Sainsbury's Supermarkets Ltd v Wolverhampton City Council [2009] EWCA Civ 835

[2009] EWCA Civ 835Case No C1/2009/0361
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM QUEEN’S BENCH DIVISON
ADMINISTRATIVE COURT: MR JUSTICE ELIAS
CO/3795/2008
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 31/07/2009
Before
LORD JUSTICE WARDLORD JUSTICE MUMMERYLORD JUSTICE SULLIVAN
Between
SAINSBURY’S SUPERMARKETS LTDAppellantWOLVERHAMPTON CITY COUNCILRespondentTESCO STORES LTDInterested Party
(Transcript of the Handed Down Judgment ofWordWave International LimitedA Merrill Communications Company165 Fleet Street, London EC4A 2DYTel No: 020 7404 1400, Fax No: 020 7404 1424Official Shorthand Writers to the Court)
Christopher Lockhart-Mummery QC & David Forsdick (instructed by Cms Cameron Mckenna LLP) for AppellantNeil King QC & Guy Williams (instructed by Wragge & Co) for RespondentChristopher Katkowski QC & Scott Lyness (instructed by Ashurst LLP) for Interested PartyHearing Hearing date : Thursday, 23 rd July 2009
Judgment

Introduction

[1]This is an appeal against the Order dated 3rd February 2009 of Elias J. (as he then was) dismissing the Appellant’s application for judicial review of the Defendant’s decision made on 30th January 2008 to give approval in principle to the making of a compulsory purchase order (“CPO”) under section 226 (1) (a) of the Town and Country Planning Act 1990 (“the 1990 Act”) as amended by the Planning and Compensation Act 2004 (“the 2004 Act”) in respect of land owned by the Appellant within a site known as the Raglan Street Site (“the site” or the “RSS”).

