Scottish Court of Session Decisions

OUTER HOUSE, COURT OF SESSION

[2014] CSOH 153

P109/14

OPINION OF LORD GLENNIE

In the petition of

TESCO STORES LIMITED

Petitioner;

for judicial review of a decision of Perth and Kinross Council dated 13 November 2013

Petitioner:  Currie QC, Burnet;  Morton Fraser

Respondent:  Findlay QC;  DWF LLP

Interested Party (Sainsbury’s):  Armstrong QC;  Shepherd and Wedderburn

23 October 2014

Introduction

[1]        This petition for judicial review concerns a decision by the Perth and Kinross Council (“the Council”), the relevant planning authority, to agree to the removal of a condition in an agreement between itself and Sainsbury’s Supermarkets Limited (“Sainsbury’s”) in terms of section 75 of the Town and Country Planning (Scotland) Act 1997.  The section 75 agreement was ancillary to the grant by the Council of Sainsbury’s application for planning permission to construct and operate a large retail superstore (with associated parking, petrol station and car wash), on a site in Perth immediately south and west of the junction between the A9 and the A85.  The condition in question prevented trading at the new superstore until the Council had let the contract for road improvements at the A9/A85 junction, those improvements being regarded as necessary to prevent any net detriment to the local road network as a result of trading from the new superstore.  The removal of that condition raises the prospect of the new superstore being open for business long before completion of the road improvement works needed to mitigate the increased traffic congestion resulting therefrom and without any guarantee that those works will ever be carried out.

The section 75 agreement and the decision to vary it
[2]        The petitioner (“Tesco”) operates a supermarket store just off the A85 (which at that point has become Crieff Road), immediately to the north and east of the A9/A85 junction, i.e. on the opposite corner of the junction and only a few hundred yards away from the site of the proposed development.  Tesco is concerned about the effect of the new superstore on traffic in the area and, in particular, on traffic seeking to access its own supermarket. 

[3]        Throughout the planning process, it was recognised that access to the site of the proposed development would require improvement, as would the A9/A85 road junction.  The proposed superstore would clearly add to that congestion. 

[4]        On 30 May 2012 a decision was taken to grant the application subject to a number of conditions, with the decision notice not to be issued until a section 75 agreement was entered into.  Discussions took place concerning (a) the road network improvements to be carried out by the Council to improve the A9/A85 junction and (b) a traffic mitigation sum (agreed at £2.18m) to be paid by Sainsbury’s for the purpose of part funding those improvements.  In due course the section 75 agreement was entered into between the Council and Sainsbury’s, followed on 19 April 2013 by the formal grant of planning permission.

[5]        The important clauses of the section 75 agreement are clauses 5 and 6.  In terms of clause 5, Sainsbury’s agreed to pay the agreed traffic mitigation sum before it commenced work on the development.  Clause 6 contained a trading restriction to the effect that the new superstore should not open for trading until such time as the Council had let the contract for the construction of the road improvement works.  At that time, as appears from the preamble to the section 75 agreement, the Council anticipated that it would make a decision on funding the road network improvements by 28 February 2013; and, subject thereto, would begin the requisite procurement process by 31 March 2013 and be in a position to let the construction contract itself by 31 December 2013. 

[6]        The rationale for linking the commencement of trading to the letting of the construction contract in this way appears from paras 132-149 of the Report of Handling (hereafter “Report”) dated 14 May 2012 by the Development Quality Manager (“DQM”) to the Development Management Committee in advance of its meeting of 30 May 2012.  There was known to be existing traffic congestion in the vicinity of the proposed development.  Sainsbury’s had put forward a number of proposed road traffic “mitigations” in order to ensure that the new superstore would cause “no net detriment” to the road network (an expression to which I shall return).  These included improvements to the existing access from the site, localised road widening, reconfigured and re-phased traffic signals, and so on.  The Council had concluded that those measures alone would not be sufficient to deal with the anticipated problems on the local road network.  There had already been proposals to upgrade the A9/A85 junction with a view to alleviating the existing traffic congestion and providing capacity in the local road network for additional development.  Given the local road network capacity issues and the fact that the junction improvement had not yet been carried out, the proposal to build a superstore on the site might be seen as premature since, from a transport point of view, the proposed development could not be supported without the upgrading of the A9/A85 junction being committed to.  However, both the construction of the superstore and the proposed junction improvements would take time.  If Sainsbury’s was allowed to commence construction of the new supermarket, that would trigger its obligation to pay the traffic mitigation sum, thus contributing to the proposed junction improvements and enabling progress to be made on those improvements.  The perceived problem was that that timing created the possibility of the new superstore being completed and open for trading before the A9/A85 junction upgrade was complete.  If that happened, then at peak periods there might be an exacerbation of traffic congestion in the immediate vicinity.  But if commencement of trading at the new superstore was restricted by a section 75 agreement until such time as the contract for the junction improvements was let, thus ensuring that there would definitely be a new junction, this exacerbation of traffic congestion would only be for a limited and finite period, i.e. until the new improved junction became fully operational.  The new junction was regarded as a long-term and significant improvement both for the immediate area (particularly given the proposed new development) and for Perth as a whole.

[7]        At a meeting on 26 June 2013, the Council committed itself to funding Phase 1 of the Perth Transport Futures project, which included the A9/A85 junction improvement works.  That already represented some slippage from the timetable set out in the section 75 agreement.  At some point thereafter it became apparent that there would be further slippage from that timetable due to uncertainty as to when, or even whether, the Council might obtain control of some of the land necessary for the junction improvement works.

[8]        On 25 September 2013 Sainsbury’s submitted an application to modify the section 75 agreement so as to de-couple the commencement of trading from the letting of the road construction contract.  They expected to be in a position to commence development by April 2014 and to be ready to open for trading as early as spring 2015.  However, there was uncertainty about when the construction contract would be let.  There was now no prospect of it being let by 31 December 2013 as previously envisaged.  They would not wish to be in a position of having completed the development but then being unable to commence trading from the new store because of a delay in the letting of the road junction construction contract.  If clause 6 of the section 75 agreement remained in force, they would not want to begin the development works without knowing that the store could actually open for trading when the development was complete.  In those circumstances they were likely to delay starting the development and consequently put back the date for paying the traffic mitigation sum.

