England and Wales High Court (Administrative Court) Decisions

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

		Royal Courts of Justice Strand London WC2A 2LL
		22 October 2015

1. MR JUSTICE DOVE:

Background

2. Athlone House was completed in 1871 in the picturesque Victorian style and occupies grounds on the northeastern edge of Hampstead Heath. The house and its environs are within the Highgate Conservation Area and are also designated Metropolitan Open Land. The house is not listed because over the years it has been subject to extensive alteration. Its recent history is that it was requisitioned during the war and then passed afterwards to the NHS, subsequently being used as a hospital providing geriatric care. When that use came to an end, the second defendant, who are the local planning authority for the area, designated it as a Major Developed Site under the then relevant policy for Metropolitan Open Land and also Green Belt, PPG2. They adopted a planning brief in order to guide the redevelopment of the site.
3. On 5 October 2005, a comprehensive redevelopment proposal was granted planning permission. On the permission document, that proposal was described as follows:

"Part conversion and part redevelopment of site for 27 residential units including:

Alterations, extensions and conversion of Athlone House to 1 x 7 bed house, the Coach House to 2 x 2 bed units, the Gate House to 1 x 1 bed unit and Caen Cottage to 1 x 3 bed house;

Demolition of all remaining post war buildings and erection of three new blocks to provide 22 flats with underground parking (9 x 2 bed, 10 x 3 bed and 3 x 4 bed);

Donation of 0.98 hectare of land as extension to Hampstead Heath; and

Significant landscaping context."

That planning permission was accompanied by a section 106 planning obligation which, amongst other matters, sought to secure the repair and rehabilitation of Athlone House.

4. The renovation plan for Athlone House was covenanted within the section 106 in the following terms:

"3.8. Renovation plan

3.8.1. The owner covenants with the Council that within four weeks of the date of this agreement it shall submit to the Council for approval the Phase 1 Renovation Plan.

3.8.2. Not to implement nor permit implementation until the Phase 1 Renovation Plan referred to in subclause 3.8.1 has been approved by the Council (as demonstrated by a written notice to that effect) such approval not to be unreasonably withheld or delayed.

3.8.3. The owner covenants that all works contained in the Phase 1 Renovation Plan shall be carried out and completed to the reasonable satisfaction of the Council within six weeks of the date of approval of the Phase 1 Renovation Plan (unless otherwise agreed with the Council).

3.8.4. Not to implement nor permit implementation until all the works contained in the Phase 1 Renovation Plan as approved have been carried out and completed to the reasonable satisfaction of the Council (as demonstrated by written notice to that effect) such approval not to be unreasonably withheld or delayed.

3.8.5. Unless otherwise agreed by the Council (acting reasonably and in accordance with the requirements of this agreement) within 42 months of the implementation date carry out and complete the Phase 2 Renovation Works to the reasonable satisfaction of the Council."

5. The Phase 1 Renovation Plan was a programme of works designed to prevent Athlone House from becoming a "building at risk" and was to comprise urgent renovation works and a package of proactive management and maintenance measures to secure that end. The Phase 2 Renovation Works comprised all the Phase 1 Renovation Works, together with what were defined within the section 106 obligation as the Athlone House Development Works. These were defined on plans produced by Lincoln Campbell Associates and comprised renovation and adaptation by dint of demolition and extension to realise a residential use of the house and secure its future.
6. After consent was granted, it was partially implemented. The three blocks of flats described in the proposal were built out. The Phase 1 works were completed, albeit there remains dispute between the claimant and the second defendant in relation to any ongoing repair obligations required under the section 106 obligation. The Phase 2 Renovation Works were not undertaken. The demolition of extensions to the house, which were part and parcel of the works comprised within the 2005 permission, was undertaken.
7. In 2009, the claimant, which was by then the owner of Athlone House, submitted an application for its demolition and replacement with a single large dwelling. The application was refused and the claimant subsequently appealed, but that appeal was dismissed by the first defendant's Inspector. One of the issues which the Inspector had to grapple with was the question of the Metropolitan Open Land designation which applied to the site. It should be recorded that, of course, Metropolitan Open Land, albeit specific to London, is treated in policy terms in exactly the same way as Green Belt and was addressed at the time of this Inspector's decision under the then provisions of Green Belt policy contained in PPG2.
8. The question arose before the Inspector as to whether or not the proposed development was materially larger than the dwelling which it was replacing. The Inspector concluded in relation to that issue in the following terms:

"25. The existing dwelling on site is substantially curtailed following demolitions, firstly, a long time ago, of large domestic adjuncts such as the conservatory and servants' documentation; and much more recently, large buildings associated with hospital use. What remains now is not the original dwelling nor is it a building which could be occupied without very substantial alteration. To establish a baseline, it is suggested that the building should be considered as it existed in 2003, without the single storey wards (as preferred by the appellant) or the 2005 planning permission which is partly implemented, and would include all the facilities necessary to live at the property, including garages. Those areas would be 2,977 square metres or 2,492 square metres GEA respectively, including basements expressed in GIA. The comparable floor area of the proposed house would be 5,063 square metres. Compared to both of these measures, the new dwelling would be very significantly larger."