Background

[2]The site is located immediately to the west of the dual carriageway ring road which encircles the Wolverhampton City Centre. The Appellant owns 86% of the site. The remaining 14% of the site is owned or controlled by the Interested Party.[3]The background history prior to the events with which we are concerned is set out in paragraphs 3 – 5 of the judgment of Elias J. Originally, the Appellant intended to redevelop the site and the Defendant agreed that it would sell its land within the site (a small parcel of land and the subsoil beneath the roads on the site) to the Appellant to enable its redevelopment scheme to proceed. In early 2005 the Appellant wrote to the Defendant saying that it no longer wished to redevelop the site and was negotiating to sell its interest to the Interested Party to enable the Interested Party to pursue an alternative redevelopment scheme.[4]On 3rd November 2005 the Defendant entered into a conditional sale agreement with the Interested Party for the sale of its land within the site to the Interested Party. The Defendant also committed itself in principle to using its CPO powers should that be necessary to facilitate the Interested Party’s redevelopment. At that stage it was not anticipated that those powers would need to be used to acquire the Appellant’s land within the site because it was envisaged that the Appellant would dispose of its land to the Interested Party by agreement.[5]Subsequently the Appellant again changed its mind and notified the Defendant that it did after all wish to redevelop the site itself. The Defendant reconsidered the matter in December 2006. It noted that the Appellant and the Interested Party could not reach agreement as to which of them was to redevelop the site. Both had applied for outline planning permission for their respective redevelopment schemes. The Defendant agreed in principle to use its CPO powers to facilitate the redevelopment of the site should the need arise. At that stage the Defendant did not indicate which redevelopment scheme it would facilitate by the use of those powers. In March 2007 the Defendant resolved to grant outline planning permission for both redevelopment schemes.[6]Section 226(1)(a) of the 1990 Act authorises the Defendant to make a CPO in respect of any land within its area if it thinks:
“that the acquisition will facilitate the carrying out of development, redevelopment or improvement on or in relation to the land.”
All three parties were, and still are agreed that the site should be redeveloped. In the absence of any agreement between the Appellant and the Interested Party, and these proceedings are confirmation if it is needed that there is no realistic prospect of any such agreement, there can be no doubt that the Defendant will have to exercise its powers under section 226(1)(a) to acquire either the Appellant’s or the Interested Party’s land within the site if any redevelopment is to proceed.[7]Faced with this dilemma, the Defendant held what was effectively a competition to decide which of the two redevelopment schemes it should facilitate by the use of its CPO powers. The process is described in detail in a report dated 30th January 2008 to the Defendant’s Cabinet (“the Report”). Having described the background and the procedure adopted for the competition, the Report explained “The general approach to the making of compulsory purchase orders”. The material provisions of section 226 of the 1990 Act, as amended by the 2004 Act were set out:
“226(1) A local authority to whom this section applies shall, on being authorised to do so by the Secretary of State, have power to acquire compulsorily any land in their area - (a) if the authority think that the acquisition will facilitate the carrying out of development, re-development or improvement on or in relation to the land…(1A) But a local authority must not exercise the power under paragraph (a) of subsection (1) unless they think that the development, re-development or improvement is likely to contribute to the achievement of any one of more of the following objects - (a) the promotion or improvement of the economic well- being of their area; (b) the promotion or improvement of the social well-being of their area; (c) the promotion or improvement of the environmental well-being of their area.”
[8]The Report drew Cabinet’s attention to the (then) Office of the Deputy Prime Minister’s (ODPM’s) guidance on the use of section 226 powers in Circular 06/04 “Compulsory Purchase and The Crichel Down Rules”, said that the advice in Appendix A to the Circular was of particular relevance, and set out the four factors listed in paragraph 16 of Appendix A to the Circular which the Secretary of State can be expected to consider when deciding whether or not to confirm a CPO made under section 226(1)(a). These four factors are:
“(i) whether the purpose for which the land is being acquired fits in with the adopted planning framework for the area;(ii) the extent to which the proposed purpose will contribute to the promotion or improvement of the economic, social or environmental well-being of the area;(iii) the potential financial viability of the scheme for which the land is being acquired;(iv) whether the purpose for which the land is being acquired could be achieved by other means.”
[9]This echoes the advice in paragraph 6 of Appendix A as to the ambit of “The well-being power”. Having said that the “wide power” in section 226(1)(a) is subject to subsection (1A), paragraph 6 refers to the circumstances in which it might be of assistance, and says in the final sentence:
“The benefit to be derived from exercising the power is also not restricted to the area subject to the compulsory purchase order, as the concept is applied to the well-being of the whole (or any part) of the acquiring authority’s area.”
[10]Returning to the Report, Cabinet was advised that: “There is no doubt that both the Tesco and Sainsbury’s schemes would fulfil the statutory purpose of facilitating the carrying out of development, redevelopment or improvement on or in relation to the land.” (4.4) References in parenthesis are references to the paragraph numbers in the Report. The Report also noted that both redevelopment schemes were acceptable in planning terms (5.7).[11]Section 6 of the Report considered: “the extent to which the two schemes are likely to contribute to the promotion of the economic, social or environmental well-being of the area.” (6.1). The only respect in which the Report is criticised by the Appellant, and the basis of the Appellant’s challenge in these proceedings, is the fact that in its consideration of these “well-being” benefits the Report included the benefits which would result from the redevelopment of another site, the Royal Hospital site (“RHS”).[12]The RHS is owned by the Interested Party. It is located on the other side of the City Centre, a little to the east of the ring road. As the crow flies the RHS is over 850m from the RSS. In a nutshell, the Report said that the implementation of the proposals for the redevelopment of the RHS: “would have a significant positive impact on the regeneration of this area of the city.” (6.10). Within the RHS there are a number of listed buildings which are in need of restoration. Any scheme for the redevelopment of the RHS must incorporate the restoration of these listed buildings and the cost of such restoration has obvious implications for the viability of any scheme on the RHS.[13]The Report explained that the “main cost/loss” associated with the RHS scheme was the refurbishment of the listed buildings for accommodation for a Primary Care Centre and as offices for the Primary Care Trust (PCT) (6.11 and 6.16). Having considered various economic appraisals the Report concluded in paragraph 6.20:
“that development of the RHS site in accordance with the Council’s aspirations is unlikely to take place for the foreseeable future unless Tesco’s current proposals, which do meet those aspirations, are brought forward through a cross-subsidy from the development of the Ragland Street site.”
The Report continued in paragraph 6.21:
“(a) there will be three phases; site clearance and demolition (phase 1), restoration of the main hospital building (phase 2) and residential, commercial and public realm (phase 3);(b) Phase 1 is expected to take 9 months and is not dependent on the Council making a CPO to support the Tesco Scheme;(c) They will commit to Phase 2 providing the Council make a CPO in support of the Tesco scheme and the PCT have signed an agreement to lease the space;(d) They will agree to a planning obligation prohibiting the occupation of the Raglan Street store until the works to the listed buildings are completed to the reasonable satisfaction of the Council subject to the council making a CPO for the Site to support the Tesco scheme and using its reasonable endeavours to secure its confirmation…”