[9]        On 13 November 2013 the committee approved the variation and agreed to delete clause 6 from the section 75 agreement.  The justification recorded in the minutes was in the following terms:

“Justification: The requested modifications are considered to be acceptable as the potential impact on the local road network would be for a temporary period only, even though this would be for a longer period of time than originally envisaged, and that flexibility would be afforded to the Council to utilise the financial contribution in alternative ways if required to ensure the local road network is not compromised unduly.”

The reference to “flexibility” arises out of a proposed change of definition in the section 75 agreement, which was also approved, enabling the Council to use the traffic mitigation sum for a wider variety of road improvement purposes and, if it thought fit, to take other steps to alleviate the increased traffic congestion even before the road junction improvements were carried out.

[10]      The decision to approve the deletion of clause 6 was taken on the basis of the information and recommendations contained in a Report by the DQM dated 23 October 2013.  That Report identified applicable General Policies from the Perth Area Local Plan 1995 (incorporating Alteration No.1 Housing Land 2000) (hereafter “PALP1”).  Policy 1 required the development to be judged against a number of criteria, one of which was that “the local road network should be capable of absorbing the development”.  It also identified relevant policies in the Proposed Local Development Plan 2012 (“PLDP 2012”), including (i) a statement that proposals for edge of centre or out of centre locations (such as this was) would only be acceptable where “(f) Any detrimental effects identified in the transport assessment are mitigated” (Policy RC4: Retail and Commercial Leisure Proposals); and (ii) a requirement that “the local road network should be suitable for the traffic generated by the proposals” (Policy ED1A: Employment and Mixed Use Areas).  It stated that the “determining issues” were whether “the proposal complies with Development Plan policy; or if there are any other material considerations which justify a departure from policy.” 

[11]      Dealing specifically with the proposed deletion of clause 6, the Report noted that it had been thought that the Council would be in a position to let the construction contract by the end of 2013.  It outlined Sainsbury’s position, to the effect that the development of the store would not commence when it was not certain that the store would be able to commence trading immediately on completion (para 31), and commented that:

“As the applicant would not be willing to commence development of the store with the current trading restriction in place the outcome of this application to vary the planning obligation is fundamental to the approved project being taken forward.”

The Report noted that, since the section 75 agreement was signed, projected timings for the road improvement scheme had slipped, in part due to difficulties over land acquisition and potential complexities of any necessary compulsory purchase order (“CPO”).  There were also significant design changes being considered.  It was now envisaged that the design and build contract might not be awarded until December 2015, with the road potentially opening in June 2017.  If the land acquisition process was unchallenged, the road construction contract could still be let before trading began at the new store.  But the worst‑case scenario was that there would have to be a CPO and even a Public Inquiry to consider objections to it.  If that happened, trading at the superstore might begin even before the Council learnt whether or not the CPO was approved; and, if the CPO was rejected, the road improvement scheme could not be progressed at all.

[12]      The conclusion on this part of the Report was set out at para 33.  I should quote this in full:

“33       The proposed deletion of Clause 6 has no impact on the policy assessment of the land use aspect of the associated retail superstore development.  The proposed development remains the same.  However, the deletion of Clause 6 would potentially extend the period of time additional traffic generated by the retail store opening would impact on the road network part of the road improvements being completed.  Existing Clause 6 allows for the retail store to open when the road improvement contract is let.  It is therefore already accepted that the retail store can open before the road improvements are completed.  The deletion of Clause 6 would extend the period additional traffic would impact on the road network by allowing the retail store to open prior to the road improvement contract being let.  It is, however, considered that the impact on the road network, whilst that may be significant, will be temporary and for a period of some 27 months rather than the more limited period originally envisaged.  While this increase in time is disappointing it is understandable that the developer does not wish to be held back from developing their store due to the difficulties associated with the Council’s attempts to bring forward the associated road improvement scheme.  The risk of the road improvement scheme not going ahead appears to be limited.  There is confidence the scheme will be delivered.  The road improvement plan is now in the Council’s Capital Budget Plan and is part of the strategic transport policy of the emerging Proposed Local Development Plan.  It should be noted that, although the on-line road improvement works required as part of the superstore planning permission would have some immediate benefit in the area between Tulloch Terrace and the Sainsbury’s supermarket site, these alone will not resolve the issues in the wider area.  I therefore consider this element would not be significant in terms of the assessment of relevant policies within the Development Plan and conclude therefore that the deletion of Clause 6 would not be contrary to the development plan.”

The “period of some 27 months” is the period from spring 2015 (when Sainsbury’s said that they expected to be ready to commence trading) to June 2017 (the date when the road would “potentially” open after the junction improvements).  The figure is correct arithmetically;  but it assumes that Sainsbury’s expectation as to when the new store will open for business is reliable and, perhaps more importantly, it assumes that the road improvement contract will be let by December 2015.

[13]      Formal notice approving the application for modification of the planning obligation was issued on 21 November 2013.  The justification in that notice read as follows:

“Justification: The proposal is in accordance with the Development Plan and there are no material reasons which justify a departure from the Development Plan.”

Additional matters
(i)         the original planning process
[14]      It is necessary to set out some of the matters considered in relation to the original grant of planning permission for the superstore.  These emerge from the Report of the DQM dated 14 May 2012 which was submitted to the committee prior to its meeting on 30 May 2012 and which formed the basis upon which planning permission was granted.  The Report discusses matters under a number of different headings and is, perhaps inevitably, somewhat repetitive, since the same matters call for discussion under different heads.  Certain points are made in the report which are relevant to the issues under consideration.  I summarise them as follows.

(a)        In many respects the proposed superstore did not tick the boxes for the grant of planning consent.  It failed the quantitative test.  Qualitative benefits were marginal and not strong enough to outweigh the quantitative issues.  The sequential assessment presented by the developers was flawed, since no need had been shown for a store of that scale.  The store was in the wrong place having regard to existing residential areas within Perth or those likely to develop in the near future.  PLDP 2012 did not allocate the site for retail use.  Planning consent for large scale developments on the A85 was embargoed until such time as the construction of the proposed A9/A85 junction had commenced.  On that basis there was little retail planning policy support for the proposal.  There were sites within or on the edge of the town centre better placed to provide convenience retailing of a more acceptable scale.  The economic situation was not a strong enough reason to relax national and regional plan policies regarding out of centre retail proposals.  As there was no capacity within the Perth area, the qualitative reasons to support the proposal needed to be strong and not to have a serious adverse impact on town centre shopping.  At that point a negative recommendation might have been expected, since the qualitative benefits had been assessed as “marginal” (and certainly not “strong”).  However, after explaining that, with certain imposed restrictions, the store was unlikely to have a significant impact on city centre convenience retail units, the Report concluded that, although the quantitative argument was not fully satisfied, there would nonetheless be some benefit to Perth residents from the introduction of an additional and different market operator and it was possible that the accessibility concerns could be at least partially addressed.