9. Another of the contentious issues in that appeal was the cost of undertaking the Phase 2 Renovation Works. It appears that eventually, during the course of the inquiry, agreement was reached between the experts on each side of the debate as to the appropriate figure for the costs of implementing those works. They fell in a bracket of £14 million to £21 million. The Inspector's conclusions in relation to the question of costs and their pertinence to the issues that he had to determine on the appeal were expressed in the following terms:

"61. The costs of extending, repairing and refurbishing the existing building would be very substantial, bearing in mind the extent of deterioration of the fabric, particularly damp penetration. I consider it is extremely likely that a new owner would wish to take advantage of its unlisted status by replacing existing features with new in a way which would ensure a reasonable maintenance-free life. This adds to my concerns that the appearance of the building would change significantly and unpredictably. Having said that, I do not exclude the possibility that a refurbishment of the existing Athlone House might be attractive to some investors; but on balance, the evidence suggests that at the level of expenditure required of between £14 to £21 million, a new owner would be unlikely to find it worthwhile to restore an unlisted building which has already lost a substantial amount of fabric and much special interest, and which would be unlikely to provide the space or room layout demanded. However none of this constitutes a persuasive argument in favour of a significantly larger building which would be inappropriate in MOL."

10. Ultimately, as I have already observed, the Inspector concluded that in particular because of the impact upon Metropolitan Open Land, that appeal had to be dismissed.
11. On 24 October 2013, the claimant made a further application for the demolition of Athlone House and the erection of a single large dwelling. The application had been redesigned in response to the earlier Inspector's concerns and conclusions. No decision was reached on the application by the second defendant and therefore the claimant exercised its right of appeal on the grounds of non determination.
12. Athlone House Working Group (hereafter "AHWG") registered their interest in the appeal and were given rule 6 status. They produced a statement of case. Within that statement of case they specified the issues which they proposed to advance in support of their position that planning permission should be refused. They relied on what they contended were positive and ongoing obligations under the section 106 obligation to keep Athlone House in repair. They resisted its loss in particular on the basis of the following contention:

"31. Athlone House itself is a significant non-designated asset. Its total loss through demolition ought not to be permitted: paragraph 135 of the NPPF. Regardless of the Council's position, AHWG is strongly opposed to the demolition of Athlone House and replacement with the proposed building. AHWG relies upon the report of Jon Avent dealing with the feasibility and viability of Athlone House's restoration."

13. On 22 October 2014, there was a pre-inquiry meeting held by the Inspector at which he urged all parties to agree as much of the evidence as was possible. This was so as to ensure that there would be an efficient use of hearing time at the inquiry. At that meeting, the claimants were keen to agree the costs of the renovation and refurbishment which had previously been agreed in the context of the earlier appeal. AHWG stated at the pre-inquiry meeting that their position in relation to that issue, and the appeal more generally, would be set out in their proof from Mr Avent. In the event, the proof produced by Mr Avent contained no detailed evidence in relation to the question of the costs of the Lincoln Campbell renovation scheme. His thesis can in essence be captured in the following extracts from his proof of evidence:

"2.20. In relation to any economic justifications for demolition, there would not appear to be any basis for such argument. The property is located in a high value area of London and it would be inconceivable for any refurbishment costs to not be covered by the asset value of the completed building.

2.21. It would be acknowledged that a new building replacement of the existing property would be a more financially attractive proposition to a property developer, and that a greater return on any development would be achieved. However, it would be unreasonable for this to have any influence on the case for demolition, and the loss of this existing heritage asset, or indeed any heritage asset.

...

6.04. During my inspection of the building it is clear that a significant proportion of the original building remains in good structural condition and is in a condition that is suitable for refurbishment. Although some architectural features have been lost in the evolution of the building, many remain and this evolution itself adds significance to the building.

...

6.11. In summary there is considered to be in justification for the demolition of Athlone House. And in its current condition the building is well suited to repair and restoration, and occupation as a fine domestic dwelling."

14. In response to the evidence, the claimant took the opportunity to furnish the inquiry with rebuttal proofs directly addressed to this and other evidence and providing the claimant's response to it. The claimant called a number of witnesses relevant to the evidence which had been offered by Mr Avent. The first of those was Mr Monie. He provided a rebuttal proof in which he responded directly to Mr Avent's evidence in the following terms:

"2.1 (1.01) Jon Avent's instructions on behalf of AHWG need to be fully understood in the context of the current appeal and matters under consideration. Also, with reference to the previous appeal decision, which remains entirely relevant. He states that his proof of evidence is prepared 'with the objective of providing a review of structural condition and associated conservation issues ...' the structural condition of Athlone House is not generally in debate and the Savills Summary Condition Report does not major on this as being a major issue.

...

2.5 (2.20) This is a sweeping statement and disregards the previous comments of the planning Inspector who carefully considered the evidence presented regarding costs for repair and refurbishment. Jon Avent says 'It is inconceivable for any refurbishment costs not to be covered by the asset value of the completed building'. The asset value of the building will not be determined solely by its location but by the quality of the refurbishment and an exceptional standard of finish that would be expected by a prospective owner occupier. Equally, the level of amenity and internal planning that a well considered and designed scheme will enhance value, which Selway Joyce demonstrate in their report, comes at considerable cost. Again, the planning Inspector accepted this and as such this should not be overlooked.

2.6 (2.21) The appellant in this case is not a property developer and the proposed scheme, which is now subject to appeal, is not designed to be one of a speculative nature but to be used and enjoyed by the owner occupier. Thus, it is not and should not be considered as a financially attractive proposition."