The Report’s conclusion on this issue in para.6.23 was:
“Whilst there is disagreement between Tesco and Sainsbury’s about the viability of the RHS development, it is clear is that, for reasons they have explained, Tesco are unlikely to carry out their scheme unless they are selected as the operator of the store at Raglan Street and are thus able to cross-subsidise the RHS development in the manner described above. Tesco have also indicated that if they are not selected, they would not be prepared to sell the RHS and would seek a more commercially attractive planning permission. This would be unlikely to realise the same level of planning benefit to the city as their present proposals for the RHS. In these circumstances, the Council could consider making a CPO for the RHS, but the outcome would be uncertain and dependant to a large degree on finding another party willing to carry out a scheme to the Council’s requirements when the viability of them is very much in question.”
[14]The overall conclusions were contained in Section 11 of the Report. The advantages of both the Tesco scheme and the Sainsbury’s scheme for the RSS were summarised. The former included the fact that it “would cross fund the RHS development and regeneration of the immediate area”. Paragraph 11.3 drew the threads together:
“In conclusion, both Schemes would bring appreciable planning benefits and would promote and improve the economic, social and environmental well-being of the city. However, the Tesco Scheme enjoys a decisive advantage in that it will enable the development of the RHS to be brought forward in a manner that is consistent with the Council’s planning objectives for that site. Making a CPO for the Tesco Scheme will therefore result in a significantly greater contribution to the economic, social and environmental well-being of the Council’s area than would making a CPO for the Sainsbury’s Scheme. On this basis, and subject to the satisfactory resolution of the matters identified in the Recommendations set out at the beginning of this report, there is a compelling case in the public interest to make a CPO to enable the Tesco Scheme to proceed.”
[15]The Minutes of the Meeting on 30th January 2008 record that:
“The Director for Sustainable Communities introduced the report and highlighted the salient matters for consideration by the Cabinet. He reported that both Schemes would bring appreciable planning benefits and would promote and improve the economic, social and environmental well-being of the City. However, the Tesco scheme enjoyed a decisive advantage in that it would enable the development of the Royal Hospital Site to be brought forward in a manner that is consistent with the Council’s planning objectives for that site.”
It was resolved:
“(a) That approval in principle be given to the making of a compulsory purchase order for the land bounded by Raglan Street, St Mark’s Road, Alexandra Street and Great Brickkiln Street within the Tesco application shown on the plan displayed at the meeting (the Raglan Street Site) to facilitate the carrying out of: (i) a mixed use development comprising 1,300 m² of A1 retail use, 1,102 m² of either A2, A3, A4 or A5 use, 145 flats including a minimum of 40 very sheltered flats, and a petrol filling station with car wash on that land and other land in the ownership of or controlled by Tesco Stores Ltd and the Council; and (ii) a mixed use retail, office and residential development of the Royal Hospital site Subject to Tesco Stores Ltd (Tesco) producing further satisfactory evidence of a commitment to the carrying out of the development referred to at (ii) above before consideration is given to a resolution to authorise the making of the compulsory purchase order….” (i) a mixed use development comprising 1,300 m² of A1 retail use, 1,102 m² of either A2, A3, A4 or A5 use, 145 flats including a minimum of 40 very sheltered flats, and a petrol filling station with car wash on that land and other land in the ownership of or controlled by Tesco Stores Ltd and the Council; and (ii) a mixed use retail, office and residential development of the Royal Hospital site Subject to Tesco Stores Ltd (Tesco) producing further satisfactory evidence of a commitment to the carrying out of the development referred to at (ii) above before consideration is given to a resolution to authorise the making of the compulsory purchase order….”
[16]The Appellant contended that: i) The Defendant had no power to use its CPO powers for the second purpose set out in the resolution: viz. to facilitate the carrying out of a mixed use retail, office and residential development of the RHS. ii) In reaching its decision as to whose land, the Appellant’s or the Interested Party’s, should be acquired to facilitate the re-development of the site, the “decisive advantage” of securing the re-development of the RHS was an immaterial consideration. A third ground, that the Defendant had predetermined the decision and/or fettered its discretion was rejected by the Judge and is not pursued in this Court.[17]The judge described grounds i) and ii) as the “formal issue” and the “substantive issue” respectively: see paragraphs 28 and 29 of the judgment. The Judge concluded that he would not be justified in quashing the resolution on the basis of the “formal issue” above. In paragraph 43 of the judgment he said:
“I agree with Mr Katkowski that the resolution does not need to be altered. Perhaps serendipitously, it does not state in terms that the purpose is to promote both developments, even if that was the Council’s understanding. It simply says that the CPO will facilitate the carrying out of both developments, and as a matter of fact, that is correct. The making of the CPO will in the unusual circumstances of this case, achieve precisely those results, and in my judgment it can do so lawfully. So I do not consider that it would be appropriate to quash the resolution.”
[18]Whatever conclusion is reached on the substantive issue I have no doubt that the judge’s decision that it would not be appropriate to quash the resolution on the basis of the formal issue was correct, and Mr Lockhart-Mummery QC fairly conceded that this was so during the course of his submissions on behalf of the Appellant. If the Appellant succeeds on the substantive issue the underlying basis for the resolution, whatever its precise terms, falls away. If, on the other hand, the appeal on the substantive issue is dismissed, because the Defendant was entitled to have regard to the benefits of securing the redevelopment of the RHS, quashing the resolution on the basis of its precise wording would be a pointless exercise in pedantry, because it would still be open to the Defendant, no CPO having yet been made, to pass another, more felicitously drafted resolution with precisely the same effect.[19]The resolution is a response to the Report, which is referred to in the minutes, and it is clear that in substance the Defendant’s Cabinet accepted the conclusion in the Report: that a CPO should be made to facilitate the Interested Party’s redevelopment scheme for the RSS because that scheme would by reason of cross-subsidy enable the redevelopment of the RHS, and thus make a significantly greater contribution to the “well-being” of the Defendant’s area than would the making of a CPO to facilitate the Appellant’s redevelopment scheme for the RSS. The substantive issue was whether the Defendant was lawfully entitled to take into consideration the fact that facilitating the Interested Party’s redevelopment scheme for the RSS would, by reason of cross-subsidy, enable the redevelopment of the RHS and thereby achieve the benefits that would result from the latter redevelopment (“the RHS benefits”).[20]The Defendant and the Interested Party submitted that the Defendant was entitled to take the RHS benefits into account because either: i) They fell within subsection 226(1A) of the 1990 Act; or ii) Even if they did not fall within subsection 226(1A) the Defendant was required to have regard to all material considerations when deciding whether to make a CPO under subsection 226(1)(a), and was therefore entitled to have regard to all of the benefits which would flow from facilitating the carrying out of a proposed redevelopment scheme when deciding which of two rival redevelopment schemes it should facilitate by the making of a CPO.[21]The judge rejected submission (a) and accepted submission (b). In their Respondent’s Notices the Defendant and the Interested Party contend that the judge erred in concluding that the RHS benefits were not within subsection 226(1A). In its appeal the Appellant contends that the judge erred in accepting submission (b).