(b)        During the planning process, issues were raised relating to transport and traffic.  These included a concern about the adequacy of the existing road network and transport infrastructure to cope with the additional traffic generated by the proposed development.  The additional traffic also raised safety concerns about pedestrians and cyclists.

(c)        It had for some time been recognised that the biggest single constraint facing the Perth area was the capacity of the roads infrastructure in and around Perth.  There needed to be significant improvements to the whole transport network, to deal with both congestion and pollution.  There was existing traffic congestion in the vicinity of the proposed development, particularly around the A9/A85 junction.  PALP1 had already recommended alterations to that junction.  The provision of the new junction would result in a long-term and significant improvement not only for the immediate area and the new development but for the wider area and Perth as a whole.  It was a key component in achieving the aims of the PLDP, allowing future development on the A85 corridor and opening up land to meet employment and housing needs.  A planning application had already been submitted.  Subject to the usual statutory procedures, it was anticipated that the improved junction could be operational within a very few years.

(d)        Recognising the need to comply with the Development Plan, the Report discussed Policy 1 of PALP1 which, as noted above, required local road networks to be capable of absorbing the additional traffic generated by the development.  The Report explained that this meant that any development should result in “no net detriment” to the operation of the associated road network; and that matters such as road capacity, safety, etc., should be “no worse” after a development was open than they were before.  While developers were not required to resolve existing problems on the road network, they were required to undertake works to offset any negative effect of their development.

(e)        Sainsbury’s had put forward a number of suggested “mitigations” designed to ensure the traffic situation was not exacerbated in any way as a result of the proposed development.  They included: improved access from the A85; localised road widening; the introduction, reconfiguration and re-phasing of various traffic signals; and the provision of extra traffic lanes in certain places.  However, the Council’s Transport Planners had concluded that while those measures would go some way to producing “no net detriment” so far as concerned the trunk road network, but they would not resolve the problems in the local road network. 

(f)         The development of the proposed A9/A85 junction upgrade which was currently being progressed would not only alleviate the existing traffic congestion but would provide capacity in the local road network for additional development, such as the proposed superstore.  Although (as set out above) the development could be seen as premature, since the junction improvements had not yet been improved, it was appropriate (given the timescale for construction of the superstore and the junction improvements) to allow the development to proceed, thereby obtaining a contribution from the developer towards the proposed junction improvements, and shortening the timescale involved provision of the junction improvements.

(g)        The Report suggested restricting the commencement of trading from the new store until such time as the contract for the junction improvements was let.  That would ensure a commitment to the provision of the new junction before trading began.  It might be that, as a result, the store would be trading for a “short while” with only the applicant’s proposed mitigations in place, but this would only be until such time as the new junction was fully operational.

(h)        On that basis, subject to the road junction improvements going ahead and subject to the developer making a financial contribution to the construction of the new junction, the development was considered to be in compliance with Policy 1 of the PALP1 in regard to transport and road safety issues.

[15]      The conclusion to that part of the Report was that the development could not be supported without the new A9/A85 junction.  It would therefore be reasonable to require (by way of a section 75 agreement) that the development should not become operational until such time as the new junction was committed to, with the contract being let or otherwise within a reasonable period to be agreed.  Given the essential requirement for the provision of the new junction to fully mitigate the additional traffic from the proposed development and the financial commitment required from the Council, it was reasonable to require a financial contribution from the applicant to enable the new junction works to be progressed in the very near future.  Although the proposal failed to accord with National Guidance and Development Plan policy in relation to retail development on an out of centre site, it was acceptable in terms of design, siting and landscape impact; and the site could be accessed satisfactorily, with appropriate parking, road infrastructure improvements and servicing, together with the early implementation of the proposed junction improvements to the A9/A85 junction.  When account was taken of the policy background, the increase of choice for the local consumer, the economic benefits and the wider development strategy for Perth, there was, on balance, a strong enough case to justify setting aside the policy concerns of the development plan. 

[16]      On that basis the Report recommended approval of the application subject to a section 75 agreement being entered into.  When the Committee met and granted the application on 30 May 2012, it also resolved, purportedly in accordance with the recommendation in the Report, that the decision notice should not be issued until the parties had entered into a section 75 agreement relating to the “supermarket development not commencing” prior to the letting of a contract for the road junction upgrade and the traffic mitigation sum being paid.  Concern was expressed that that wording – in particular the words “development not commencing” – would prevent Sainsbury’s even starting the development work before the road construction contract was let.  This had not been the recommendation in the Report.  In November 2012 the Committee agreed to amend the resolution so that it reflected an agreement that trading would not commence before the construction contract was let.

(ii)        re-assurance given to Tesco
[17]      On 1 June 2012, before the terms of the section 75 agreement had been settled, Semple Fraser wrote to the Council on behalf of Tesco expressing concern about anticipated increases in the level of peak hour traffic congestion in the vicinity of Crieff road as a result of the new superstore.  They asked the Council to confirm its intention to include (either in the planning conditions or in a section 75 agreement) a suspensive condition to the effect that no trading from the store would be permitted until such time as the new A9/A85 junction was in place or, at the least, a contract for the works had been let.  Only in that way, they said, could the Council and the other parties be certain that the new junction would in fact be deliverable within a reasonable time of the new superstore opening for business.

[18]      The Council replied by letter of 15 June 2012 providing confirmation that

“the Council does intend to ensure that no trading from the new store will be permitted until such time as a contract for the new A9/A85 junction has been let and to secure this position through the terms of Section 75 Agreement.”

(iii)       progress of the road junction improvement works
[19]      At about the same time as the planning application for the new superstore was being considered, the DQM submitted a Report recommending approval of the application for the proposed upgrading of the road infrastructure around the junction.  He concluded that there was “an established and ongoing traffic and air quality issue surrounding the A9/A85 junction, with the current junction acting as a major constraint not only on the transport network but also on further development of sustainable economic growth in and around Perth.  To do nothing was not a viable long-term option – a major upgrade of the junction was essential.  Planning Permission for the junction upgrade was granted on 31 May 2012, the day after the decision to grant planning permission for the superstore. 

