenant of agricultural land including that which would be taken for the FDC development. The loss would have a serious financial impact and would be, he has said, particularly ruinous for the farm having regard to the nature and position of the land in question.
3. This claim is by no means straightforward and there is a substantial history which needs to be considered. However, it has generated enormous amounts of paper. Including bundles of authorities, there have been more than 4,709 pages put before me. To those have been added lengthy skeleton arguments and some additional documentation so that the total exceeds 4,900 pages. This is excessive. Most of the authorities have not been necessary and efforts should have been made to agree core bundles. Much of the correspondence placed in the bundles has also been unnecessary.
4. In October 2007 the IP made an application for permission to carry out works at the airport which extended beyond those now proposed and to construct an FDC. The Secretary of State decided to call this in and the IP withdrew it. In October 2008 the IP submitted an application for development of a FDC on a somewhat smaller scale. This did not include an application for development of the airport since the IP indicated that the work it would carry out did not in its view require permission since it would be permitted development. The application was accompanied by an Environmental Statement (ES) which dealt with the likely significant effects of the FDC. It did not consider the effect of the proposed works to the airport.
5. The Defendant granted permission. This was challenged by the Claimant. It was quashed by the Court of Appeal on the ground that the ES should have dealt with the effects of the work to the airport. The court records in paragraph 19 of the judgment of Sullivan LJ (R(Brown) v Carlisle City Council [2011] Env LR 5):-

"The defendant and the IP submitted that it was legitimate and reasonable not to treat the airport works as part of the cumulative effects of the FDC because there was no, or no significant functional link between the airport works and the FDC. "

Sullivan LJ cited the Planning officer's report to the Committee which observed that the argument was that it was "essentially a financial (rather than a functional or operational) imperative for the FDC to be developed" at the site to enable the airport's improvements to be achieved so that it could continue in being. Sullivan LJ observed (paragraph 20):-

"It is far from certain that there will be no functional link between the upgraded airport facilities and the FDC."

He referred to the IP's chairman's statement to shareholders that the acquisition of the airport (which it occupies under a lease from the defendant) offered an opportunity to provide air freight solutions as well as the potential to develop passenger aviation.

6. The IP applied for the present permission on 16 December 2010. The officers' report to the planning committee on 15 July 2011 recommended refusal. The FDC was considered to be primarily for road haulage as opposed to air freight and so could not be regarded as airport related development. Only if it could be regarded as airport related would it have been in accordance with the local or development plan. While it was recognised that the IP could seek to close the airport if it was "not capable of economic operation as a commercial airport", it had not been demonstrated that, were permission to be granted, the income generated by the FDC would both cover the current significant annual losses and pay for the substantial cost of the airport related development. The report continued:-

"Further, specialist advice received by the Council casts significant doubt on the realistic potential for either air freight or passenger flights given the market, competition elsewhere, coupled with the relative shortness of the landing distance available of the runway and the lack of provision of an instrument landing system."

Thus the officers' view was that the likely benefits of the proposal did not outweigh the harm. There was in addition a defect in the ES since it failed to assess how the additional passenger throughput would be managed.

7. The licence issued by the CAA restricts use to aircraft with a maximum take off weight of 12.5 tonnes. There were a total of some 21 persons working full time and 14 part time at the airport. The majority of movements were by private light aircraft, for flight training or by helicopter including air ambulance. There were and are no passenger or cargo movements. The airport itself was established in 1941 as a wartime training base for pilots. Its southern boundary abuts the A689 which provides a link via the A69 to the M6 at Kingstown on the northern fringe of Carlisle some 9 kilometres or so away. The main runway is 1837 metres long and the development is not intended to extend its length. This means there is a limit to the size of aircraft which could use it even if it were upgraded as proposed. The suggested capital costs of the runway and taxiway works ultimately ranged from £5.1m (IP) to £7.5m (defendant's adviser) to £11.8m (claimant). In addition, there would be a need to improve the facilities to enable passengers to use the airport.
8. The report considered what it described as the socio-economic impact. The defendant had instructed a specialist adviser Alan Stratford Associates (ASA) to give advice on this issue. All smaller regional airports were facing increased costs and reduced demand. The IP had purchased Southend Airport and had a 42% interest in an airline, Aer Arran. This, it is said, would create the possibility of a link to Southend and to Ireland at Dublin or Waterford. The figures provided to the defendant for the total cost of upgrading work needed to enable commercial use of the airport would be in the region of £11.8 million or more. A report had been submitted on the claimant's behalf by York Aviation which indicated that there was no market for freight at Carlisle airport. The majority of travellers for which there was the highest demand from those travelling from Cumbria would not be able to be served from the airport and those who wanted to travel from London to Carlisle would be highly unlikely to travel to Southend to catch a plane rather than take a train from Euston.
9. In the result, the officers' report stated:-

"6.66 When assessing this issue in the light of the available information it is concluded that no convincing evidence that includes a breakdown of all costs, has been presented by the applicant regarding the effectiveness of the proposed FDC in enabling development in the light of the disputed costs regarding the runway works. No convincing evidence has been given showing that the forecast passenger flights and air freight movements are either realistic or achievable. The figures given by the applicant lack detailed supporting evidence and analysis. No evidence in the form of extensive market research nor a business/master plan has been presented to substantiate these claims. Thus even if the Council were to impose a condition requiring the runway works to be carried out in advancement of commencement of the proposed FDC, there is no guarantee that flights will actually take place, nor that further building to raise sufficient revenue will not be required.

6.67 Based on the work of ASA, the aviation benefits appear over-optimistic.

6.68 The lack of supporting evidence is a surprising omission. It would be inappropriate to allow a development on the basis of enabling development if there is little realistic prospect of the runway being used as proposed. As such, the asserted benefits should in the view of officers be given little weight."

10. In the light of this report, the IP requested and was granted time to submit further information. A report from York Aviation (the author being Ms Congdon) of 20 October 2011 stated that the further information provided by the IP on the prospects of commercial use failed to address the fundamental question regarding the viability of the airport as an operating entity following the development and in several cases (which she had identified in her report) the information presented was simply wrong or betrayed a lack of understanding of airport operations or finance. Overall, she remained convinced that commercial operations on the scale proposed would not be commercially viable at Carlisle.
11. In a letter of 12 June 2012, Ms Congdon maintained her views having studied the further information provided by the IP. Essentially, the cost figures and the forecasts of passenger use were unrealistic. ASA sent a letter to the defendant. On 17 May 2012 it suggested that the potential demand for a Carlisle Southend service could be in the order of 25,000 to 30,000 passengers in year one and a Dublin service could constitute a further 10,000 to 12,500. It indicated that York Aviation's forecasts were in line with its figures. It noted that it had set out its reasons why it was inappropriate to treat the proposed FDC as 'enabling development' in its letter of 3 February 2012. But it summarised its conclusions as follows:-

"Our primary concern is the overall financial viability of the airport. Our analysis suggests that the achieved traffic levels would rely heavily on a London service. It is uncertain, as to the likely customer reaction to the use of Southend rather than one of the main London airports. The time-savings over alternative rail travel are small and the potential costs considerably higher. From an airline perspective, it is uncertain as to whether the level of traffic generated would be sufficient to retain the route on a long-term basis without an on-going subsidy from either the applicant/Stobart group or the public sector.

