Scottish Court of Session Decisions

Petitioner: Martin QC, Munro; Semple Fraser

Respondent: Armstrong; Gillespie MacAndrew

Interested Party: Thomson QC, Drummond; Brodies

15 September 2010

[1] The petitioners are Tesco Stores Limited (hereinafter referred to as "Tesco") and are the occupiers of premises operated as a superstore at South Road, Dundee. This superstore opened for business in February 2009. Tesco formerly operated a smaller supermarket at premises at Methven Street, Dundee. The supermarket at Methven Street was closed following the opening of the superstore at South Road.

[2] On 18 January 2010 Dundee District Council (hereinafter referred to as "the planning authority") granted outline planning permission to Asda Stores Limited and MacDonald Estates Group Plc for the development of a foodstore, café and petrol filling station with associated car parking, landscaping and infrastructure at a site on Myrekirk Road, Dundee. The site of the proposed development is approximately 800 metres from the superstore operated by Tesco at South Road. Asda Stores Limited and MacDonald Estates Group Plc were named as respondents in the petition. They were jointly represented at the first hearing and for convenience I shall refer to them in this opinion as "Asda".

[3] At the outset of the hearing I was informed that there were a number of matters upon which all parties participating were agreed. These were, firstly that in determining Asda's application the planning authority was obliged to conform to the development plan unless material considerations dictated otherwise. Secondly, that the relevant Development Plan comprised the Dundee and Angus Structure Plan 2001-2016 and the Dundee Local Plan 2005. Thirdly, that the duty to conform to the development plan was incumbent upon the planning authority by virtue of section 25 of the Town and Country Planning (Scotland) Act 1997. Lastly, that in reaching its decision the planning authority was obliged to properly interpret and apply the policies set out in the development plan and to take account of all material considerations.

[4] In this petition Tesco make two complaints in relation to the decision to grant Asda's application for planning permission. Firstly, it was submitted that the Asda site was an "out of centre" site. I should interject at this juncture to record that there was no dispute that this was the correct categorisation of the Asda site. As an "out of centre" site, it was in a less preferable location for new retail development in terms of the "sequential test" for site selection. In light of this consideration it was submitted by Tesco that in reaching its decision the planning authority had failed properly to apply the "sequential test". This argument was put in two ways. In the first variation of the argument it was submitted that the planning authority had misdirected itself as to the meaning of the sequential test. The second variation of the argument was that the planning authority had failed to take into account a material consideration when applying the sequential test. In either event it was submitted that the decision of the planning authority was vitiated by a failure properly to apply the sequential test.

[5] The second argument advanced for Tesco was an alleged failure to have regard to a material consideration when determining Asda's application. The material consideration which it was submitted the planning authority failed to have regard to was the Lochee Physical Regeneration Framework, a regeneration strategy for the Lochee area of Dundee. As a result of these failures the planning authority were said to have acted unlawfully, the decision to grant planning permission was accordingly vitiated, and fell to be quashed.

[6] Tesco's submissions in support of these arguments fell into 5 chapters. The first was identification of certain areas of agreement between the parties. I have already narrated these in paragraph [3] of this opinion. The second chapter was to outline what was said to be the parameters of the argument between the parties. The third chapter was to take the court to and identify the terms of the policies of the development plan and other material considerations which it was said required to be considered and applied by the planning authority in determining the application. In the fourth chapter counsel took me to what were said to be relevant authorities. Fifthly, and lastly, counsel stated the substantive argument as to why the decision to grant the planning application was vitiated and fell to be quashed.

[7] I have formed the view that I can conveniently deal with the second and fifth of these chapters, that is the parameters of the argument between the parties and the substantive grounds advanced by Tesco in support of its position, together. Before setting forth Tesco's position on these matters I should however set forth counsel's submissions under the third and fourth chapters, the policies and other matters said to be material considerations and the relevant authorities a little more fully.