[20]      A Report by the Head of Finance dated 19 December 2012, which was concerned with funding for the road junction improvements, stated that an early decision on the Council’s commitment to progress the scheme was required in order to allow Sainsbury’s to enter into a section 75 agreement with the Council.  That would allow the superstore development to proceed, with a planned opening towards the end of 2014.

[21]      On 19 June 2013 the Executive Director (Environment) submitted a Report for consideration by the Council at its meeting on 26 June 2013.  The Report outlined the key phases of the Perth Transport Futures project, with a particular focus on the A9/A85 junction and the link road to Berthapark.  The project would be delivered over a number of years in four phases, Phase 1 being the enhanced A9/A85 junction and the Berthapark link.  Work was ongoing in relation to site investigations for Phase 1.  Construction was expected to take place between financial years 2015/2016 and 2017/2018.  It was noted that the budget included a contribution from Sainsbury’s of £2.18 million (the traffic mitigation sum), leaving a net unfunded cost of £20.92 million.  The Council needed to plan on the basis of funding the £20.92 million in the short to medium term.  Unless significant Scottish Government contributions were forthcoming, the Council should base its decision on whether to commit to funding Phase 1 on the premise that it would have to borrow to fund that £20.92 million.  The Council was asked to commit to funding Phase 1 of the project on that basis.  That recommendation was accepted by the Council.

[22]      The application to vary the section 75 agreement followed shortly after this, on 25 September 2013.

Tesco’s challenge to the decision to delete clause 6 of the section 75 agreement
[23]      Tesco challenged the decision to delete clause 6 of the section 75 agreement and thereby de‑couple the commencement of trading at the new superstore from the junction improvement works designed (in part) to resolve the exacerbation of traffic congestion likely to result from it.  It was accepted that even with that provision in the section 75 agreement there was going to be a period of heightened congestion after the new superstore opened for business; but that heightened congestion was only likely to last for a relatively short period.  The period could, in any event, be regarded as finite, since the letting of the road construction contract enabled it to be said with some confidence that the junction improvement works would be delivered.   The effect of the deletion of clause 6 meant that it was quite uncertain whether the congestion arising from the increased traffic caused by the opening of the superstore for business would be mitigated by road improvement works within a reasonable time or, indeed, at all.  In the application to vary the section 75 agreement, all that was said on behalf of Sainsbury’s was that it was now clear that the construction contract would not in fact be let by 31 December 2013.  Consideration of the matter by the Council in its Report dated 23 October 2013 revealed no greater clarity.  The Report asserted that it was “now envisaged that the design and build contract [i.e. the contract for the junction improvement] may not be awarded until December 2015”, but set out no factual basis for this assertion.  Indeed, the Report raised the spectre (“the worst‑case scenario”) of the necessary land acquisition being challenged, a CPO being required, objections being raised, a public inquiry being held and the CPOs being rejected, in which case “the road improvement scheme could not be progressed”.  It was all wholly speculative.  For aught known, it remained possible that the target of having the construction contract let before trading began in, say, Spring 2015 could still be met.  If so, all well and good; there was no need to remove clause 6 from the section 75 agreement.  But it was also possible that there could be significant delays in letting the construction contract; and it might in fact never be let because of difficulties in acquiring the land.  In those circumstances the effect of removing clause 6 would be to allow the superstore to commence trading without any solution to the traffic congestion resulting therefrom.  The Report expressed “confidence” that the road improvement scheme “will be delivered” but gave no basis for that confidence.

[24]      In the Report of 14 May 2012 relied upon by the Committee at their meeting of 30 May 2012, it was recognised that the development had to be judged against the criteria in PALP1, specifically the requirement that the local road network should be capable of absorbing the development.  The interpretation given to that policy in the Report was that there should be “no net detriment” to the road network as a result of the development, and that “conditions such as road capacity, safety, etc., should be no worse after a development is open than they were before”.  The development could not be supported without the improved A9/A85 junction being committed to.  That was the reason for requiring the section 75 agreement.  If as a result of the deletion of clause 6 the new superstore was allowed to begin trading before the road construction contract was let – indeed without any regard to the state of play as regards the road junction improvements – that would wholly undermine the basis upon which planning consent was granted.  The justification given at the Committee meeting on 13 November 2013 was that the potential impact on the local road network would be for a temporary period only.  But that could not be said with any degree of confidence, and no basis for it is disclosed in any of the material before the Committee.  The formal decision notice justified the decision to delete clause 6 by asserting that the proposal was in accordance with the Development Plan and that there were no material reasons justifying a departure from the Development Plan.  That was wrong, since (as the Report of May 2012 had recognised) the Development Plan required there to be no net detriment to the local road network.  There appeared to have been no better reason for approving the deletion of clause 6 other than that Sainsbury’s had asked for it to be deleted.  The Report of 23 October 2013 appeared to proceed upon the basis that Sainsbury’s would pull out of the development if clause 6 was not deleted, but Sainsbury’s had never said that; it would in any event be wrong to delete clause 6 simply because of such a threat.

[25]      In summary, Tesco’s complaints were as follows:

(a)        the Council had failed properly to interpret its own development plan;

(b)        in reaching its decision to delete clause 6, the committee failed to address the material issue, namely whether clause 6 was still necessary and/or still served a useful purpose;

(c)        the Council failed to give adequate or intelligible reasons for its decision and/or had no factual basis for key parts of its decision; and/or

(d)        having regard to the reasons why it was decided in May 2012 that a section 75 agreement containing clause 6 was needed, no reasonable planning authority could have concluded in November 2013 that it was appropriate to delete it.

These submissions bring into play different legal principles relevant to a challenge to the decision of the planning authority by way of judicial review.  In substance, however, these are to a large extent simply different ways of presenting the same argument.  That argument is to this effect: that the decision to delete clause 6 was fundamentally flawed, since it ran counter to Policy 1 of PALP1 as construed by the Council at the time of granting permission for the superstore development, in that without clause 6 it could not be said with the requisite degree of certainty that there would be “no net detriment” to the operation of the associated road network resulting from the development.  Neither the decision of the committee on 13 November 2013, nor the Report of 23 October 2013 on which that decision was based (insofar as that is a relevant consideration) showed any adequate or intelligible reason for deleting clause 6 from the section 75 agreement – they did not address the question of whether clause 6 was still necessary, nor did they disclose any factual basis for the assumptions and arguments on which that decision was based.  Contrary to the submissions advanced by the Council and Sainsbury’s, this was not simply a case of the planning authority exercising its planning judgement in a manner which was not open to challenge.  Before getting to the stage of planning judgement it was incumbent upon the Council, as planning authority, correctly to interpret the relevant policy in the development plan and correctly to ascertain the facts upon which it was to exercise its judgement.  There was no legitimate interpretation of the development plan and no basis in fact to justify the Council coming to the decision to delete clause 6.