15. The second witness offered by the claimants in relation to these issues, and who provided a rebuttal directly to the evidence of Mr Avent, was Mr McCoy. In his rebuttal proof, he commented as follows:

"2.2 (2.20) This is a sweeping statement and disregards the previous comments of the planning Inspector with regard to the likely range of costs agreed with Mr Powling (Camden's appointed expert) to refurbish Athlone House. Our experts have commented regarding the saleability of and the asset value of the completed building.

2.3 (2.21) The appellant in this case is not intending to dispose of the completed scheme as a speculative development.

2.4 (3.05) All the advice that Selway Joyce have given in respect of the refurbishment of Athlone House is in reference to a refurbishment to a good standard on the basis of the Phase 2 Renovation Plan; as required by the section 106 agreement. The range of costs accepted by the previous Inspector takes in to account Mr Powling's view of refurbishment."

16. Finally, rebuttal evidence was provided by the claimant's witness Mr Peters. He responded not solely to the evidence of Mr Avent, but also to evidence from one of AHWG's other witnesses, Ms Waldman. In his rebuttal proof, he provided evidence as follows:

"2.2. Firstly, I would highlight the difference between the term 'unmarketable' and the phrase that I used, 'it is unlikely that any purchaser will be found'. Unmarketable implies that a property cannot be sold at any price. It is, however, well understood that for a property to be sold there needs to be both a willing buyer and seller. It is my opinion that in the case of Athlone House, the 2005 permission does not meet the needs of the likely purchaser profile and would require the price to fall in order to secure a scale, to a level which would then be unacceptable to an owner, resulting in the property being unsold.

...

3.1. A comment is made by Jon Avent in his proof of evidence at paragraph 2.20, stating that 'it is inconceivable for any refurbishment costs to not be covered by the asset value of the completed building'.

3.2. This I would suggest is a rather simplistic approach. The refurbishment cost alone is not the only financial consideration in deciding whether to renovate and adapt a building. It is quite possible for the costs of a renovation to exceed the end value of a property. In considering whether the end value is likely to cover costs, a potential purchaser would need to make certain additions to the simple build cost. One would need to add, amongst other items, professional fees, interest charges, landscaping, purchase costs and the purchase price itself. If one was to carry out a formal valuation, allowance would also need to be made for sale costs.

3.3. It is also necessary to consider the form of the final product which will not have a 'fixed price' dependent upon size, but will take into account the room sizes, their aspect, facilities offered, quality of finish and services provided. If the finished product does not meet the needs of the market to which it is aimed, or from which the highest demand and value can be expected, it will be necessary to reduce the price to a level where other purchaser profiles are included.

3.4. I would finally repeat that at this level of the market, owners generally do not have to sell. They are sufficiently wealthy to be able to retain property until conditions change and their price aspiration can be met."

17. During the inquiry, in the cross-examination of Mr Robin Purchas QC, who appeared then and appears in the present case on behalf of the claimant, it was clarified with AHWG's witnesses that they had no basis for contesting the cost estimates which had been offered again in the evidence on behalf of the claimant and which had previously been agreed with the representatives of the second defendant at the earlier inquiry. In response to Mr Purchas's questions, they confirmed that their evidence in relation to the realism of there being a future for Athlone House was simply on the basis of the building as it stood and their appraisal of it.

The Inspector's decision

18. The Inspector had a great many issues brought before him for consideration and assessment. The key points which he had to consider for the purposes of this challenge were as follows. Firstly, he had to deal with the proposal in the light of Metropolitan Open Land policy, starting in particular with whether it was inappropriate development in terms of paragraph 89 of the Framework. The Inspector dealt with this in the following terms, and it is necessary to quote from his decision at length, both to do justice to that decision and also to do justice to the extensive submissions which I heard from the parties in relation to his consideration of this aspect of matters:

"31. Framework 89 explains that the construction of new buildings is inappropriate in the Green Belt, but is allows six exceptions to this. The appellant relies on two of them:

The replacement of a building, provided the new building is in the same use and not materially larger than the one it replaces (the replacement exception); and

Limited infilling or the partial or complete redevelopment of previously developed sites (brownfield land), whether redundant or in continuing use (excluding temporary buildings), which would not have a greater impact on the openness of the Green Belt and the purpose of including land within it than the existing development (the PDL exception).

32. This then provides the starting point -- in order to make the comparison it is first necessary to define, in the replacement exception, 'the building it replaces' and, in the PDL exception, 'the existing development'. There is no argument that Athlone House is essentially a dwelling so its replacement would be in the same use. There are three potential definitions of building size in this case -- relating to the pre-2003 position, that is before any the site was proposed to be redeveloped; the 2005 planning permission; and the house as it stands today.

33. My colleague in 2011 spent little time on these matters. First he considered the overall position. He gave substantial weight to saved policy LU1 as part of the then current development plan and, taking into account the extent of development already carried out, he assessed the proposal against PPG2.C4 as part of an MDS development. He found that the proposal overall would also double the built volume on the site; as he puts it, a significant increase in built volume. He then went on to consider the proposal as a separate replacement dwelling under PPG.3.6, the Council's preference. While he noted that what remained in 2011 was neither the original building, and nor could it be occupied without very substantial alteration, he addressed the suggested baselines of the pre-2003 position and the 2005 planning permission. He found that against these two alternatives, the floor area of the new house would be doubled or more. The new dwelling would be very significantly larger.