[8] The third chapter of Tesco's submissions was to take me to the terms of the development plan policies and other matter said to be material considerations in the determination of this application. I should interject at this point to indicate that, in so far as I can determine from the submissions made, there was no significant dispute between parties as to what constituted the relevant policies and for that matter other material considerations to which the planning authority should have had regard. It is probably of assistance if I indicate all the policies to which my attention was drawn and that were said to be relevant. My attention was firstly drawn to the Dundee and Angus Structure Plan 2001-2016 (No.6/2 of process). Within that document my attention was drawn to paragraphs 5.2, 5.7 and the "Town Centres and Retailing Policy 4: Out Of Centre Retailing" contained on page 34 of the document. I was then referred to the Dundee Local Plan Review August 2005 (No.6/3 of process) and in particular policy 45 "Location New Retail Developments" on page 83 of that document. I was then referred to NPPG 8, "Town Centres and Retailing", dated October 1998 (No.6/5 of process). The significance of NPPG 8 is that it is the source of the sequential test, the significance and application of which test lies, as I have already outlined, at the heart of Tesco's first argument. In relation to NPPG 8 my attention was drawn to paragraphs 1, 2, 8, 9 and box 45, 12-15 within that document. I was informed that NPPG 8 had been superseded in 2006 by SPP8, "Town Centres and Retailing" dated August 2006 (No.6/4 of process) and was referred to at paragraph 6 box 1 and box 2(a) - (c), para 15-16 and 38-39 within that document. After my attention had been drawn to these policy documents I was taken to the Planning Retail Statement prepared by Hargest and Wallace, Planning Consultants for Asda, a document dated August 2009 (No. 6/7 of process). This document had formed the basis of Asda's case for planning permission as presented to the Development Quality Committee, the committee of the planning authority tasked with consideration of the Asda application. My attention was drawn to paragraphs 2.23, 2.24, 3.18, 3.33, 4.1- 4.3, 4.10, 4.12, 4.20, 5.2-5.3, 5.12, 5.25, 5.39, and 5.52, of this document. My attention was drawn to the report to the Development Quality Committee (the report is No.6/8 of process). I was taken through this document in some detail and referred to passages on page 2, 8, 9, 11, 12 and 14. My attention was drawn to the fact that the report raised a number of structure plan and local plan policy issues. It was noted that the report recognised that the proposal was contrary to a number of structure plan policies, in particular employment policy 2, policy 4 regarding town centre and retailing and to local plan policies 24 and 45 relating to employment, land and retailing respectively. Notwithstanding being contrary to these policies the overall conclusion of the report, expressed at page 14, was that; "... there are other material considerations of sufficient weight that would justify the setting aside of these policies and offer support for the development...". The other material considerations identified were said to relate particularly to planning and economic benefits that would arise from the development and to improved transportation arrangements for the trunk road and industrial estates adjoining the development. It was further drawn to my attention that whilst the report identifies the above noted areas where the proposal was contrary to development plan policies the report does not identify and state that the proposal was at variance with the sequential test. On the submissions for Tesco this was said to be because the author of the report, apparently accepting arguments advanced on behalf of Asda "...accepted that at present there is no suitable site available to accommodate the proposed development." This approach was said to be at the heart of the planning authorities incorrect approach to the sequential test. Following consideration of the report to committee my attention was drawn to the relevant Minutes of that committee (No.6/16 of process).

[9] Counsel for Tesco then took me to what were submitted to be the relevant authorities. I was referred to City of Edinburgh Council v Secretary of State for Scotland (1998) SC (HL) 33 and in particular to passages in the speech of Lord Clyde at page 43G, 43B and 45A, and to Wordie Property Company Limited v Secretary of State for Scotland 1984 SLT 345 and in particular to a passage in the opinion of the Lord President (Emslie) at page 347-8. In relation to these authorities counsel submitted that two propositions could be drawn. Firstly, that matters of planning judgment are properly the province of the planning authority and may only be challenged if there had been unreasonableness in the Wednesbury sense. Matters of planning judgement included the assessment of material considerations militating in favour of or against a proposed development. Secondly, a failure to take account of a relevant consideration, taking account of an irrelevant consideration, or taking a decision which lacked a proper basis in fact, all provided independent grounds entitling a court to intervene in a planning decision. These grounds were not dependant upon showing that the outcome was unreasonable in the Wednesbury sense. These criteria were all said to be considerations in the present case. It was said firstly, that in the present case there was a failure to take account of relevant considerations. Secondly, the planning authority had taken into account irrelevant considerations. Thirdly, the planning authority had taken account of fact without a proper factual basis. Fourthly, there was a failure to properly interpret a policy relevant to the decision.