Response by the Council and Sainsbury’s
[26]      It was emphasised on behalf the Council that this was not an application for planning permission, nor a challenge to the grant of planning permission, and there was therefore no reason to revisit that matter.  Further, matters such as whether the junction upgrade was more or less certain in November 2013 than it had been in May 2012, and the length of time which would be acceptable for the new superstore to be trading with only Sainsbury’s own proposed mitigations in place (i.e. before the junction upgrade was completed), were all matters of planning judgement and therefore pre‑eminently matters for the Council, as planning authority, to decide upon.  The court should be slow to interfere in such matters.  PALP1, though relevant here, was now history; it had been superseded by the Perth Local Development Plan.  The question of compliance with any particular policy, such as Policy 1 (“no net detriment”) did not have to be assessed at any precise moment; it was a question of planning judgement whether any such policy was complied with having regard to the likely duration of any temporary non-compliance.  The no net detriment policy did not require there to be absolute certainty as to the delivery of the junction upgrade; what degree of confidence in its delivery was required for compliance with the policy was, again, a question of planning judgement.  Much would depend on circumstances.  The position in May 2012 was very different from that in November 2013.  In May 2012 the PLDP had been out for only a few months – it published in January 2012 – with proposals for the junction improvements.  At that time there was no commitment either by the Council or by the Scottish government to fund the junction improvements; the offer of funding for the junction improvements from the Almond Valley development to the north-west of the site had lapsed; and the junction improvements themselves were only at the planning application stage.  By contrast, in November 2013 the Local Development Plan was at a more advanced stage; the reporter had submitted his report and only limited areas of the Plan remained uncertain.  His report (as p.436) took the view that the A9/A85 junction improvements “can reasonably be assumed to be deliverable”.  The Council had committed funding for the whole A9/A85 project and a considerable amount of work was on the point of being done.  There had been a significant move forward.  It was a matter of planning judgement for the committee as to how significant that was.  The court should assume that although the discussion in committee would be informed by the content of the DQM Report, committee members would also be fully aware of what was going on e.g. the emerging PLDP, funding for the road junction improvements and the likely progress of the junction improvement work.  Accordingly, the court should only interfere if it was apparent that the Report was seriously misleading or that the committee proceeded on a clearly erroneous basis.

[27]      The May 2012 Report clearly contemplated that trading from the new store would begin before the junction improvements were in place.  There was going to be some congestion before the work on the road junction was completed.  It also concluded that Sainsbury’s financial contribution was a significant factor in helping to accelerate the junction improvement works.  The junction improvements were necessary for the new superstore; and, because it brought with it a financial contribution, the new superstore was an important factor helping bring about the junction improvements.  The planners faced the difficult task of trying to get two horses to the starting line at roughly the same time.  They were never going to get them there at precisely the same time.  But, if they succeeded in getting them there at roughly the same time, there would be no conflict with PALP1, even if for a period trading began at the new superstore before the road improvements were in place.  What was important for compliance with PALP1 was that there should be a commitment to the new junction.  It was a matter of planning judgement whether the various pitfalls to the junction works being completed were real barriers or were capable of being overcome.  Some flexibility was required, as was recognised in the May 2012 Report (per 148: “or otherwise within a reasonable period to be agreed”).  Further, the planners could not ignore the potential economic benefit which would be delivered by the new superstore.

[28]      In summary, the Council’s position was that it had maintained a consistent interpretation of the “no net detriment” policy in PALP1, recognising at all times the “temporal” element in the assessment of compliance, i.e. that the junction improvement works could not be delivered at exactly the same time as the store commenced trading, and it was therefore permissible to have some additional traffic congestion for a period until the junction improvement works were complete (though there would have been nothing wrong with it changing its interpretation of the policy, provided the new interpretation was a reasonable one).  There was no failure to give reasons for the decision – and, in any event, Tesco was not a party who had to be notified of the application or the decision, and therefore could not be prejudiced by any failure to give reasons.  And the decision was not perverse.  Tesco was inviting the court to enter into the planning merits, which was not permitted.

[29]      Sainsbury’s took part in the hearing as an interested party.  They adopted the submissions made on behalf of the Council and added some points of their own.  In particular, they emphasised the extent and cost of the road improvements offered by them quite apart from the traffic mitigation sum of £2.18m.  It was not feasible that they would spend this amount of money on the road improvements unless it was certain that they would be able to begin trading.  The application by Sainsbury’s in September 2013 to vary the section 75 agreement by deleting clause 6 also proposed altering the definition of “Road Network Improvements”, so as to provide the Council with additional flexibility on the way in which it could spend elements of the traffic mitigation sum.  This alteration was accepted in the October 2013 Report (in the justification given at the end) and in the decision of the committee itself on 13 November 2013.  Accordingly, even though the commencement of trading was de-coupled from the letting of the junction contract, commencement of trading still triggered Sainsbury’s payment of the traffic mitigation sum and extra flexibility was given to enable part or all of that sum to be diverted to improvements to help mitigate the increased traffic congestion.

[30]      In the course of submissions I was shown a large number of authorities, many of them well‑known.  I do not propose to refer to them all in this opinion.  I am grateful for their citation and have taken them all into account.  I refer below only to those that seem to me to be directly in point. 

Discussion
[31]      The issue in this petition for judicial review is as to the lawfulness of the decision by the Council, as planning authority, to delete clause 6 of the section 75 agreement entered into between itself and Sainsbury’s.  There is no challenge either to the original grant of planning permission for the new superstore or to the terms of the section 75 agreement in its original form.  It is important to note, in particular, that there is no challenge to the decision to permit trading to commence at the new superstore once the road junction construction contract was let, notwithstanding that that might result in exacerbated traffic congestion for a period of time between the letting of the contract and the completion of the junction improvement works.