Our financial analysis shows that, even if the scheme is treated as enabling development, the scheme would make an annual loss of between £1.6m - £2.2m. These losses exclude any previous expenditure by the Stobart Group (e.g. for the purchase of the airport and the land). Such losses reflect the experience of many smaller regional airports in the UK such as Plymouth, Newquay, Humberside, City of Derry, and Dundee etc. Of these, Plymouth closed in December 2011, whilst the others are subsidised by the public sector, or in the case of Humberside, by the Manchester Airport Group. The freight distribution centre, however, appears to be profitable as a standalone project. On this basis, we are concerned that there would be little incentive for Stobart Air to continue to operate the airport as a loss-making concern – although we recognise the difficulties faced by the Council under the conditions of the lease. We note that there would be some economic benefits from developing the airport, although we believe that these are relatively small and would probably not justify continuous subsidy by a Regional Development Agency or other public body."

12. ASA wrote a further letter on 26 June 2012. This is an important letter since it annexed a spreadsheet which set out the figures forecast for the losses anticipated for the airport when upgraded and put to commercial use which could be covered by profits from the FDC. The spreadsheet showed that the commercial use could be maintained for some 25 years thus providing for commercial use in the short or medium term.
13. ASA referred to an analysis made by Economic Consulting Association (ECA) which made clear that airport operations including the proposed new commercial service were not financially viable in their own right. The overall project including the FDC was marginally financially viable but high risk. ASA had made its own analysis which concluded that neither the airport itself nor the full project would be financially viable. However, if the infrastructure and financing costs could be disregarded (i.e. treated as sunk costs, possibly a precondition of planning consent) the project showed positive cash flow to 2035. But it might be necessary to seek to discontinue commercial air services. So far as the viability of services from Carlisle was concerned, ASA's conclusion was:-

"In summary, we believe that commercial passenger services from Carlisle are of borderline financial viability for Aer Arran (or any other operator). We recognise that Stobart Air may initially be prepared to subsidise these, either directly by financial support to Aer Arran or by reduced airport charges at Carlisle and Southend. In the longer term, however, we cannot see how either commercial passenger or freight services from Carlisle could be financially viable or in the interests of Aer Arran or Stobart Air. "

14. There is evidence that the IP has said that it would not be prepared to provide subsidy to encourage use by commercial operators of Carlisle Airport. This issue is important since as Ms Congdon had made clear subsidies to persuade air lines to use Carlisle would be required. ASA made the point that, contrary to the IP's assertions, any additional net revenue to Southend would be allocated against Southend rather than Carlisle. The necessary additional costs resulting from air passenger duty and airport charges at Carlisle would be 'likely to make the overall door-to-door journey cost uncompetitive against direct rail travel'. ASA concluded as follows:_

"In view of these factors, we do not believe that it would be in Stobart's best interests to proceed with the airport infrastructure improvements, even though the FDC is, in itself, financially viable. Even if the airport were developed, we do not believe that commercial air services would themselves be sustainable in the longer term.

Despite this, our financial analysis indicates that, if the airport infrastructure capital and financing costs are treated as 'sunk costs' (e.g. as a precondition of planning consent) then the potential rental received from the FDC would provide the necessary subsidy needed in order to maintain commercial services at the airport. The rental paid could be reduced (effectively to the level of the airport's current operating loss) if it did not introduce (or discontinued) the commercial services proposed."

15. There has been criticism levelled by Mr Jones Q.C. at the spreadsheet figures in that the subsidy which is likely to be required to attract airlines has not been taken into account. Thus it is said the revenue to be derived from passengers is exaggerated. Mr Forbes who produced the ASA reports has in a letter of 4 December 2013 accepted that the spreadsheet did not specifically include the cost of any such subsidies. He noted that the IP had said that there was no intention to pay such subsidies but he recognised that there was likely to be a need for an initial subsidy of some £250,000 per annum. While he does not concede the matter, it seems to me to be apparent that the figures in the spreadsheet are not entirely acceptable and the losses on commercial use are likely to be greater than those forecast. This will affect the time over which commercial use can be anticipated and throws further doubt on the overall viability of the proposals. This is important since the prospects of commercial operation are, as will become clear, crucial to the grant of permission.
16. The deferred meeting of the planning committee was to take place on 6 July 2012. The officers produced what is described as an addendum report. This made the point that commercial operations were of borderline viability. It stated:-

"1.208 … serious questions still arise not only over the viability of commercial passenger and freight services from Carlisle airport in the longer term but also the prospect that all the asserted wider benefits to the local economy will materialise.

1.209 Furthermore, the proposed distribution centre is likely to be an almost exclusively road-based haulage operation in a countryside location when there are other, identified, more sustainable locations within Carlisle for such an operation."

17. The report made the point that it should be recognised that the IP had already invested (by way of covering existing annual losses) in the airport and not sought its closure. It continued:-

"1.213 Rather, the current proposal has the potential to enable the airport to remain open, involve the undertaking of work to the runway, and allow general aviation to operate at existing levels if nothing else, and with the prospect in at least the short term of commercial passenger services. This would make the Airport's immediate future more secure and thus help to safeguard the existing directly and indirectly related jobs. Members may also view it as a means of retaining such a facility for future generations and in the hope rather than necessarily the expectation that circumstances may change in the longer term."

18. In paragraphs 1.24 and 1.25 the report stated:-

" 1.24 Thus the development as a whole is still regarded as not according with the development plan as a whole. The NPPF as a material consideration does not, in officers' views, indicate that the application should not be decided in accordance with the development plan. The DFT consultation document does not alter officers' position. As regards the non-planning document/"Masterplan" of May 2010, this does not accord with local Plan planning policy and the applicant's stated aspirations (in May 2010) for passenger traffic are now acknowledged by them not to be realistic.

1.25 Other material considerations include the "enabling development" argument. This arises where part of a proposed development is contrary to policy (i.e. the distribution centre) but it is argued that it should nevertheless be permitted because it will enable policy-compliant development (runway etc works and airport use) to take place. For reasons set out below under the "socio-economic" heading, officers do not consider that it has been demonstrated that significant airport use will be achieved by this development. However, it is recognised that the current proposal has the potential to enable the Airport to remain open, involve the undertaking of work to the runway, and allow general aviation to operate."

And in 1.60, it was said that the two key questions were whether the proposal would on its own lead to a viable airport based on current levels of use and on commercial air passenger and/or air freight operations in the short, medium or longer term.

19. This was hardly a positive support for the proposed development. However, at the meeting the committee was informed that additional information had recently been received of relevance to the Environmental Statement and so there was a further deferral of consideration. The further hearing was fixed for 3 August 2012 and a second addendum report was produced. The recommendation at its outset was in these terms:-

"Very much on balance, the proposal is recommended for approval."

20. This was subject inter alia to the completion of a s.106 agreement which included an obligation on the applicant to keep the airport open unless it could be shown that it was no longer economically viable (even with the distribution centre's rental income). There were two other requirements involving the payment of £100,000 for a habitat enhancement scheme to benefit breeding waders and some travel plan obligations which I do not need to detail. It was said in the report that members might decide "that they would wish to grant permission at least to keep the airport open and to achieve renewal of runways etc and to hope that the applicant's forecast of commercial passenger traffic will materialise."
21. The report represented much of what had been in the earlier addendum. But in paragraph 1.109 it was noted that ASA had explained that the figures it forecast for total passengers by the twentieth year were likely to depend on the payment of subsidy to any airline operating the relevant routes. The absence of an Instrument Landing System was material, albeit some substitute could be put in place. But the lack of ground radar could mean that Carlisle was unable to meet the safety criteria required by many airlines. In paragraph 1.225 to 1.228 the following is said:-

"1.225 The consultant's analysis of the viability of air services shows that commercial operations are of borderline viability. In the case of the Airport, and if account is taken of the rental income from the proposed distribution centre, the commencement of scheduled services to Dublin and Southend would be profitable but this diminishes over time. For example, in 2014 the profit for the Airport is forecasted to be £516,000 but without the rental the loss would be £1,184,000; in 2026 the corresponding figures are £253,000 and £1,547,000; and by 2032 the forecasted profit is £86,000 but the potential loss without the rental has risen to £1,744,000. The Council's consultant has questioned whether such parameters will provide an appropriate internal rate of return to meet or exceed the pre-tax weighted cost of capital. The consultant has also considered possible alternative and additional aviation related uses (for example aircraft maintenance) but does not consider these to be feasible.