[10] I turn now to set forth the second and fifth chapters of Tesco's submissions, what were said to be the parameters of the argument and the substantive argument. Essentially, there were two arguments presented, albeit that the first argument was divided into two separate branches. The first argument was that in arriving at the decision to grant Asda planning permission the planning authority had failed properly to apply the sequential test. This argument was set forth in paragraphs 6-10 of the petition. The sequential test was said to require the planning authority to consider locations for new retail development in a sequential order as follows: (1) town centre; (2) edge of town centre; (3) other commercial centres identified in the development plan and (4) out of centre locations that are, or could be made, easily accessible by a choice of transport modes. Application of this test was required by policies of the development plan. It was submitted that the planning authority misdirected itself as to the meaning of the sequential test and thereby reached a conclusion which should be characterised as an error. Moreover the planning authority failed to take account of material considerations in its application of the sequential test and was therefore not entitled to reach the decision that it did in its purported application of that test. Either way it was contended the decision was vitiated, by failing properly to apply the sequential test the planning authority had acted ultra vires and the decision fell to be reduced.

[11] The second argument advanced by Tesco was that in reaching its decision to grant the Asda application the planning authority failed to take account of a material consideration, a regeneration strategy for the Lochee area of Dundee entitled the "Lochee Physical Regeneration Framework". This argument was set forth in paragraphs 11 and 12 of the petition. The submission was that the planning authority in reaching its decision had proceeded on the basis that the regeneration strategy for Lochee was only a material consideration in relation to proposed development in the Lochee district centre. It was submitted that such an approach was flawed, and indeed as a matter of law incorrect. It was contended that as a matter of law where a planning authority had adopted a strategy for the regeneration of an area, in this case the Lochee district of Dundee, then the terms and objectives of that strategy were a material consideration in relation to development outwith that area . Failure to consider the strategy where, as was the case in the present instant, the development proposed was not necessary to meet a need and where, further, the proposed development was likely to impact adversely on the vitality and viability of the area covered by the strategy would be a failure to have regard to a material consideration sufficient to vitiate the decision. Both these considerations were met in the present case and, accordingly, a failure to have regard to the "Lochee Physical Regeneration Framework" by the planning authority constituted a failure to have regard to a material consideration vitiating the decision.

[12] In support of the first leg of the argument, that the planning authority had misdirected itself as to the meaning of the sequential test, counsel presented what was said to be the correct approach. That approach was said to be to leave aside the particular aspirations of the developer in terms of scope and scale and for the planning authority to ask itself, starting with the town centre, whether there were any suitable sites for retail development in the area. Approached in this way the submission was that the question would be answered in the affirmative because the former Tesco Supermarket site at Methven Street was available as a site suitable for a class 1 retail foodstore within the area covered by the development plan. The planning authority had not approached the Asda application in this way. The approach of the planning authority was to prioritise the aspiration of the developer, in this case Asda. On counsel's argument because Asda stated that the Methven Street site was not suitable because of its size the planning authority did not consider it as an alternative site in the development plan. That approach was submitted to be incorrect. The consequence of the approach adopted by the planning authority would be that the sequential test could always be avoided by a developer simply by saying that any premises were not suitable. That would have the unfortunate consequence of undermining the purpose and objective of the sequential test. The alternative approach, as advanced on behalf of Tesco, would support and uphold the sequential test. Every site would be considered without reference to the subjective requirements or aspirations of an individual developer.