34. While the 'existing building as it stands' option was not specifically considered as a potential baseline in that Inspector's decision, I do not believe that it can be claimed that it was ignored or given no weight. It was after all a main plank in the case of CBC and local objectors. I suspect that, as an even smaller baseline, there was simply no need to take it further. Having established material enlargement, as the appellant notes, the 2011 Inspector made no further reference to this matter and it formed no part of his decision or reasoning. In view of the changes in planning circumstances I consider it necessary for me to review all three options in the context of both the PDL exception and the replacement exception.

The PDL exception

35. The PDL exception in the Framework is effectively brought forward from PPG2, although it is much altered. Paragraph 3.4(5) of PPG2 allowed an exception for the limited redevelopment of existing MDS in the Green Belt identified in adopted local plans which met the criteria set out in paragraph C4 of Annex C. The site was identified as an MDS in Camden's then UDP through policy LU1, which had been saved, and a planning brief was issued.

36. The outcome, in accordance with the brief, was the proposed demolition of hospital wards and the 2005 planning permissions for three blocks of flats, the conversion of cottages and gatehouse and the conversion of Athlone House to a dwelling, to be secured by section 106 agreement. This was clearly seen very much as a package, on enabling development lines. The Council evidently considered that the planning objective had been achieved by this overall redevelopment proposal. UDP policy LU1 had served its purpose. It was subsequently superseded and the site is no longer designated as an MDS.

37. The pre-2003 position effectively regards the Athlone House site as a remnant part of the development of the MDS. Since the site no longer has MDS status, there is no policy basis for considering the house as part of the wider site. The Framework PDL exception now is not policy linked, and I consider that there is no justification for reassessing the house as part of the overall site under superseded MDS designation or for casting about for other areas of PDL in order to justify a larger site. Nonetheless the house itself is clearly PDL and its complete redevelopment would fall within the terms of this exception.

38. The appellants argue that, although carried out in 2006 at the same time as the hospital ward demolitions, the demolition of the northern service extensions of Athlone House was not required by condition attached to any planning permission and was undertaken for safety reasons. They maintain that, for the purposes of assessing PDL, the extensions should therefore be considered part of the existing house. However the removal of the extensions is part of the 'alteration, extensions and conversion' of Athlone House as part of the 2005 permission and they were expected to be demolished, as part of the Phase 2 requirement of the 2005-section 106 agreement, within 42 months of the implementation of the planning permission. The removal of the extensions was clearly a part of the careful overall balancing exercise carried out under PPG2.3.4(5) and UDP policy LU1 and it would not be appropriate now to 'double count' them as part of the existing house. I therefore consider that the assessment of the size of Athlone House as the existing development in a PDL exception should follow the same lines as that for the building it replaces in the replacement exception.

The replacement exception -- 2005 planning permission

39. This relates to the scheme for the alteration, extensions and conversion of Athlone House granted planning permission in 2005 as part of the overall redevelopment of the site (the Lincoln Campbell scheme). It includes the alteration and refurbishment of the interior, repair of the exterior, demolition of outbuildings, a small swimming pool extension and a new garage/accommodation block. This scheme was required to be carried out within 42 months of the implementation of the flats development by the 2005 section 106 agreement but, apart from the removal of the northern wings, it was not started.

40. The Council recognises that these plans may well require changes, and will need to 'evolve' to meet the needs of an individual owner. My colleague considered them to be no more than that holding position. Nonetheless they were carefully considered at the time and I consider them to be a respectable basis for a conservative repair and rehabilitation of the house. Despite initially promoting the permitted plans as a basis for comparison, the appellants now consider that the scheme as approved is unrealistic and will never be built, and reject it as a viable benchmark against which to consider the proposed dwelling. They argue that the appropriate comparators should be either the pre-2003 position or a more realistic version of the 2005 permitted scheme with the sort of extensions and alterations a purchaser would inevitably require. Both parties generally agree that the Lincoln Campbell scheme will not be realised in its permitted form. It is clearly unrealistic to think that the Lincoln Campbell scheme as designed will ever be constructed. I therefore reject the 2005 planning permission as a realistic baseline for comparison with the proposed new replacement dwelling.

The replacement exception -- as it stands

41. Framework 89 expressly says that a replacement building should not be materially larger than the one it replaces and that the redevelopment of previously developed sites should not have a greater impact on the openness of the Green Belt than the existing development. I do not consider that the assessment of 'the one it replaces' or 'the existing development' can relate to something that does not currently exist. On a common sense approach, taking this policy objective on its face, it seems to me that the plain meaning of 'the one it replaces' and 'the existing development' must be the building as it exists on site now, at the time of the proposal.

42. In my judgment these words cannot be interpreted to mean the house as it may have existed before redevelopment of the MDS (the pre-2003 position), nor some discredited scheme of alteration and extension which is unlikely to be built (the 2005 permission), nor some future scheme of undefined extension. I take the firm view that the building to be replaced is the building as it stands now and that this is the proper baseline for comparison with the proposed replacement building in line with the terms of the exceptions in Framework 89."

19. Having concluded that the policy required him to take the baseline as the building as it stood, he concluded that the proposal before him was materially larger and therefore amounted to inappropriate development within the terms of the Framework.
20. The second issue which was of particular concern to the Inspector, and which featured in the course of this challenge, were the heritage considerations that arose in relation to the impact on heritage assets from the demolition of Athlone House. In that regard, the Inspector provided as follows:

"53. The significance of Athlone House lies primarily in the rare survival of an opulent Victorian merchant's house in the inner suburbs; its eclectic design, representative of a particular period of English architecture; and the survival of various original internal features. Despite the loss of some characteristic external features, which led to the decision not to list it, the house retains a high level of architectural, social and historic interest.