[32]      There was no dispute about the planning framework within which this petition for judicial review falls to be determined.  Section 75 of the Town & Country Planning (Scotland) Act 1997 (as amended) (“the 1997 Act”), permits a person seeking planning permission by agreement with the planning authority to enter into a planning obligation restricting or regulating the development or use of the land either permanently or for such periods as may be specified in the agreement.  That was done here in the section 75 agreement.  The relevant planning obligations required payment of the traffic mitigation sum (clause 5) and restricted the commencement of trading until such time as the road construction contract was let (clause 6).  Sainsbury’s, being the person against whom those planning obligations was enforceable, was entitled to apply to the planning authority to have them modified or discharged: section 75A(2).  Sainsbury’s made such an application on 25 September 2013.  On such application being made, the planning authority may determine that the planning obligation (i) is to continue to have effect without modification, (ii) is discharged, or (iii)  is to have effect subject to the modifications proposed in the application: section 75A(4).  There is no other possibility.  Except by agreement with the applicant, the planning authority cannot modify the planning obligation in some other way than that sought in the application.  In the present case the Council, as planning authority, granted the application and determined that the planning obligation should have effect subject to the modifications specified in the application.  That involved altering the definition of the road improvement works to which the traffic mitigation sum could be applied (which does not matter for present purposes) and deleting clause 6 (which is central to the current dispute).

[33]      In dealing with an application for planning permission, the planning authority must have regard to the provisions of the development plan: section 37(2) of the 1997 Act.  The determination of that application must, unless material considerations indicate otherwise, be made in accordance with the development plan: section 25 of the 1997 Act.  The section 75 agreement arose out of the determination by the Council of the application for planning permission for the new superstore and contained planning obligations to which the grant of planning permission was subject.  It follows that both the original determination of the terms of that section 75 agreement and the determination of the application for its modification or discharge also had to be made in accordance with the development plan unless material considerations indicated otherwise. 

[34]      The requirement that the application must, unless material considerations indicate otherwise, be made in accordance with the development plan was first introduced by the section 18A of the Town and Country Planning (Scotland) Act 1972.  Before that the requirement was only that the planning authority should have regard to it; they were required to consider it but not obliged to follow it.  That section, which is now replicated in section 25 of the 1997 Act, introduced a priority to be given to the development plan in the determination of planning matters.  If its provisions are relevant to the particular application, they are to govern the decision unless there are material considerations indicating that they are not to be followed: see City of Edinburgh Council v Secretary of State for Scotland 1988 SC(HL) 33 per Lord Clyde at pages 43B-45B and per Lord Hope at page 35G-I.  But although that provision has introduced a requirement with which the planning authority must comply, it has not touched the well‑known distinction between those matters which are properly within the jurisdiction of the planning authority and those matters in which the court can legitimately intervene.  If the planning authority takes the right matters into account, the assessment of the weight to be attached to those matters is for it and it alone, subject to challenge on grounds of perversity or irrationality: ibid at pages 44B-45B and 36A-G.  If, on the other hand, the planning authority fails to have regard to a relevant policy in the development plan, or fails properly to interpret it, then its decision will be open to challenge: ibid at page 44G-H. 

[35]      Those passages in City of Edinburgh Council were approved by Lord Reed at paras 17‑19 of his judgment in Tesco Stores Limited v Dundee City Council 2012 SC (UKSC) 278, a judgment with which all other members of the Supreme Court agreed.  He emphasised that aspect of the decision in City of Edinburgh Council which states that the planning authority must proceed upon “a proper understanding of the development plan”.  The policies in the development plan are designed to secure consistency and direction in the exercise of discretionary powers, while allowing a measure of flexibility to be retained.  Accordingly, they should be interpreted “objectively in accordance with the language used, read as always in its proper context”.  They are not to be construed as if they were a statute or a contract; that would not be possible, since they contain broad and often irreconcilable statements of policy, framed in language whose application to a given set of facts requires the exercise of judgement which can only be challenged on grounds of perversity or irrationality.  But insistence on that element of judgement does not mean that planning authorities can depart from the objective interpretation of the policies in the development plan, making them mean whatever they want them to mean.  They cannot.  If they do that they are subject to correction by the courts.

[36]      The development plan here included PALP1.  Policy 1 of the General Policies in PALP1 required the development to be judged against a number of criteria, including a requirement that “the local road network should be capable of absorbing the development”.  The development, including the section 75 agreement, required to be judged by that test.  The DQM, in his Report of May 2012, which can be taken to have been accepted by the Council when it reached its decision on 13 May 2012, explained his understanding of that policy.  It meant that any development should result in “no net detriment” to the operation of the associated road network.  Matters such as road capacity, safety and so on should be “no worse” after a development was open than they were before.  That interpretation was not challenged by Tesco at the hearing before me.  The Council did not seek to depart from it either.  Nor did Sainsbury’s question it.  In those circumstances I must proceed upon the basis that that is a correct interpretation of the policy.

[37]      In light of that, the question to be decided is whether the Council’s decision to delete clause 6 from the section 75 agreement – or to put it more broadly, its decision to leave in place the planning permission for the development of the new superstore without the commencement of trading being restricted by clause 6 to a time after the construction contract for the necessary junction improvement works had been let – was made in accordance with the relevant policy in the development plan; or, if not, whether the Council gave proper consideration to the question of whether there were material considerations justify a departure from the policy.

[38]      In reaching its decision on 13 May 2012 to grant the application for planning permission subject to a number of conditions and subject also to a section 75 agreement being entered into, the committee noted in its Justification that the proposal “is contrary to the Development Plan but there are material considerations as narrated in the Report of Handling, which justify a departure therefrom”.  The conclusion that the proposal was contrary to the development plan related to policies in the development plan with which this petition is not concerned.  So far as concerned the “no net detriment” policy in Policy 1 of PALP1, the conclusion in the Report (contained in the sections dealing with Road Network Capacity/Traffic Impact) was that “subject to the on-line road improvements [i.e. the mitigations proposed by the applicants] and a financial contribution to the construction of the new junction, the development is in compliance with Policy 1 of the PALP 1995 in regard to transport and road safety issues”:  see para 144.  That was the conclusion reached notwithstanding that, despite restricting the commencement of trading until such time as the contract for the junction improvements was let, it might be that for a “short while” the store could be trading with only the applicant’s proposed mitigations in place:  para 143.  It was emphasised in the overall conclusion to this section that the development could not be supported without the new junction being committed to.  That was the basis for requiring the section 75 agreement.  But the clear inference is that if the new junction was committed to then the development could be supported.