1.226 As such, serious questions still arise not only over the viability of commercial passenger and freight services from Carlisle Airport in the longer term but also the prospect that all the asserted wider benefits to the local economy will materialise.

1.227 Furthermore, the proposed distribution centre is likely to be an almost exclusively road-based haulage operation in a countryside location when there are other, identified, more sustainable locations within Carlisle for such an operation.

1.228 The proposed development as a whole is still regarded as not according with the development plan as a whole. This is consistent with the previous recommendation, and with legal advice. In particular, the proposed freight distribution centre is not airport related, it does not constitute inward investment, nor is it a development that otherwise for policy reasons needs to be at the Airport. The development plan is regarded as being consistent with the National Planning policy Framework (NPPF). Its presumption in favour of development moreover applies only to sustainable development. The NPPF as a material consideration does not alter officers' views."

22. The conclusion in paragraphs 1.232 – 1.233 was:-

"1.232 As things stand, the current proposal has the potential to enable the Airport to remain open, involve the retention and enhancement of needed facilities, allow general aviation to operate and, if nothing else, raises the prospect in at least the short term of commercial passenger services. The application therefore would lead to the development and retention of infrastructure; and would make the Airport's immediate future more secure and thus help to safeguard the existing, and potential future, directly and indirectly related jobs. This is of benefit to the local economic and social prosperity of the area. The EKOS Report of June 2012 submitted on behalf of the applicant indicating that the Airport provides direct employment to the equivalent of 26 full time jobs with the net safeguarded employment being equivalent to 60 full time posts, and contributes £3m of GVA annually to the Cambrian economy.

1.233 Members will appreciate the difficulties in making forecasts but, nevertheless, may view the proposal as a means of at least retaining such a facility for future generations in the hope, rather than necessarily the expectation, that circumstances may change in the longer term. "

23. At the meeting of the Committee on 3 August 2012 the Principal Planning Officer gave further information. He drew attention to the difference of views in the forecasts of the viability of commercial use, but stated that those differences did not affect the recommendation since "there was common ground (ASA and Mott Macdonald [the IP's consultants]) that a permission was likely to deliver a required runway and a viable airport, at least in the short to medium term and that formed the basis of the recommendation". Mr Jones has criticised the use of the word 'likely' since, taking all the various reports together, there were real doubts whether commercial use could even in the short to medium term be achieved. However, the officer and the committee were entitled to rely on ASA's views. The material parts of ASA's letter of 28 June 2012 to which I have already referred were read out to the committee. Thus I do not accept Mr Jones's argument that the committee was misled as to ASA's views.
24. The committee was advised in these terms:-

"The difficulties in making forecasts were acknowledged within the report and it was because forecasts were unpredictable that the Principal Planning Officer advised Members that the proposal may not secure viability in the longer term. In effect, there appeared to be a misunderstanding and not a last minute change to the July 2012 report, there was no departure from the objective of achieving a commercially viable airport and the objective was not just to keep the airport open."

The last sentence is most important. Mr Humphreys, Q.C. without dissent from other counsel accepts that the prospect of obtaining if only in the short to medium term a commercially viable airport may have tipped the balance in favour of granting permission. Thus without that, in my judgment, permission would probably have been refused. Certainly, the recommendation of the officer would have been to refuse and to grant in those circumstances bearing in mind that the FDC was contrary to the plan would have been unsustainable. It is also accepted that permission would only have been justified if there was a real prospect of such commercial use. Thus it seems clear to me that a mere hope would have been insufficient.

25. The Officer's conclusions in his advice to the committee were in the following terms:-

"In conclusion, the Principal Planning Officer advised that the proposed distribution centre was not per the development plan but runway renewal was. The Principal Planning Officer advised Members that they needed to be aware of a number of risks in that:

if not economically viable the airport could close

even with permission, no incentive to promote the airport for passenger movements/air freight if not particularly profitable, i.e. the £2m rental income may far exceed the expense of keeping the airport open and it may not be considered worthwhile to do more than keep the airport open

there may be further applications for enabling development to try to make the airport economically viable, and

the result could be an HGV distribution centre in the countryside.

However, on balance the Principal Planning Officer recommended in favour of the application because it would, at least, achieve runway renewal, would keep the airport open when if planning permission was refused could potentially close the day after. Furthermore, the Council's independent consultants (ASA) acknowledged, that in the short/medium term, scheduled services to Dublin and Southend could be profitable, although the level of profit diminished over time."

This is perhaps slightly misleading in that it appears to indicate that runway renewal and preventing the closure of the airport were the main benefits. The use of the word 'profitable' is also criticised by Mr Jones. However, it was known to the committee that commercial use could only be achieved without an overall substantial loss if profits from the FDC and the treatment of the costs of the upgrading as sunk costs were applied. Thus, albeit perhaps 'profitable' was not the best word to use, the members cannot have been misled. The note of what was said at the meeting concluded as follows:-

"A Member queried whether the conditions would ensure that the airport would be sustainable and available in perpetuity. The Principal Planning Officer advised that the proposed Section 106A Agreement had been suggested to ensure that the airport would remain open and the suggested Travel Plan would seek to address sustainable modes of travel."

26. If this truly reflects the Officer's response, it is incorrect since it was clear that it could not be guaranteed that the airport would remain open in perpetuity. Indeed, as will be apparent from the committee's resolution that was not what was expected since if it was no longer economically viable to keep it open it would close. However, whatever may have been in the mind of the member who asked the question, there can have been no misunderstanding of the true position.
27. The committee decided that authority to issue approval be granted to the Director of Economic Development subject to a number of requirements. These included some further information about Great Crested Newts and advice on a State Aid point which had been raised and which continues to be relied on by Mr Jones. In addition, there was to be completion of a s.106 agreement which included "an obligation on the applicant to keep the airport open and the runway maintained unless it could be shown that the airport is no longer economically viable (even with the distribution centre rental income)." The agreement should also include Travel Plan obligations, a payment of £100,000 for a habitat enhancement scheme to benefit breeding waders and the imposition of conditions set out in an attached schedule.
28. There was some correspondence from the claimant and his solicitors before the meeting due to be held to reach a final conclusion whether the requirements, in particular the s.106 agreement, were met. Information was conveyed that Aer Arran had decided to cease flights to Waterford and it was submitted that this made a difference to the commercial viability. This was denied by the IP. The draft s.106 agreement was made available on the defendant's web site and at the Civic Centre on 14 January 2013. A report was prepared for the committee meeting to be held on 25 January 2013. It was noted that a request to the Secretary of State to call in the application had been refused. Various further representations on the defects in the application were identified, but the view of the officer was that they did not change the situation. It was said that the outstanding issues in relation to the effects on neighbouring protected areas had been resolved as had the concerns about state aid. The advice which I have cited in paragraph 25 above was repeated. The conclusion was:-

"Very much on balance, and having taken account of the new information, the proposal is still recommended for approval subject to the engrossment of the Section 106 agreement and imposition of the relevant conditions."