54. AHL seeks to justify its proposal to replace the house by the high costs of repair and conversion, which it considers makes such work unviable in today's market conditions. At the inquiry AHWG was able to show that, through a realistic programme of conservative repair, the building is capable of economic reuse as a dwelling. AHL's much higher estimate seems to me to reflect a much greater degree of replacement rather than repair and a much more extravagant level of fitting out, a matter of choice to suit an owner's aspirations.

55. While I recognise that the value of the house is such that it would only be of interest to the higher end of the market, I do not consider that an opulent level of finishes and fittings should be such a decisive factor in assessing viability. Although some upgrading is clearly necessary, the opportunity to sustain and enhance the significance of the house through conservative repair, putting it back into viable use as a dwelling, would be lost through complete demolition. That loss must weigh against the proposal in the overall balance."

21. The Inspector thirdly had to review various submissions which had been made to him about the materiality, substance and continuing effect of the section 106 obligation which was before him. The conclusions which he reached on those submissions were expressed as follows:

"77. AHL maintains that, having regard to the cost and other factors, the obligation relating to the refurbishment of Athlone House can now only be met by replacing it. That seems to me to be a complete negation of the original intention agreed by both parties to the section 106 agreement. AHL has not sought to argue under section 106A of the Act that the obligation no longer serves a useful planning purpose or that that purpose could be equally well served by a modified obligation. (In any event that is not something I can consider in a section 78 appeal).

78. It is clear that the section 106 agreement is still in force, fulfilling a planning function. It is accepted by all parties that the Lincoln Campbell scheme cited in the agreement could be altered, even substantially changed, to meet the requirements of the owner. That would be perfectly possible through an agreed deed of variation of the agreement. It is perhaps pertinent to note here that the extension or alteration exception in bullet point 3 of Framework 89 refers to 'the original building' rather than 'the existing building', indicating scope for the consideration of an extension more in line with the size of the original building.

79. The agreement remains in operation and is intended to secure a planning consideration which was an important factor in the original decision to grant planning permission for the scheme of redevelopment of the hospital site. It made the proposal acceptable in planning terms. The essential commitment is to refurbish Athlone House and there is a clear prospect of enforcement of that through injunction. While the details of a method of refurbishment and extension acceptable to both parties may change, I consider that despite the costs involved the obligation to refurbish cannot so easily be set aside."

22. Having considered all of the many factors which were relevant to his determination, the Inspector concluded in relation to the planning balance in the following terms:

"80. I have found the proposal to be inappropriate development in the MOL which is, by definition, harmful and should not be approved except in very special circumstances. I have also found harm to the openness of MOL. As Framework 88 confirms, substantial weight must be given to any harm to MOL.

81. I have also found other harm. To reflect the requirement to have special regard to the desirability of preserving designated heritage assets I give great importance and weight to the substantial harm to the Highgate Conservation Area and to the less than substantial harm to the setting of the Kenwood Estate Registered Park and Garden. That is reinforced by the substantial weight I give to the unjustified loss of Athlone House as an undesignated heritage asset and to the lost opportunity to restore it to a dwelling. I give considerable weight to the loss of quality of views from the Heath and to the breach of the obligation to refurbish the existing house. I give full weight to the conflict with the local development plan and national planning policy.

82. Against that I give substantial weight to the benefit of the repair and restoration of the locally listed gardens and grounds of Athlone House. Since opinions are divided I give limited weight to the claim that the replacement building would be an architectural masterpiece. I give some weight to the value in bringing the site back into beneficial use, thereby ending the uncertainty about its future, and considerable weight to the social and economic benefits to the locality and to London's role as a World City. However, much of this would also follow restoration of the existing building.

83. Weighing all these factors in the balance I find that the benefits of the scheme are nowhere near sufficient to overcome the extensive harm it would cause."

23. The Inspector therefore concluded that the appeal had to be dismissed.

Policy

24. The principal policy in contention in relation to this case is contained within the provisions of the National Planning Policy Framework ("the Framework") in respect of Green Belt which also, as I have set out above, applies equally to Metropolitan Open Land. The relevant provisions of the policy about which submissions were addressed are as follows:

79. The government attaches great importance to Green Belts. The fundamental aim of Green Belt policy is to prevent urban sprawl by keeping land permanently open; the essential characteristics of Green Belts are their openness and their permanence.

...

87. As with previous Green Belt policy, inappropriate development is, by definition, harmful to the Green Belt and should not be approved except in very special circumstances.

88. When considering any planning application, local planning authorities should ensure that substantial weight is given to any harm to the Green Belt. 'Very special circumstances' will not exist unless the potential harm to the Green Belt by reason of inappropriateness, and any other harm, is clearly outweighed by other considerations.

89. A local planning authority should regard the construction of new buildings as inappropriate in Green Belt. Exceptions to this are:

...

The extension or alteration of a building provided that it does not result in disproportionate additions over and above the size of the original building;

The replacement of a building provided the new building is in the same use and not materially larger than the one it replaces.

...

Limited infilling or the partial or complete redevelopment of previously developed sites (brownfield land), whether redundant or in continuing use (excluding temporary buildings), which would not have a greater impact on the openness of the Green Belt and the purpose of including land within it than the existing development."