[39]      There is no indication in the Report of May 2012 as to the likely length of the “short while” during which the store might be trading before the new junction was completed.  Some indication of what may have been in the mind of the DQM may be gleaned from his later Report of 23 October 2013 which informed the committee in reaching its decision on 13 November 2013 to delete clause 6 from the section 75 agreement.  In paragraph 32 he noted that it was then envisaged that the road construction contract might not be awarded until December 2015, leading to a potential road opening date of June 2017.  That is a period of about 18 months from letting the contract to completion of the works.  That would be the maximum length of time during which the store might be trading without the new junction being in place.  It would obviously be shorter if the road construction contract was let before commencement of trading.  It is not clear whether the committee was given any indication of the sort of period being contemplated.  If 18 months was the sort of period under consideration in May 2012, then it follows that the committee must have agreed with the DQM’s conclusion that a delay of about that length between the opening of the new superstore for trading and the completion of the road junction improvements needed to alleviate the effect of the additional traffic likely to be engendered thereby did not contravene the “no net detriment” policy in PALP1.  But even if the committee had no information about the likely period between opening the store for trading and completing the new junction, it is clear that it was prepared to accept that there would be some unspecified period between those two events during which traffic congestion would be significantly worse, and to treat the proposal as in compliance with the “no net detriment” policy notwithstanding that that was the case.  It is not suggested that in coming to that conclusion the committee either misconstrued the relevant policy or that their decision was perverse or irrational.

[40]      When the matter came to be considered again in November 2013, in the context of Sainsbury’s application to modify the planning obligation in the section 75 agreement, the position regarding the proposed junction improvements had altered to some extent.  From the point of view of commitment, matters had moved forward.  Planning permission had been granted for the new junction layout and the Council had given a commitment to funding the project, helped by the traffic mitigation sum to be paid by Sainsbury’s.  So there was greater confidence that the junction improvement would be delivered.  On the other hand, it is clear that the timetable originally contemplated had slipped significantly.  Instead of the construction contract for the junction being let by the end of December 2013, it had become apparent that it was unlikely to be let until, at the earliest, December 2015.  That meant a slippage of about two years.  The information from Sainsbury’s in their application as to when they hoped to commence development (April 2014) and when they might be in a position to be ready to open for trade (no earlier than spring 2015) meant, assuming that information to be correct, that the road construction contract would not be let until perhaps nine months after the store began trading.  That would mean, on that basis, that the period of exacerbated traffic congestion between the commencement of trading at the store and the completion of the junction improvement works might be some 27 months.  On that hypothesis the proposal to de-couple the opening of the store for business and the letting of the road construction contract would result in the unmitigated extra traffic congestion going on for some 27 months instead of a shorter period of anything up to 18 months. 

[41]      At para 33 of the October 2013 Report to the committee it was noted that while the impact of the deletion of clause 6 on the road network might be significant, it would be “temporary and for a period of some 27 months rather than the more limited period originally envisaged”.  The conclusion in that paragraph was that the deletion of clause 6 would not be contrary to the development plan.  That appears to have been the view taken by the committee at the meeting of 13 November 2013.  Under the heading of “Justification” it was said that the requested modifications were considered to be acceptable as the potential impact on the road network would be for a temporary period only, even though for a longer period of time than originally envisaged.  That appears to be saying that the fact that the impact on the road network would be for a longer period than originally envisaged does not mean that there is a contravention of the “no net detriment” policy in PALP1.  The formal notice approving the deletion of clause 6 stated that the proposal was in accordance with the development plan.

[42]      Thus far it is difficult to see any basis upon which the decision to remove clause 6 can be susceptible to challenge.  The committee had regard to the relevant policy in the development plan.  They did not suggest that this was a case where other material considerations either required or allowed them to depart from that policy.  They saw no need to do so.  They considered that the proposal to delete clause 6 was consistent with the development plan despite there being a longer gap than previously contemplated between the commencement of trading and the opening of the new road junction.  That is a matter for their judgement.  Once it is accepted, as it is, that they could properly consider that the original proposal was consistent with the “no net detriment” policy notwithstanding that there would be a detrimental effect on traffic on the local road network for a period before the new road junction was completed, they cannot be criticised for forming the view that a detrimental traffic effect for a rather longer period was still consistent with that policy.

[43]      A number of detailed criticisms were made.  It was said that there was no basis upon which the Report or the committee could assume that Sainsbury’s would be ready to commence trading by spring 2015.  Whether that is right or not, it cannot affect the validity of their decision.  They were accepting, for this purpose, a worst-case scenario.  If in fact Sainsbury’s were not ready to begin trading by then, the period of enhanced traffic congestion would be correspondingly reduced.  It was said that the Report had overstated the threat to the development going ahead if section 6 was not deleted, in that it seemed to suggest that Sainsbury’s were saying they would pull out altogether if their application to modify the planning obligation in the section 75 agreement was not granted.  It does not seem to me that the Report put the matters so strongly, but even if it did there is no indication that it affected the judgment of the committee in its conclusion that the de-coupling of the link between commencement of trading and the letting of the road construction contract was consistent with the “no net detriment” policy. 

[44]      Finally on this aspect it was said that there was no proper basis for the assessment that the road construction contract would be let by the end of 2015 and, therefore, that the junction improvements would be completed by June 2017.  The criticism here really relates to the fact that in para 32 of the Report the “worst case scenario” is put forward, namely that the land acquisition process could come to a halt because of a public inquiry, and that the road improvement scheme could not be progressed.  If that were to happen then the exacerbated traffic congestion caused by the opening of the new superstore would simply continue, unless and until some new scheme was worked out for dealing with it.  In those circumstances it would be difficult to see how that would be consistent with the “no net detriment” policy in the development plan.  However, in paragraph 33 of the Report it is said that the risk of the road improvement scheme not going ahead “appears to be limited”.  It was argued on behalf of Tesco that that recognised that there was some risk, albeit a limited one.  It seems to me that that is too literal a reading of that sentence; that sort of expression is often used to mean that the risk is virtually non-existent.  Be that as it may, and even there was some risk that the road improvements would not go ahead, the committee was entitled to make an assessment of the likelihood of that happening.  The Report goes on to say that there was “confidence” that the scheme would be delivered.  The committee were entitled to assume that that confidence was based upon the DQM’s experience of the planning and land acquisition process; and they would no doubt have taken into account their own collective experience of such matters.  It was a matter for the committee to assess the chances of the road improvement scheme not going ahead.  They clearly proceeded on the basis that the road improvement scheme was likely to go ahead.  I did not understand it to be argued that as a matter of law they could not find the proposed deletion of clause 6 to be compliant with the “no net detriment” policy unless they were absolutely certain that the road improvement scheme would go ahead.  Any such argument would be bound to fail.  In those circumstances the committee were entitled to treat the matter as one in which the deletion of clause 6 would simply lead to an extended period of traffic congestion before the improved road junction was complete, and were entitled to treat this extension of that period as consistent with the “no net detriment” policy.