29. At the meeting on 25 January 2013, the committee allowed the claimant to address it. He made the point that the advice that ASA had said that the Southend routes would be profitable was misleading since it would require a subsidy both initially and on an ongoing basis. He also asked what assurances there were that Southend was operating in a viable manner. Again, the salient points set out in the 26 June 2012 letter were read to the committee by the Planning Officer. But the advice on State Aid which the claimant's solicitors had received had not been produced and so the final decision was adjourned to 31 January 2013.
30. In a letter of 22 January 2013 the claimant's solicitors raised a number of matters including State Aid and the question of profitability for Aer Arran. In addition, it asserted that the s.106 agreement contained 'no definition of viability or economic viability, nor the rate of return test which has to be met'. This criticism was rejected by the IP's solicitors who said that 'economic viable operation' was "clearly defined within the draft agreement and the matters to be addressed in the Viability Assessed on planning set out in Schedule1." Thus the terms of the s.106 agreement were 'capable of being enforced by the City Council.'
31. On 31 January 2013 the committee finally granted permission and the s.106 agreement was executed on 6 February 2013. It is instructive to note the reasons given for the grant. So far as material, they are as follows:-

"When assessing this application it is evident that there was common ground between the Council's and applicant's consultants that the proposal can keep the Airport open with an updated main runway and rental income. The proposal (in itself) will at least renew the runway (through the use of a planning condition preventing occupation of the freight distribution centre until the works have been completed) and keep the Airport open when, if planning permission was refused, it could potentially close the day after; however it is the case that the Council's independent consultant (Alan Stratford Associates) does not consider that commercial air services would themselves be sustainable in the longer term even with distribution centre income.

The spreadsheet produced by Alan Stratford Associates which accompanies their letter of 26^th June shows that up to 2035, with the rental income from the proposed distribution centre, the Airport is viable for commercial services (without the distribution centre income, the Airport is not viable) the subsidy is in effect the rental income for the distribution centre. The provision of rental income; keeping the Airport open; updating the runway; and the prospect of commercial passenger services in the short/medium term representing tangible benefits.

There is a difference of views in the aviation forecasts between the applicant's, Council's and local resident's consultants. The difficulties in making forecasts are acknowledged and (because forecasts are unpredictable) there is recognition that the proposal may not secure viability in the longer term.

… In conclusion, the proposed distribution centre is not per the development plan but the work to the runway is. There are recognised risks in that:

If not economically viable the Airport could close;

But even with permission, no incentive to promote the airport for passenger movements/air freight if not particularly profitable – the rental income may far exceed expense of keeping the Airport open and may not be considered worthwhile to do more than keep the Airport open;

Alternatively, or first, there may be further applications for enabling development; and

Could result in simply an HGV distribution centre in the countryside.

Nevertheless, on balance (and with due regard to all the issues and submitted material) the officer recommendation is in favour because the proposal will at least achieve runway renewal; keep the Airport open (unless demonstrated that it is not economically viable) when if planning permission were refused it could potentially close the day after; and the prospect of commercial passenger services in the short/medium term representing tangible benefits."

32. These showed that the committee were clearly persuaded by the officer's recommendation and, while keeping the airport open was a material consideration, the prospect of commercial passenger services in the short/medium term was a factor which was particularly material in that with it there were tangible benefits.
33. The permission contained a number of conditions. Those numbered 10 and 23 are material in relation to protection of the environment and special areas and I will refer to them so far as necessary when dealing with the claimant's grounds which allege breaches of the Conservation of Habitat and Species Regulations 2010. The s.106 agreement in clause 5.6 provided as follows, under the heading 'Keeping open the Airport':-

" (a) To Operate the Airport in compliance with and to maintain at all times a Civil Aviation Authority Public Licence unless it is demonstrated to the satisfaction of the Council, as local planning authority (acting reasonably), through the submission of a Viability Assessment that the provision and operation of such Airport Facilities for Non-Commercial Purposes (as a minimum provision and operation) results in the Airport being not capable of Economic Viable Operation.

(b) Any Viability Assessment submitted to the Council for its consideration in accordance with the provisions of clause 5.6(a) shall include, as a minimum, the information and follow the methodology set out in Schedule 1 together with all such other information reasonably requested by the Council.

(c) Any Viability Assessment submitted to the Council in accordance with clause 5.6(a) shall be subject to independent audit at the expense of the Owner and the independent auditor shall provide advice to the Council to assist in its consideration of the Viability Assessment."

It defined 'viability assessment' to mean:-

"a financial appraisal of the Airport, undertaken at the expense of the Owner, in accordance with the provisions of Clause 5.6(a) for the purpose of demonstrating whether the Airport is capable of operating as an Economic Viable Operation …"

'Economic Viable Operation' was defined to mean:-

"Operation of the Airport by the Owner or any other reasonably competent operator with control of the Land in a manner that is economically viable which shall be determined with reference to the actual, potential and/or theoretical rental income received from the Development in accordance with the information to be provided as part of a Viability Assessment pursuant to Clause 5.6. For the avoidance of any doubt, any theoretical and/or potential rental income as part of a Viability Assessment shall be taken into account notwithstanding whether actual rental income is, is not or will be received by the Owner. For the avoidance of further doubt, the meaning of and matters that are material to the meaning of the term for the purposes of Clause 5.6(a) shall in the absence of agreement between the Owner and the Council be determined by an expert appointed pursuant to Clause 8.13 of this Deed. "

34. Schedule 1 to the agreement gave details of what should be considered in making a viability assessment. The total capital costs included the cost of the FDC and the Airport Infrastructure and £1m per annum payable to meet a bank loan of £10m to be used in part payment of the capital costs. Operating expenditure was to be deducted from operating revenue (which included actual/theoretical/potential FDC income having regard to all operating revenue forecasts arising from the Development). In addition, net revenue accruing to Southend airport from operation of a Carlisle/Southend service less loan interest associated with debt funding associated with the Capital Costs estimated at 4% per annum was included. This exercise would identify the Internal Rate of Return (IRR), to be calculated by looking at the net cash flow of the project, taking into account

Total Capital Costs

Bank Loan Finance drawdown and Capital Repayment

Total operating revenue, including Net revenue accruing to London Southend Airport from operation of the Carlisle-Southend Service

Total operating expenditure including Bank Loan interest in connection with the Bank Loan Finance.