[13] The argument in relation to misdirection in relation to the sequential test was presented in a further way. That was that the planning authority had simply misunderstood the sequential test. In that regard my attention was drawn to R (Raissi) v Secretary of State for the Home Department [2008] QB 836 which case was said to provide authority for the proposition that a failure to apply the correct interpretation to a policy could be a ground for invoking the supervisory jurisdiction of the court. Whilst it was accepted that this case concerned the interpretation of ministerial policy in the field of immigration and not planning law it was further contended that in Johnson Brothers v Secretary of State for Communities and Local Government [2010] EWCA 254 recognition had been given to the possibility of extending the dicta in Raissi to planning law.

[14] In making the submissions in relation to misdirection that I have recorded counsel recognised that there were authorities which suggested that all questions of interpretation of planning policy fell within the planning judgement of the decision maker and could only be challenged on Wednesbury grounds. The authorities that were drawn to my attention, in this regard were R v Secretary of State for the Environment (ex‑parte Tesco Stores Limited) [2001] JPL 686, Freeport Leisure Plc v West Lothian Council [1999] SC 215, Cooperative Group (CWS) v Highland Council (2008) CSOH 28, Virgin Cinema Properties Limited v Secretary of State for the Environment [1998] 2 PLR 24 and Lidl UK v North Ayrshire Council 2006 CSOH 165.

[15] Counsel further recognised that the submission in relation to misdirection as to the proper meaning of the sequential test required to consider and address what was described as an apparently contrary decision of Lord Glennie in Lidl UK GmbH v The Scottish Ministers [2006] CSOH 165. This case involved the challenge by way of judicial review of the decision of a reporter in relation to the application by the reporter of a local plan policy concerned with new retail development in "Edge of Centre/Out of Centre Development", essentially the same area with which the present application is concerned. The issue before Lord Glennie was whether the reporter had, in reaching his decision, correctly applied the sequential test. The critical part of Lord Glennie's decision is, for present purposes, in paragraph [14] of his opinion where he states;

"The question is whether the alternative town centre site, in this case the existing Lidl site, is suitable for the proposed development, not whether the proposed development can be altered or reduced so that it can be made to fit into the alternative site. If that was not his approach, it is impossible to see how he could have arrived at this part of his decision by any coherent reasoning since, on the undisputed facts the existing Lidl site has a smaller floor area than is required for the proposed development. On either approach I am satisfied that this part of his decision is wrong in law and can properly be categorised as irrational and ultra vires."

It is clear that Lord Glennie's approach was to approach the sequential test from the standpoint of the requirements of the application, if the alternative site did not meet or conform to the site requirements in the application it should not be considered as an alternative.

[16] The second strand of the argument was the failure by the planning authority to take account of a material consideration. [The Lochee Physical Regeneration Framework.] It was here submitted that the Lochee district of Dundee fell within the primary catchment area for the proposed Asda store. This was said to be an undisputed fact. It was also submitted that the planning authority did not consider that the proposed Asda store was necessary to address any deficiency in shopping provision within the catchment. The planning authority did however consider that the Asda proposal would adversely impact on the vitality and viability of the district centre. In these circumstances it was submitted that the relevance of the terms and objectives of the Regeneration Framework was obvious and omitting to consider the compatibility of the Asda proposal with that framework constituted a failure to consider a material consideration.

[17] In response to these submissions, senior counsel for the planning authority addressed me in a submission split into two parts, namely how he said I should approach the issue of the sequential test and, secondly, his response to the petitioner's submissions in relation to the alleged failure to have regard to a material consideration.

[18] In relation to the question of the interpretation of the sequential test I was firstly reminded that in considering a planning application the authority required to comply with the provisions of Sections 25 and 37 of the Town Country Planning (Scotland) Act 1997. He then submitted that the correct approach to the issue of determination of the planning application was that approved by the House of Lords in City of Edinburgh District Council (supra) and in particular in the speech of Lord Clyde at page 44G, 45A-B, F. On the basis of this authority he submitted that in its approach to consideration of the grant of planning permission the court should proceed on the basis that there was no requirement for detailed consideration of every point at issue by the planning authority. The court simply required to be satisfied that the planning authority in reaching its decision had considered the relevant key issues. Support for this approach was to be found in Murray Council v Scottish Ministers [2006] SC. 691 at paragraphs 17, 28 and 30.