[45]      It was submitted on behalf of Tesco that the Council had failed to give proper, adequate or intelligible reasons for its decision to delete clause 6.  I reject that submission for the reasons set out below. 

[46]      The obligation to give reasons is well established:  see e.g. Wordie Property Co Ltd v Secretary of State for Scotland 1984 SLT 345,  South Bucks District Council v Porter (No 2) [2004] 1 WLR 1953.  But there is no need to look for authority on this point.  Regulation 8 of the Town and Country Planning (Modification and Discharge of Planning Obligations) (Scotland) Regulations 2010 (“the 2010 Regulations”) provides that a notice of determination (i.e. a notice determining an application to modify or discharge of planning obligation in a section 75 agreement) must include a statement of the reasons on which the planning authority based its decision.  However, the decided cases are of some relevance.  They show three things of importance to this petition:  (i) that the reasons are intended to inform interested parties of the reasons for the decision, so as to enable them to understand why the decision was made and provide a guide to future actions by the successful and unsuccessful parties; (ii) that they must be intelligible to the well informed reader who is well aware of the issues involved and the arguments advanced; and (iii) that a reasons challenge will only succeed if the aggrieved party can satisfy the court that he has been substantially prejudiced by any failure to provide an adequately reasoned decision.

[47]      It is worth elaborating slightly on the point about the reasons having to be intelligible to the well informed reader.  That well informed reader will know the nature of the application under consideration.  He can attend the meeting of the relevant planning committee, which failing he can obtain or have access to the formal minutes of that meeting at which the decision is recorded.  He will know, or can find out, the content of the report submitted by the relevant planning officer to the planning committee.  It can be assumed, in the absence of contrary evidence, that where the committee have followed the recommendation by the planning officer in his report, they have also followed the reasoning in that report:  See R (Telford Trustee No 1) v Telford and Wrekin Council [2011] EWCA Civ 896 at paras 16‑20 and R (Thrashorfield Limited v. Bristol City Council [2014] EW HC 757 (Admin) at para 13(iii).  It must follow that in seeking to identify the reasons that have been given for a determination, it is permissible and indeed often necessary to look beyond the formal decision notice to the report upon which the decision was based.

[48]      On that basis I am in no doubt that the challenge based on a failure to give reasons must fail.  Reading the October 2013 Report, the minutes of the meeting of the committee on 13 November 2013 and the formal decision notice as a whole it is clear that the committee took the view that the deletion of clause 6 did not contravene the “no net detriment” policy because, in their view, the de‑coupling of the date for commencement of trading from the date on which the road construction contract was let only had the effect of extending the period during which there would be exacerbated traffic congestion resulting from the opening of the superstore before the junction improvement works were complete.

[49]      However, that is not the only basis for rejecting this challenge.  A reasons challenge will only succeed if the aggrieved party can satisfy the court that he has been substantially prejudiced by any failure to provide an adequately reasoned decision.  That calls into question the right of Tesco to be notified of the application to modify the planning obligation in the section 75 agreement and to be notified of the decision.  The procedure in respect of such applications is laid down in some detail in the 2010 Regulations.  In terms of regulation 2, an “interested party” is the applicant, the owner of land to which the planning obligation relates and any other person against whom the planning obligation is enforceable.  In the present case that does not include Tesco.  Regulation 3 requires an application to be accompanied by a statement setting out the names of interested parties.  Regulation 5 requires the planning authority to notify every interested party that the application has been made.  Regulation 7 requires the planning authority to give notice of their determination to every interested party.  In the present case none of those regulations required Tesco to be notified of anything.  If they did not require to be notified of the determination, it is difficult to see how they can claim to be prejudiced by reason of the fact that the notice which they were not required to be given failed to set out in full the reasons for the determination.  I would reject the reasons challenge on this ground also.

[50]      The final ground of challenge is that the decision to delete clause 6 was a decision which no reasonable planning authority properly instructed could have arrived at.  I reject this challenge too.  I do not propose to set out my reasons at great length.  They have already been made apparent earlier in this opinion, in particular at paras [40]‑[41] and [48].  In summary, the committee must be taken to have decided that the “no net detriment” policy permitted approval of a planning application which would have a temporary adverse effect on traffic, that temporary effect lasting until the junction improvement works were complete.  At the time of the original planning application, the junction improvement works had not been granted planning permission; and the Council had not committed itself financially to that project.  The section 75 agreement was relevant for two reasons.  First, it enshrined a commitment by Sainsbury’s to pay the traffic mitigation sum.  That was important, because it helped the Council decide to commit financially to the road improvement project.  Secondly it provided that the superstore could not open for trading until the road construction contract was let.  That was important because it appeared to give some guarantee that the increased traffic congestion resulting from the opening of the superstore for trading would only be temporary.  By the time it came to consider the application to modify the section 75 agreement by deleting clause 6, matters had moved on.  Planning permission had been obtained and the Council had committed to funding the junction improvement works.  Although there were further hurdles to be overcome, this provided sufficient reassurance for the committee to be satisfied that the increased traffic congestion resulting from the opening of the superstore for trading would remain a temporary phenomenon, albeit that it would be for a longer period than previously contemplated.  Consistently with their earlier interpretation of the “no net detriment” policy, they took the view that this was acceptable.  It did not involve any departure from that policy.  I see no basis for saying that that was irrational or perverse.  It is not for this court to say whether every committee faced with the same application would have come to the same decision.  It is sufficient that the decision cannot be said to be one that no reasonable committee could have reached.

Disposal
[51]      For these reasons I shall sustain the pleas in law for the respondent and the interested party and refuse the petition.  I shall reserve all questions of expenses.