35. It is obvious that this fails to regard the capital costs as 'sunk' costs. They should not have been taken into account as expenditure. Indeed, if they were, the airport could not be economically viable as the advice given to the committee made clear. Furthermore, no period over which economic viability was to be assessed is given nor was the basis upon which it had to be judged in the sense of what return had to be regarded as showing economic viability.
36. On 27 February 2013 the claimant's solicitors sent the defendant a pre-action protocol letter. In it they attacked the s.106 Agreement asserting that Economic Viability had not been properly identified so that the agreement was in effect unenforceable. It also raised the other grounds which have been relied on in these proceedings, namely State Aid, failure to comply with the Habitat Regulations of 2010 and failure to include in the ES information of environmental impacts. The defendant responded on 21 March 2013 refuting all the allegations made by the claimant's solicitors. This claim was lodged on 10 April 2013. Essentially it relied on the matters raised in the pre-action protocol letter. In its summary grounds of resistance served with its Acknowledgement of Service on 23 May 2013 the defendant rejected all the grounds but indicated in relation to Ground 1(a) which included the contention that the s.106 Agreement was not capable of achieving what it was intended to achieve and was unenforceable, that 'the IP has agreed to enter into a Deed of Variation of the s.106 obligation to address one point not in fact raised under Ground 1(c)'. That point was the failure to specify that the capital costs should be regarded as sunk costs.
37. It is indeed remarkable that those advising the claimant at this stage had missed this defect in the s.106 Agreement. However, it came to light as the claim proceeded and I have no doubt that the defect would have led to the grant of permission being quashed. While the points raised by the claim were challenged, I think that economic viability was not properly dealt with and there was considerable force in them. Indeed, since this was such a borderline decision, I doubt whether the permission would have survived. However, it was clear that the s.106 agreement did not deal with what the committee had required in order to justify the grant of permission. This was said to have been an oversight and I have no reason to doubt that. It was accordingly decided that a deed of variation should be entered into and this was signed on 31 May 2013.
38. Mr Jones has submitted that this could not lawfully have been done by the officer. It was not a matter which fell within the powers of delegation. Furthermore, it was unfair and constituted a procedural error to have done it in private and without publishing its terms in advance so that the claimant and indeed any other potential objector could make submissions about it. In addition, it led to an application to disclose all correspondence which passed between the IP and the defendant in negotiating the variation. The defendant resisted this application on the ground of 'litigation privilege' and in due course I made an order that there should be disclosure, albeit I had considerable doubt, which I stated, that it would assist the claimant's case. That is indeed the position. All that Mr Jones is able to pray in aid is that the defendant informed the IP that if it did not agree to the variation the claim would have to be conceded. That is hardly surprising.
39. I have no doubt that the officer had the power to negotiate the variation. The original agreement failed to implement what the committee required. The opportunity was sensibly taken to deal in addition with other matters raised in the claim in order to attempt to ensure that there were no defects in the agreement as varied. Evidence has been given by the defendant to show that there was proper delegation, but, since I am satisfied that the officer clearly had power pursuant to the original decision of the committee on 31 January 2013 to put in place an agreement which met the committee's requirements, it is not necessary to determine that issue. Suffice it to say that the evidence points in favour of the power independently of that derived from the original decision of the committee.
40. There is no obligation to consult on variations of a s.106 agreement. R v Lichfield DC ex p Lichfield Securities Ltd [2000] PLCR 458, concerned a s.106 agreement which had financial consequences for the claimants and so they should have been consulted. Equally, consultation is needed if there has been a promise that that will occur. Here, the claimant has no personal interest in the s.106 agreement since his only concern is to argue that permission should not have been granted. Indeed, it is hardly in his interests that all possible defects should be removed since that would affect the chance of success in his claim. Reliance is also placed on R(Midcounties) v Wyre Forest DC [2009] EWHC 94. But in that case it was held that a s.106 agreement had been placed on the register, coupled with the then circular and an express indication to the claimant that it would be sent a draft, created a legitimate expectation that advance disclosure would occur. It is to be noted that a draft of the original s.106 agreement was published and representations could be made about it. In any event the claimant has not been prejudiced by the failure even if, which I do not accept, a draft and the negotiations should have been disclosed.
41. In the circumstances, I consider only the s.106 agreement as varied and I do not need to resolve the arguments based on the original agreement. So far as material, the amendments are as follows:-

(1) Economic Viable Operation was to be defined to mean the Operation of the Airport by the Owner or other reasonably competent operator with control of the land in a manner that is economically viable.

(2) Economically Viable is to be determined by the owner submitting a Viability Assessment which demonstrates that the level of the Actual Return exceeds the Agreed Return.

(3) Agreed Return is defined to mean a level of the owner's return to be realised from the Airport and the Development which exceeds £1.

(4) Actual Return is defined to mean the level of the Owner's Return realised from the airport and the Development calculated in accordance with the viability assessment.

42. New clauses 5.6(d) and (e) were added. 5.6(d) reflects what the original agreement set out as the definition of economic viable operation which I have already cited. 5.6(e) reads:-

"For the avoidance of doubt the Parties hereby agree that only if the Agreed Return exceeds the Actual Return for a period of three consecutive years shall the operation of the airport be deemed not to be Economically Viable."

43. In addition, there was a new Schedule I substituted which did not include capital costs under operating expenditure which needed to be subtracted from total operating revenue, which included actual, theoretical and potential income arising from the development including, of course, the FDC.
44. There were further provisions which dealt with measures to safeguard the special areas, namely the Upper Solway Flats and Marshes Special Protection Area (SPA) and the River Eden Special Area of Conservation (SAC). SPAs are designated as such pursuant to the Wild Birds Directive and SACs are designated because they are the natural habitat of wild fauna and flora which are of sufficient importance within the Community to require special protection. Clause 5.10 required the owner to submit a Biodiversity Management Plan which had to be approved by the Council before development commenced. This had to identify, maintain, manage and monitor any features of biodiversity interest including all protected species and interest features of the SPA and the SAC. It must include measures to avoid any adverse effects of noise or lighting. The plan was defined as follows:-

"a plan to be prepared by the Owner in accordance with the provisions of clause 5.10 for the purposes of ensuring the provision of habitat and species conservation/enhancement measures and to ensure that the Development will not adversely affect features of the SPA and the SAC."

45. In addition, a new Clause 5.7 required that a construction and management plan had to be submitted and approved by the council before the commencement of development. This was defined to mean:-

"a plan to be prepared by the Owner in accordance with the provisions of Clause 5.7 for the purposes of ensuring that the construction of the Development will not adversely affect the integrity of the River Eden SAC and to safeguard Biodiversity 2020 species."

The Biodiversity 2020 species were brown hare, common toad and hedgehog. The plan had to include inter alia measures to avoid pollution and siltation of the River Eden during construction and measures to protect otters, badgers and the Biodiversity 2020 Species.