The grounds in brief

25. Ground 1 of the claimant's case is that the Inspector misinterpreted paragraph 89 and in particular the phrase "the one it replaces" in the fourth exception within that paragraph, and "the existing building" in the sixth exception within that paragraph. These phrases, it is submitted on behalf of the claimant, called for the exercise of planning judgment in their interpretation in circumstances where, in addition to what was physically present on the ground, there were planning permissions and also evidence before the Inspector that in order to provide a realistic future for the house in the market, it was going to be necessary to expand or extend the building in order to meet the likely requirements of any potential purchaser and occupier.
26. Further, it was contended that in paragraph 78 of the decision letter, the Inspector was in effect specifically contemplating in the context of the future operation and enforcement of the section 106 obligation that there would indeed be extension of the building beyond that which was presently on the ground. That finding by the Inspector should have informed his conclusions as to what the baseline for comparison should be under paragraph 89 of the Framework and his failure to include it in the light of his earlier finding was an error of law and a misinterpretation of the Framework.
27. In addition, by way of further submission under this ground, the claimant contended that the Inspector had failed properly to understand that the Inspector in 2011 had in fact specifically rejected the existing building as an alternative for the baseline for the comparison and therefore had misunderstood an important material consideration, namely that which had been found in the earlier decision. Finally under this ground, the claimant contended that the Inspector's reference to "double counting" in relation to his application of the sixth exception was misconceived and unjustified.
28. Ground 2 of the claimant's case focuses on the conclusions, in particular in paragraphs 54 and 55 of the decision letter, and what it is submitted was a misunderstanding of the claimant's case as to the costs of the Lincoln Campbell scheme and what they would achieve. It was submitted on behalf of the claimant that that scheme did not involve "an opulent level of finishes and fittings". As such, therefore, the Inspector misunderstood the nature and extent of the works which would be provided through the implementation of that scheme.
29. Further, it was contended on behalf of the claimant that the costs of implementing that scheme were uncontentious and the evidence in respect of it unchallenged. If the Inspector was going to query that agreement, or seek to go behind what had been accepted and concluded, he should in fairness have given the claimant an opportunity to deal with any concerns about the extent and nature of the refurbishment. If he was endorsing some other basis for repair and rehabilitation of Athlone House through the conclusions which he expressed in those paragraphs, then he ought to have explored that with the claimant's witnesses, and his failure to do so was a breach of his obligations in relation to procedural fairness. Finally, it was submitted in any event that his reasons in relation to this aspect of the decision were inadequate.

The law

30. The discretion as to whether or not to grant planning permission which is exercised by a local planning authority and by the first defendant or his Inspector in the context of a section 78 appeal is governed by the well known principles set out in section 70 of the Town and Country Planning Act 1990 and section 38(6) of the Planning and Compulsory Purchase Act 2004. The application should be determined in accordance with the development plan unless material considerations indicate otherwise. National planning policy is of course another consideration for these purposes.
31. The meaning of planning policy is now well settled to be a question of law. This was determined by the Supreme Court in the case of Tesco Stores Ltd v Dundee City Council [2012] UKSC 13. Giving the leading judgment of the Supreme Court, Lord Reed observed as follows:

"18 ... The development plan is a carefully drafted and considered statement of policy, published in order to inform the public of the approach which will be followed by planning authorities in decision making unless there is good reason to depart from it. It is intended to guide the behaviour of developers and planning authorities. As in other areas of administrative law, the policies which it sets out are designed to secure consistency and direction in the exercise of discretionary powers, while allowing a measure of flexibility to be retained. Those considerations point away from the view that the meaning of the plan is in principle a matter which each planning authority is entitled to determine from time to time as it pleases, within the limits of rationality. On the contrary, these considerations suggest that in principle, in this area of public administration as in others (as discussed, for example, in R (Raissi) v Secretary of State for the Home Department [2008] QB 836), policy statements should be interpreted objectively in accordance with the language used, read as always in its proper context.

19. That is not to say that such statements should be construed as if they were statutory or contractual provisions. Although a development plan has a legal status and legal effects, it is not analogous in its nature or purpose to a statute or a contract. As has often been observed, development plans are full of broad statements of policy, many of which may be mutually irreconcilable, so that in a particular case one must give way to another. In addition, many of the provisions of development plans are framed in language whose application to a given set of facts requires the exercise of judgment. Such matters fall within the jurisdiction of planning authorities, and their exercise of their judgment can only be challenged on the ground that it is irrational or perverse: Tesco Stores Ltd v Secretary of State for the Environment [1995] 1 WLR 759, 780, per Lord Hoffmann. Nevertheless, planning authorities do not live in the world of Humpty Dumpty: they cannot make the development plan mean whatever they would like it to mean."

32. Those observations, albeit specifically in relation to a development plan, are obviously equally apposite to the consideration of national planning policy in the Framework. Policies are, therefore, to be read in a practical way, bearing in mind that they are not contracts or statutes, but rather they are public documents seeking to ensure a consistency of approach in controlling development and providing a Framework for decisions about whether planning permission should be granted or refused. Clarity and predictability are key touchstones when considering their interpretation.
33. When it comes to exercising planning judgment, the Inspector is an expert tribunal who is informed by, but not bound by, the evidence which is heard in the context of a planning inquiry. He or she can and must exercise his or her own judgment to reach conclusions on the planning considerations which are ranged before the inquiry. That can on occasion involve departure from the evidence, even departure from agreed evidence, subject to appropriate procedural safeguards to ensure fairness, to which I shall turn in due course, and also to the overarching requirement that the decision which is ultimately reached is not one which is irrational or perverse, it being borne in mind that demonstrating that such a decision was irrational or perverse will be an exceedingly high hurdle.
34. When scrutinising decisions, the court is going to bear in mind that the Inspector has to deal in his or her reasons with the principle, but not every issue which is raised, and to provide reasons which satisfy the requirements which were described by Lord Brown in South Bucks District Council v Porter (No 2) [2004] UKHL 33 [2004] 1 WLR 1953 as follows:

"36. The reasons for a decision must be intelligible and they must be adequate. They must enable the reader to understand why the matter was decided as it was and what conclusions were reached on the 'principal important controversial issues', disclosing how any issue of law or fact was resolved. Reasons can be briefly stated, the degree of particularity required depending entirely on the nature of the issues falling for decision. The reasoning must not give rise to a substantial doubt as to whether the decision maker erred in law, for example by misunderstanding some relevant policy or some other important matter or by failing to reach a rational decision on relevant grounds. But such adverse inference will not readily be drawn. The reasons need refer only to the main issues in the dispute, not to every material consideration. They should enable disappointed developers to assess their prospects of obtaining some alternative development permission, or, as the case may be, their unsuccessful opponents to understand how the policy or approach underlying the grant of permission may impact upon future such applications. Decision letters must be read in a straightforward manner, recognising that they are addressed to parties well aware of the issues involved and the arguments advanced. A reasons challenge will only succeed if the party aggrieved can satisfy the court that he has genuinely been substantially prejudiced by the failure to provide an adequately reasoned decision."

35. The requirements of procedural fairness in planning inquiries, conducted as this one was under the Town and Country Planning Appeals (Determination by Inspectors) (Inquiries Procedure) (England) Rules 2000 were recently addressed by the Court of Appeal in the case of Hopkins Developments Ltd v Secretary of State for Communities and Local Government [2014] EWCA Civ 470. In the principal judgment of the Court of Appeal, delivered by Jackson LJ, he distilled the principles into six propositions as follows:

"62. From reviewing the authorities I derive the following principles: (1) Any party to a planning inquiry is entitled (i) to know the case which he has to meet and (ii) to have a reasonable opportunity to adduce evidence and make submissions in relation to that opposing case. (2) If there is procedural unfairness which materially prejudices a party to a planning inquiry that may be a good ground for quashing the Inspector's decision. (3) The 2000 Rules are designed to assist in achieving objective (1)(i), avoiding pitfall (1)(ii) and promoting efficiency. Nevertheless the Rules are not a complete code for achieving procedural fairness. (4) A rule 7 statement or a rule 16 statement identifies what the Inspector regards as the main issues at the time of his statement. Such a statement is likely to assist the parties, but it does not bind the Inspector to disregard evidence on other issues. Nor does it oblige him to give the parties regular updates about his thinking as the inquiry proceeds. (5) The Inspector will consider any significant issues raised by third parties, even if those issues are not in dispute between the main parties. The main parties should therefore deal with any such issues, unless and until the Inspector expressly states that they need not do so. (6) If a main party resiles from a matter agreed in the statement of common ground prepared pursuant to rule 15, the Inspector must give the other party a reasonable opportunity to deal with the new issue which has emerged."

36. I am confident that by the second sentence of that fifth proposition set out by Jackson LJ, he was not in any way suggesting that the Inspector should effectively announce that he or she has made up his or her mind about an issue before the inquiry has closed. In practice, no doubt, what the fifth proposition would require would be that the Inspector indicate that no further material need be provided to him or her in order for a decision to be reached on the issue so as to draw debate upon it to a close. Were the Inspector thereafter to conclude against a party's interest on the basis of a decisive aspect of that issue, which had not been addressed in the material before this inquiry or on the basis that there was no material to address that particular aspect, then that party would no doubt have cause to consider that they had been treated unfairly.