[19] Applying that approach to the present case there were, he submitted, two critical key issues. These were, firstly, could the court be satisfied that the planning authority had complied with policy and, secondly, whether the proposal complied with the development plan. It was his submission that in both these key areas the planning authority as a matter of fact agreed with Tesco's submission to the authority. That submission was that the Asda application did not comply with the development plan. Tesco had argued to the planning authority that the Asda proposal failed by reason of failure to comply with the development plan. That being the case there was no difference between the position of the planning authority and Tesco. There was, as a matter of law, no actual requirement to comply with the sequential test because it was implicit in the decision of the authority that the Asda proposal did not comply with the development plan. In these circumstances the planning authority had proceeded, as they required to do as a matter of law, only on the basis that there were exceptional circumstances justifying the grant of the application notwithstanding its failure to comply with the development plan. The decision to allow the Asda application, was a planning decision. As a planning decision the ability of the court to interfere was limited to circumstances whereby that decision could be said to be unreasonable in the Wednesbury sense. In that regard reference was made to Oxton Farms v Selby District Council and Persimmons Homes (Yorkshire) Limited (English Court of Appeal 18 April 1997), Sainsbury Supermarket Limited v Perth and Kinross Council (2009) CSOH 138 and City of Edinburgh District Council v Secretary of State for Scotland 2001 SC 957, at paragraphs 13 and 14. The last mentioned case was a decision of the Inner House. Counsel for the planning authority submitted that the decision was in point with the present case and that, therefore, I was bound to follow the ratio of that decision.

[20] In relation to the submission that the authority had failed to have regard to a material consideration, namely the "Lochee Physical Regeneration Framework" counsel for the planning authority submitted firstly, that document was not a material consideration so far as the Asda application was concerned. The importance of that document was confined to applications within the Lochee area of Dundee. The Asda application fell outwith that area. The framework was a material consideration for applications within the area which it covered. It was not however a material consideration for the purposes of the Asda site. Further and in any event, contrary to the position adopted by the petitioners, the framework was a matter within the knowledge of the committee that decided the Asda application and was considered by them. In this light my attention was drawn to the fact that the framework document was drawn to the attention of the committee by the petitioner's planning consultant in his presentation to the committee on 18 January 2010, that is prior to the granting of planning permission.

[21] The arguments advanced by the planning authority were adopted by counsel on behalf of Asda. In supplementing the submissions junior counsel for Asda drew to my attention that notwithstanding Tesco's position that the Methven Street site, that is the former Tesco Supermarket site, was marketed for sale that fact was not known to Asda. It was Asda's position that whilst the estate agents had prepared particulars and that whilst the site was no doubt technically available for sale there had been no active marketing of the site by or on behalf of Tesco. In particular when representatives of Asda had visited the locality they had seen no boards or hoardings on the site advertising its availability for let or sale. Furthermore, Tesco had done nothing to bring the availability of the site to the attention of Asda notwithstanding Tesco's knowledge of the Asda application.

[22] In the dispute giving rise to this petition for judicial review it was common ground amongst all parties that the planning authority were required to determine Asda's application in accordance with the provisions of the development plan, unless there were material considerations justifying departure from the provisions of the plan. The planning authority, in granting the Asda application, departed from the provisions of the development plan and their reasons for so departing have been challenged. Two distinct challenges are made to the decision to depart from the provisions of the development plan. The first raises the issue of the application of a planning policy by a planning authority. The second is a straightforward contention that a decision maker, a planning authority, failed in reaching a decision to have regard to a material consideration.