46. Mr Jones argued that the committee should have considered and approved these variations. He submitted that, in particular in relation to the new Clauses 5.7 and 5.8 but generally, the only proper course was to quash the original permission and to reconsider the matter on the basis of the new provisions. Clauses 5.7 and 5.8 should have been included as conditions and it was not proper for a s.106 agreement to cover them instead. This I reject. It is a pointless waste of money since there would, he accepted, be a need to come to the court to quash the permission. It is also entirely unnecessary since, as I have already said, I am satisfied that the officer had the necessary power to approve an agreement which properly reflected the committee's requirement in the original grant of permission.
47. I have had to consider whether the prospect of short to medium term commercial use of the upgraded airport does reasonably establish that there is a planning advantage which outweighs the development's failure to accord with the material planning policies. The test to be applied is whether the decision was irrational in Wednesbury terms. It is worth bearing in mind the original view of the officer in 2011 that specialist advice cast 'significant doubt on the realistic potential for either air freight or passenger flights'. However, it is for the committee to exercise its planning judgment and it is clear on the authorities which I do not need to refer to specifically that the threshold is particularly high if a challenge to the exercise of a planning judgment is to succeed. The exercise by the committee of its judgment in favour of the development depended upon it being persuaded that there was a realistic prospect of at least medium to short term commercial operation of the airport. The upgrading of the runway and of the airport generally to enable passenger and freight traffic to use it could also be properly taken into account. While I am bound to say that to achieve no more than a limited period of commercial or any use is not a particularly substantial benefit, I do not think I can properly decide that the committee was not entitled to decide as it did.
48. But the decision can only, as I have said, be justified if the committee was properly entitled to conclude that there was a reasonable prospect of achieving commercial use for the sort of period identified by ASA in the spreadsheet (which is now somewhat out of date). Since the officers' recommendation was only just in favour of grant of the application, it is in my judgment necessary to see whether the advice given is in any way unreliable. Even a relatively minor error or failure to have regard to a factor could tip the balance in a case such as this.
49. ASA through Mr Forbes has accepted that the need to pay subsidy to Aer Arran or to any airline to attract it to Carlisle was not specifically included in the spreadsheet. The IP told Mr Forbes that it had no intention to pay such subsidies, but ASA and Ms Congdon agreed that they would be needed. The IP did not indicate to the committee that it had changed its mind and so the figures in the spreadsheet have to take that into account. The subsidies needed would not necessarily mean an immediate lack of viability but could decrease the period over which commercial operation could be expected. Indeed, Ms Congdon has stated that they would mean that the estimated surpluses shown even in the initial years would disappear.
50. Attacks have also been made by Mr Jones on the passenger number forecasts, the calculation of operating costs and the anticipated revenue from Southend. ASA's forecasts of passenger numbers were not really at odds with those produced by Ms Congdon and there was no reason why the committee should not rely on them. It has been submitted that ASA did not address in its operating costs figure 'additional direct operating costs associated with the terminal operation for commercial passengers'. This has been denied by Mr Forbes in a letter of 4 December 2013 and I see no good reason to doubt his assertions. So far as possible revenues from Southend are concerned, there was an issue. I am bound to say that I am not impressed with the positive approach adopted by ASA, but the decision on that is not for me but was for the committee advised by the officer. I cannot say that reliance of ASA's figures in this context was unreasonable.
51. As I have said, the committee's planning judgment had to be exercised on the basis that short to medium term commercial use was likely to occur. Whether or not it was entitled on the evidence to conclude that the likelihood existed was not a matter for its planning judgment but depended on the accuracy of the forecast put before it by ASA. It seems to me that the subsidy issue to which I have referred was not properly dealt with and since anything which went to show that commercial operation would not be likely to be feasible even for a shorter period than forecast might have tipped the balance, that failure becomes more important. In reality, it does not seem that there was anything in ASA's reports which overcame the original scepticism expressed by the officer in the July 2011 report.
52. Mr Jones submitted that the s.106 agreement was unlawful in that it amounted to an unlawful attempt to buy or sell a planning permission. The appropriate test is set out by the Supreme Court in R(Sainsbury's Supermarkets) v Wolverhampton CC [2011] 1 AC437 in which Lord Collins said at paragraph 38:-

" … where there are composite or related developments (related in the sense that they can and should properly be considered in combination), the local authority may balance the desirable financial consequences for one part of the scheme against the undesirable aspects of another part."

In paragraph 70 he stated that what was a material consideration was a matter of law although weight was for the decision maker, financial viability might be material if it related to the development, the financing of relevant planning benefits from the development could be material and off site benefits which were related to or connected with the development would be material. He concluded:-

"There must be a real connection between the benefits and the development."

53. Mr Jones referred to paragraph 122 of the Community Infrastructure Levy Regulations 2010. It is headed 'Limitation on use of planning obligations' and provides by 122(2):-

"A planning obligation may only constitute a reason for granting planning permission for the development if the obligation is –

(a) necessary to make the development acceptable in planning terms;

(b) directly related to the development; and

(c) fairly and reasonably in scale and kind to the development."

'Planning obligation' is defined in 122(3) to mean an obligation under s.106 of the TCPA 1990.

54. Mr Jones submitted that there was non-compliance with 122(2)(c) in particular. The proposed development has two parts; namely the FDC and upgrading of the airport runway. It is clear that there is the real connection required as stated by Lord Collins between the two developments. Sullivan LJ in the previous Brown decision doubted the validity of the submission then made for the purpose of trying to rescue the permission that there was no functional link between the two developments. While it would be but a small percentage of the hoped for commercial use, freight was to form some part and the link to the FDC is obvious. I am satisfied that Mr Jones' submission is to be rejected. There is no doubt that the committee's decision would not have been any different. If Paragraph 122 had specifically been drawn to its attention. In any event, I am satisfied that the provisions do not mean that the committee could not properly decide that the s.106 agreement was an appropriate obligation in the context of this application for planning permission.
55. Mr Jones submitted that the officers' advice failed to apply the National Planning Policy Framework (NPPF) properly and so the committee failed to do so accordingly. The point he makes is that a failure to comply with a planning policy weighs against the grant of permission since the development is not to be regarded as sustainable. The advice given in relation to the NPPF was in these terms:-

"The development plan is regarded as being consistent with the NPPF. Its presumption in favour of development moreover applies only to sustainable development. The NPPF as a material consideration does not alter officers' views."

56. There are as it seems to me two possible answers to this submission. The first is that the NPPF does not suggest that permission cannot properly be granted where a plan is unfavourable if material considerations in the form of planning advantages indicate that it should. The weight to be attached to such material considerations is a matter for the decision maker's judgment. Further, if the advantages in planning terms outweigh the disadvantages notwithstanding the planning policy being adverse the development can properly be regarded as sustainable. The word sustainable in the NPPF is not defined; the reader has to work through some 200 paragraphs which indicate what particular matters can be taken into account. But whatever answer is applied, the reality is that the NPPF does not add anything to be considered. It was necessary for the committee to weigh the advantages against the disadvantages and nothing in the NPPF detracts from, or varies that.
57. State Aid is not permitted unless the Commission is notified and agrees to it. Article 107(1) of the Treaty for European Unification (TFEU) provides:-

"Save as otherwise provided in the Treaties, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible within the internal market."

At first blush, it is difficult to see how the permission in this case could fall within this provision. However, the provision has to be given a wide definition as the ECJ stated as long ago as 1961 in Steenkolenmijnen v High Authority [1961] ECR 1 where the court stated:-

"The concept of aid is nevertheless wider than that of a subsidy because it embraces not only positive benefits, such as subsidies themselves, but also interventions, which in various forms mitigate the charges which are normally included in the budget of an undertaking and which, without, therefore, being subsidies in the strict meaning of the word, are similar in character and have the same effect."