Conclusions

37. I have no doubt that the Inspector's interpretation of the phrases "the one it replaces" and "the existing building" were correct, and that they set as the baseline, as the Inspector found, the extent of physical built development on the site as the basis for comparison for the purposes of the consideration of the fourth and sixth exceptions within paragraph 89 of the Framework. That extent of physical built development is essentially a question of fact and does not engage the need for the exercise of any planning judgment. Planning judgment will come at the next stage, when that baseline is compared with the proposal and the extent of any change gauged against the tests which are set out in the exceptions.
38. There are three reasons for the conclusion which I have reached. The first reason is determinative and the other two are supportive of the first reason. The first reason is that that is what the language of the policy, read literally and deploying as it does the present tense, clearly means. That is in a sense the end of the issue, bearing in mind the method of construction described in Lord Reed's judgment and set out above.
39. However, there are, as I have said, two further reasons which support that conclusion. Firstly, that reading, which would lead to the direct comparison between the existing compromise of openness by what is present on the site against that which is proposed, is entirely consistent with the aim of the Framework's policy in paragraph 79 to keep land permanently open. It is therefore an interpretation which is consistent with the clear aim of the Framework's policy.
40. The further reason for supporting this interpretation is that reading the policy in this way gives rise to clear and predictable results, without the need to controversially disinter the history of the site and then seek to resolve those aspects which may be relevant and those irrelevant to the question of the appropriate baseline. It is, therefore, an interpretation which leads to clarity and consistency in decision making, which must be in reality the purpose of having the policy in the first place.
41. It follows that in my judgment the Inspector was correct in paragraph 42 of the decision letter to reject the other possibilities which were put to him and to use what was on the ground as the basis for his decision.
42. In the course of argument, the hypothetical case of a material fallback (as opposed to the 2005 Lincoln Campbell scheme which the Inspector accepted would never be constructed), was aired as being a potential complication to the use of the physical development as it stands as the appropriate baseline. Would such a material fallback count? Whilst it does not arise in this case, I accept the submission that was made on behalf of the first defendant by Mr Honey that it would not affect the baseline which was the basis of comparison set out in paragraph 89. Paragraph 89, as I have already observed, is clear; an unbuilt permitted development which a developer may be keen to implement could not, on the basis of the interpretation of the plain words of the policy, be included in such an assessment. That is not to say that such a material fallback would be irrelevant. It would probably be relevant at the stage of considering the question of very special circumstances, taking account of the weight to be attached to it bearing in mind the likelihood of its implementation and the extent of its impact on openness if it were developed.
43. In any event, as I have observed, this hypothetical example does not arise in the present case because on the Inspector's conclusions the 2005 planning permission was not a material fallback, as he accepted that there was no possibility of it in fact being implemented.
44. I turn then to the subsidiary arguments that are raised under Ground 1. In my view, there is no inconsistency between paragraphs 41 and 42 on the one hand, and paragraph 78 on the other, of the decision letter. In substance, they relate to separate and discrete questions. In paragraphs 41 and 42 of the decision letter, the Inspector was addressing the correct construction or interpretation of paragraph 89 and the determination of the baseline against which he had to make the relevant comparisons to determine whether the development was inappropriate. In paragraph 78 of the decision letter, he was addressing the potential future of Athlone House, possibly deploying a different exception to the definition of inappropriate development. Given he had concluded, correctly, that paragraph 89 set as its baseline the site as it currently stands for the purposes of the fourth and sixth exception, whatever he considered the future might hold in paragraph 78 of the decision letter could not affect that conclusion. There is, therefore, no substance in this complaint.
45. In my view, equally, the Inspector did not misunderstand what the previous Inspector had determined. The explanation which the Inspector provided in paragraph 34 of his decision letter, firstly makes perfect sense in the light of the facts of the case as they were presented to the Inspector in 2011. There was little purpose in examining the extent of the existing physical built development after the Inspector had concluded that even taking the most advantageous position available to the claimant, the policy was infringed. Secondly, as the Inspector observed, in the light of the change of planning circumstances since 2011, and in particular the emergence of the Framework, it was incumbent upon him, against the new language of the Framework, to review all the potential options which were available in the analysis.
46. Finally, the reference in paragraph 38 to "double counting" was in my view entirely apt. The removal of the extensions in 2006 was part and parcel of the balance in relation to the impact on openness, struck across the totality of the MDS site as a whole, justifying amongst other matters the construction of three blocks of flats which occurred as part of the implementation of the 2005 permission. In short, those extensions had already been accounted for in that exercise. They could not properly be counted again.
47. I turn, therefore, to the submissions made on behalf of the claimant in relation to ground 2. Placing paragraphs 54 and 55 of the decision letter in context, the costs of the Lincoln Campbell scheme were not disputed by AHWG, nor did they necessarily need to dispute them in order to advance their case. They were not necessarily, or indeed exclusively, pursuing the Lincoln Campbell scheme as the potential future for the building as part of their case. What they were pursuing, as is evident from the extracts of the evidence which I have set out above, was the opportunity for the building's future to be secured by repair and reuse as a dwelling as it stood, bearing in mind, for instance, that it did not have evident and significant structural problems. It should be noted that the Lincoln Campbell scheme did include significant elements of new building and extension alongside the refitting of facilities within the proposed dwelling.
48. Whilst I have no doubt there may be scope for debate about the Inspector's choice of the adjectives "extravagant" and "opulent", the essential points are that the Lincoln Campbell scheme did involve choices about the extent of replacement and fitting out, and the Inspector accepted AHWG's case that the opportunity for less extensive solutions to retain the building could exist and the loss of that opportunity weighed against the proposal. There was, therefore, in my view no fundamental misunderstanding or misdirection on the part of the Inspector in this part of his decision.
49. As we have seen, the claimant had the chance, and indeed took the chance, to address and rebut the evidence and the case presented by AHWG by saying in essence that AHWG's evidence was unrealistic, for the reasons set out in the evidence which I have quoted above. Ultimately, the Inspector did not accept that evidence. The conclusion that that evidence was to be rejected was within the legitimate scope of his judgment and his reasons for doing so were clear and properly expressed, both in paragraphs 55 and 81 of his decision, where he noted and accepted the weight to be attached to the lost opportunity for providing a more conservative repair and refurbishment to retain the house as it currently stood.
50. In the light of his conclusions about the section 106 obligation and its continuing effect, his decision was both entirely comprehensible and engaged with all of the main issues on this topic which had been placed before him.
51. For the reasons which I have expressed, I am therefore unable to accept that there is any validity in either ground 1 or ground 2 as advanced by the claimant in this application and it must be dismissed.
52. MR JUSTICE DOVE: Mr Westaway, I received an email yesterday, I think it was yesterday, in respect of which the parties helpfully set out a timescale for future submission of matters. I asked my clerk to express my gratitude for that, and I repeat it to all the parties this morning, and I shall await submissions from everybody in accordance with that timescale to achieve an order at some point in a week's time. If in the meantime you are able to agree an order, obviously then I will be content to receive that as well.
53. MR WESTAWAY: Yes, my Lord.
54. MR JUSTICE DOVE: Good. Thank you all very much indeed.