[23] So far as the first of these challenges is concerned the starting point must, in my view, be the consideration that the interpretation of the policy is, and should in my view always be, primarily a matter for the decision maker. This consideration is all the more powerful when the decision maker is a body created for the very purpose of implementing policy in a specialist area and which has within its ranks specialists in the relevant area. Those considerations plainly apply to planning authorities. Clear support for that general consideration is found in authority from the highest sources (see Lord President Emslie in Wordie Property (supra) at p347-8, approved by Lord Clyde in City of Edinburgh (supra) at p144 and Lord Hoffmann in Tesco Stores v Secretary of State for the Environment [1995] 1 WLR 759 at p780). It is against that legal framework that the approach of the planning authority to the sequential test in the present case must be considered. The most recent formulation of the sequential test, and the formulation to which the planning authority would require to have primary regard when considering the Asda application is to be found in SPP8 "Town Centres and Retailing". This document is a published statement of the Scottish Executive of its policy in relation to certain matters. It is however, in my opinion, important to note that it is statement of policy designed to facilitate the delivery of national government objectives, not a rule of law. This consideration is plainly appreciated by the authors of the document who recognise that in applying the sequential approach (the nomenclature adopted in SPP8) planning authorities, developers and owners and occupiers of land require to adopt a flexible and realistic approach (paragraph 16). Having regard to the fact that the sequential test or approach is a policy and not a rule and that it is expected that this policy should be implemented in a flexible and realistic way it is, in my view, very difficult to suggest, as was the position of Tesco, that there is one correct method of applying the test to the exclusion of other possible approaches. I consider that it is a matter for the exercise of the planning judgement of the planning authority as to how they decide to apply the sequential test. If I am correct in that matter then a challenge to the application of the sequential test would only be available if a disappointed person could establish Wednesbury unreasonableness.

[24] Tesco presented a variation of their argument on misdirection in relation to the sequential test, adopting an argument which was, as I understood it, designed to avoid the need of establishing Wednesbury unreasonableness. This argument relied upon dicta in the English Court of Appeal in R (Raissi) supra to the effect that the test to be applied in interpreting a ministerial policy statement was to ask what a reasonable and literate man's understanding of the policy would be, not whether the meaning attributed to the words of the policy by the minister was a reasonable one. I have reservations whether this dicta is of assistance in the present case. In the first instance, as is noted in R (Raissi) supra itself there is doubt as to whether the "reasonable meaning" approach is accepted in planning cases (paras 118-120). More fundamentally even assuming that the correct method of approaching the interpretation of planning policies such as the sequential approach in SPP8 is by a reference to a reasonable man's understanding of the policy, where can it be said that in deciding the Asda application the planning authority transgressed? The complaint advanced on behalf of Tesco was that the planning authority adopted an interpretation of that policy which they did not agree with. Although it was submitted that the approach adopted was incorrect Tesco were unable to point to a definitive, binding statement of how the policy should be interpreted and implemented. Since, as I have already observed, the sequential approach is a policy and not a rule this is not surprising. There may be a number of ways to implement a policy and, whilst different interpretations of policy may yield different outcomes that is not to render one approach axiomatically correct and others incorrect. Equally I do not consider that a reasonable man might not consider that any of a number of interpretations of a policy were each reasonable. I would note that in Lidl UK GmbH (supra) Lord Glennie favoured the approach to the sequential test adopted by the planning authority in the present case, which does, in my view, lend a degree of legitimacy to that approach. Having regard to these considerations I am unable to accept the alternative formulation of the challenge to the sequential test advanced on behalf of Tesco.

[25] I turn to the second argument advanced by Tesco, failure to have regard to a material consideration, the Lochee Physical Regeneration Framework. Before this argument could get off the ground Tesco would, of course, require to satisfy the court that the framework was a material consideration in relation to the Asda application which the planning authority were required to consider. I have reservations whether this hurdle has been surmounted. The document, in terms, is concerned with one distinct area of the City of Dundee, the relevant application concerns land outwith that area. Furthermore, it is plainly the case that in formulating the development plan the needs of the district of Lochee were taken account of in the context of the whole area covered by the development plan. When these factors are considered I form the view, albeit tentatively, that the regeneration framework might only be a material consideration within the context of Lochee. There is however a more fundamental obstacle to this argument, that advanced by counsel for Asda, namely that the relevant committee had in fact considered the regeneration plan. That argument is, in my view, established. For that reason I find it relatively easy to reject the second argument advanced on behalf of Tesco.

[26] In the result I reject both of the arguments advanced by Tesco. Accordingly I uphold the third plea in law for both respondents and dismiss the petition.