58. Prima facie this could mean that any grant of planning permission which gives an advantage, as will often be the case, to the recipient could engage state aid. But the court has made clear that the exercise of a power which only the state or a public body such as a local authority which is in the same position can exercise will not amount to state aid. Thus the grant of planning permission will not by itself constitute state aid: see Muller v Bundesamt etc (Case C-451/08), which concerned the award of public work contracts, where at paragraph 57 the court observed:-

"It is not the purpose of the mere exercise of urban-planning powers, intended to give effect to the public interest, to obtain a contractual service or immediate economic benefit for the contracting authority …"

59. It is common ground that four conditions must be met if Article 107(1) is to apply. First, there must be an intervention by the State or through State resources. Second, the intervention must be liable to affect trade between Member States. Third, it must confer an advantage on the recipient. Fourth, it must distort or threaten to distort competition. In a valuable discussion of the requirements of State Aid, Advocate General Wathelet in Doux Elevage SNC (Case C-677/11) referred to the material principles established by the ECJ (Paragraph 37). Financing through State resources is a constitutive element of the concept and so the State measure must entail a burden on the public purse either in the form of expenditure or reduced revenue: see Prussen Elektra [2001] ECR 1-2159.
60. Mr Jones accepts that a grant of planning permission being a regulatory role reserved to the State will not involve State Aid. But he submits that the use of a s.106 agreement is a different matter. This it is said has required the IP to direct resources to a particular market operator, namely the owner of the airport. The permission to construct the FDC is contingent on the financing of the airport. I can see the possibility of State Aid arising where there is no link between the provider and the recipient of the finance. It is not necessary to show that State resources are directly or even indirectly involved, but there must be some direct link between the advantage conferred and a reduction or a risk of reduction in the State budget: see Bouygues (II) [2013] Case C-401/10 at paragraphs 101 to 109.
61. While the airport operator may be a different company within the Stobart Group, in reality it is the group which matters. The distinction between the legal entities recognised in English law is not in my judgment material. Thus the reality is that Stobart has agreed to subsidise itself in order to establish the planning advantage which enabled planning permission to be granted. There is no question of special rules applying to enabling development. Equally, there is no question of any state resources being involved. It is hardly surprising that state aid has not so far as I am aware been raised in planning cases since it will be likely that any case which could by the use of a s.106 obligation engage it (such cases will be rare in the extreme) would fall foul of a lack of justification for the s.106 obligation. But I do not need to go into that. Suffice it to say that I am satisfied that the arguments put forward by the defendant and the IP on state aid are correct and I reject those put forward by Mr Jones.
62. Mr Jones submitted that it was necessary to make a reference to the ECJ on the question whether state aid applied to the circumstances of this case. I am satisfied that such a reference is not needed since I am persuaded that there is no merit in the state aid argument. But even if I felt that a reference might be justified, I would have refused to make it leaving it to a higher court, if the claim went further, to consider whether such a reference should be made. This approach is consistent with authorities on the making of a reference: see Commissioners of HM Revenue & Customs v Loyalty Management UK Ltd [2007] STC 536 applying the indications given by the Court of Appeal as to the need for restraint in making a reference in, for example, R(Professional Contractors Group Ltd) v IRC [2002] 1 CMLR 1332.
63. SACs and SPAs are designated as sites of community importance for the conservation of natural habitats and for the protection of fauna and flora. This follows the requirements of Council Directive 92/43/EEC (the Habitat Directive). Article 6(3) of the Directive provides:-

"Any plan or project not directly connected with or necessary to the management of the site but likely to have a significant effect thereon, either individually or in combination with other plans or projects, shall be subject to appropriate assessment of the implications for the site and … the competent national authorities shall agree to the plan or project only after having ascertained that it will not adversely affect the integrity of the site concerned and, if appropriate, after having obtained the opinion of the general public."

In R(Boggis) v Natural England [2010] Env LR 13, the Court of Appeal made clear that, notwithstanding the word 'likely' in Article 6(3), the precondition before there could be a requirement to carry out an appropriate assessment was not that significant effects were probable: a risk was sufficient: see per Sullivan, LJ, giving the only reasoned judgment, at paragraph 36 applying the decision of the ECJ in the Waddenzee case [2004] ECR 1-7405. But to justify a challenge to the propriety of an assessment in any particular case a claimant must produce credible evidence that there was a real rather than a hypothetical risk which should have been but was not properly considered.

64. The Habitat Regulations 2010 have transposed the requirements of the Directive into domestic law. Article 6(3) is dealt with through Regulation 61 which, so far as material, provides:-

"(1) A competent authority, before deciding to undertake, or give any consent, permission or other authorisation, for a plan or project which-

(a) is likely to have a significant effect on a European site … (either alone or in combination with other plans or projects), and

(b) is not directly connected with or necessary to the management of that site,

must make an appropriate assessment of the implications for that site in view of that site's conservation objectives.

(2) A person applying for any such consent, permission or other authorisation must provide such information as the competent authority may reasonably require for the purposes of the assessment or to enable them to determine whether an appropriate assessment is required.

(3) The competent authority must … consult the appropriate nature conservation body and have regard to any representations made by that body …

(4) [The competent authority] must …, if they consider it appropriate, take the opinion of the general public, and if they do so, they must take such steps for that purpose as they consider appropriate.

(5) In the light of the conclusions of the assessment …. The competent authority may agree to the plan or project after having ascertained that it will not adversely affect the integrity of the European site …

(6) In considering whether a plan or project will adversely affect the integrity of the site, the authority must have regard to the manner in which it is proposed to be carried out or to any conditions or restrictions subject to which they propose that the consent, permission or other authorisation should be given."

Paragraph 68(2) provides:-

"Where the assessment provisions apply, the competent authority may, if they consider that any adverse effects of the plan or project on the integrity of a European site … would be avoided if the planning permission were subject to conditions or limitations, grant planning permission or, as the case may be, take action which results in planning permission being granted or deemed to be granted subject to those conditions or limitations."

I have no doubt that Regulations 61(6) and 68(2) enable any necessary restrictions or limitations to be given effect by conditions or obligations in a s.106 agreement or a combination of both.

65. Detailed assessments were produced from Lloyd Bore who are ecology and landscape experts. Separate assessments were made for the SAC and the SPA. That for the SPA is dated May 2011 and for the SAC July 2012. Each is lengthy and detailed. In relation to the SPA, the conclusion of Lloyd Bore was that while there were some shortcomings in the information provided with the 2010 application, the applicant had provided sufficient information for the assessment to show that the proposed development would not have an adverse effect on the SPA. However, to ensure no future adverse impacts, there was a need to provide conditions to ensure noise would not result in any significant reduction in numbers of pink-footed geese and whooper swans and to ensure consultation with Natural England and the RSPB if any changes were proposed to the bird control and safe-guarding activities.
66. In relation to the SAC, the conclusion of Lloyd Bore was as follows (Paragraph 1.94 of the report):-

"… several impacts have been assessed as potentially impacting significantly on the River Eden SAC and SSS1. It is therefore considered that in the absence of adequate, formalised agreements and conditions, the proposed development may adversely affect the integrity of the site in the light of the conservation objectives … In order to be certain of no significant impact and to avoid future adverse effects on the integrity of the … SAC, it is considered that the following issues would need to be agreed before any planning permission is granted, or conditioned in any planning permission that may be granted."

The issues in question were identified as being material during construction and during operation. They covered possible contamination, pollution, the effects of noise, lighting and vibration and increased traffic. Conditions to achieve the necessary safeguarding were indicated.

67. Lloyd Bore's conclusion was stated thus (Paragraph 1.107):-

"It is concluded that sufficient information has been provided by the applicant for the purposes of this assessment to show that there are not likely to be any major barriers to ensuring that the proposed development will not have an adverse effect on the integrity of the .. SAC. However, to be certain of no adverse impacts on the integrity of the … SAC, a number of issues regarding potential impacts … will need to be considered in any planning permission that may be granted, as detailed … above. It is therefore concluded that, providing the issues as highlighted in this assessment are adequately conditioned in agreement with Natural England, the proposed development (either alone or in combination with other plans or projects) will not lead to an adverse effect on the integrity of the …SAC."

68. In the officer's report to the committee, this conclusion was set out. The recommendation was the approval should be subject to 'the River Eden Appropriate assessment being signed off'. The identified conditions included those which were intended to meet the concerns raised by Lloyd Bore in its reports on both the SAC and the SPA. In the original claim it was asserted that the conditions did not include some of those specified by Lloyd Bore in relation to the SAC and did not include any which referred specifically to or met the conclusion of Lloyd Bore in relation to the SPA. In those circumstances, despite the contention that the conditions imposed were sufficient, it was decided to use the variation agreement to deal with any possible deficiencies.
69. The agreement which varied the original s.106 agreement contained five new provisions which were intended to put in place the conditions which Lloyd Bore had advised were needed. I do not think that it is necessary to go through these in detail. Suffice it to say that the skeleton argument from the IP has in Appendix 1 identified clearly how the new obligations read with the existing conditions in the planning permission complied with the recommendations made by Lloyd Bore. It would lengthen this already over long judgment unnecessarily to go into detail.
70. The main thrust of Mr Jones's argument is that it was not lawful for the matter to be dealt with in that way. It was for the committee as the competent authority not the officers to approve the necessary conditions or restrictions to ensure that there was compliance with Paragraph 61 of the 2010 Regulations. By the time permission was granted the SAC assessment had been 'signed off' by officers following approval by Natural England, so that, subject to the appropriate conditions or restrictions, the requirements of the 2010 Regulations were met.
71. The committee in granting permission were aware that there was a need to impose primarily no doubt, as it believed, through condition obligations which ensured that there would be no adverse impact on the SAC or the SPA. But inevitably it left to officers to draft the necessary obligations so as to ensure that its requirements were met. There were real concerns, which this claim when originally brought identified, that the conditions did not achieve what they should have achieved. Thus it was proper for the matter to be put in order to the extent that that was considered necessary in the variations to the s.106 agreement. There is in my judgment nothing unlawful in that. It follows that I reject the ground which relies on an alleged failure to comply with the 2010 Regulations.
72. The final ground relied on by Mr Jones relates to the ES which for development such as that involved in this case was required by virtue of Directives as transposed into domestic law by the Town & Country Planning (Environmental Impact Assessment)(England & Wales) Regulations 1999. Regulation 3(4) prohibits a planning authority from granting planning permission to which the regulation applies (it is common ground that it does apply to this development) unless it has first taken the environmental information into consideration and it must state in its decision that it has done so. Environmental information is defined in Regulation 2(1) to mean:-

"the environmental statement, including any further information and any other information, any representations made by any body required by those Regulations to be invited to make representations, and any representations duly made by any other person about the environmental effects of the development."

An ES must include the information specified in Schedule 4 to the Regulations. This includes by Paragraph 1(c) "an estimate, by type and quantity, of expected residues and emissions (water, air and soil pollution …) resulting from the operation of the proposed development". Paragraph 3 requires a description of the aspects of the environment likely to be significantly affected by the development including, in particular, inter alia air and climatic factors. And Paragraph 4 requires a description of the likely significant effects of the development on the environment to cover all such effects, whatever their extent resulting from inter alia the emission of pollutants.

73. Greenhouse gas emissions obviously affect the environment and fall within the requirements of what must be addressed in the ES. In Paragraph 7.4 of the ES, this is said:-

"Greenhouse gas emissions are relevant in a national and global context and not in a local one. It is not appropriate to assess these impacts at specific locations within the study area."

74. There was an assessment of emissions of pollution from traffic and their likely effect on health using, as is said, worst-case locations. The assessment was that the overall air quality impacts were not significant. The approach to greenhouse gas emissions was amplified in Paragraphs 7.91 and 7.92 of the ES as follows:-

"7.91 Quantifying the total greenhouse gas emissions from a development such as this is not straightforward. Emissions from aircraft take place over the entire journey and at this time, there is no accepted methodology that could be sensibly applied to apportion these emissions to an individual airport operation. Similarly, emissions from road vehicles associated with the development will occur over the whole length of a journey, for which relevant information is not available.

7.92 Greenhouse gas emissions impact at national and global scales. Of primary importance is the net total emission from the country as a whole. The spatial distribution of these emissions within the country is less important. The Government expects that air traffic will continue to expand on a national basis, and if the demand is not met at one airport, then it will be met at another. In this context, a local airport, could conceivably reduce the total emissions associated with each aircraft flight. It is not, however, feasible or appropriate for an ES to compare the relative benefits and disbenefits of different regional airport locations."

In Paragraph 7.108, the ES stated:-

"When viewed in isolation, any development which causes an increase in greenhouse gas emissions runs counter to the Governments' overall aims regarding climate change. However, it is not appropriate to assess greenhouse gas emissions for a single development in isolation since a development that increase emissions locally might reduce emissions nationally. Such impacts are thus best assessed at a national level."

75. There is authority which confirms that greenhouse gas emissions from aircraft resulting from an extension of use of an airport are properly dealt with on a national rather than a local level: see for example R(Griffin) v Newham BC [2011] EWHC 53 (Admin). But this does not necessarily apply to emissions from additional traffic, to the FDC and the airport as an assessment of the gases would be feasible. However, the courts have been reluctant to allow judicial review to be used to criticise the contents of an ES as opposed to whether one should have been obtained. In R(Blewett) v Derbyshire CC [2004] Env LR 29; Sullivan J made observations which have been approved in the Supreme Court. He said that even if an ES had not dealt with a particular impact, the planning authority was not obliged to refuse permission because of that failure. The ES was still an ES and it was for the LPA to consider whether overall the information available to it was indeed sufficient to meet the obligations upon it imposed by the 2011 Regulations. And in Bowen-West v SSCLG [2010] Env LR 22, the Court of Appeal made it clear that a Wednesbury test must be applied in resolving a claim that an ES was defective to such an extent as vitiated the decision made by the planning authority.
76. I have no doubt that the ES was properly to be regarded as such. ASA in its May 2011 report advised that the conclusions that emissions affecting air quality were not significant were reasonable. It is I think obvious that the extent of greenhouse gas emissions even if assessed locally rather than nationally would not have been such as to require refusal of permission. In the light of the approach which the authorities show must be taken, I do not think that the ES can be shown to have been sufficiently defective as to meet the Wednesbury test and so this ground must be rejected.
77. Following receipt of the claim, and receipt of a further statement from Ms Congdon prepared for the claim expressing her views and giving reasons for saying that the decision to grant permission was flawed, the defendant decided to put the matter back to the committee to see whether the Members agreed with the original decision. They were to be advised not to allow the question of cost to influence their decision. I am far from persuaded that that was a valuable exercise. However, advice was received from a third party that to make use of Ms Congdon's statement without her consent or that of the court would amount to a contempt of court. That advice was correct, inasmuch as such use without the necessary consent was prohibited by CPR 32.12. Attempts to obtain consent were unsuccessful since Mr Jones Q.C. was away and there was not time to get consent from the court. Thus it was decided that the consideration by the committee would not be other than informal and would not include consideration of Ms Congdon's statement.
78. The claimant has complained that this meant that the so-called consideration by the committee members was unfair and should not be considered material in this claim. Mr Humphreys has very properly not sought to rely on it. In any event, it adds nothing since it could not cure a defect if one exists.
79. I have therefore to consider whether the shortcomings which I have indicated in the socio-economic considerations suffice to show that the decision cannot stand. This was such a borderline decision that any material defect is of greater importance than it might have been otherwise. It cannot in my judgment be said that it could not have made any difference. For the reasons I have set out in Paragraphs 48 to 51, I am satisfied that the forecasts contained in the spreadsheet annexed to the 21 June 2012 letter were deficient and that deficiency may have tipped the balance.
80. In the circumstances, this claim succeeds on that ground alone and the planning permission must be quashed.