Subsection 226(1A)

(b) Subsection 226(1A)

[22]I have set out the relevant provisions of section 226 above (para.7). Although the proposed CPO would facilitate the carrying out of development and improvement as well as redevelopment on the RSS, the facilitation of its redevelopment is the principal purpose, and for convenience I will therefore omit any further reference to development and improvement when considering the relationship between the two subsections, 226(1)(a) and 226(1A).[23]In paragraph 12 of his judgment Elias J. said that subsection 226(1A) was “a limitation on the power conferred by section 226(1)(a); it does not extend that power in any way”. He added that in practice it was unlikely to provide any real limitation since it was almost inconceivable that a proposed redevelopment would not have at least some of the benefits identified in subsection 226(1A).[24]It is true that subsection 226(1A) is negative in form – “must not exercise the power under paragraph (a) of subsection (1) unless….” – but in substance, as Mr Lockhart- Mummery fairly conceded, it positively requires local authorities, when deciding whether to exercise the power conferred by subsection 226 (1)(a) to consider whether the carrying out of redevelopment on the proposed CPO site “is likely to contribute to the achievement of….the objects” of the promotion or improvement of the economic/social/environmental well-being of their area.[25]The statutory language may appear somewhat negative and convoluted, but in my view the underlying policy objective is clear. Subsection 226(1)(a) focuses the local authority’s attention on what is proposed to take place on the CPO site itself. While the local authority must be satisfied that the CPO will facilitate the redevelopment of the CPO site, subsection 226(1A) requires it to look beyond the benefits that will accrue on the CPO site itself, and to consider whether, and if so to what extent, its redevelopment is likely to bring economic/social/environmental “well-being” benefits to a wider area. Although it is in form a limitation, in practice the purpose of sub-section 226(1A) is to broaden the issues that must be taken into account by a local authority when deciding whether to make a CPO under s.226(1)(a). This understanding of the practical effect of the subsection is entirely consistent with the policy advice in Circular 06/04 (see paragraphs 8 and 9 above).[26]Though convoluted, subsection 226(1A) is expressed in deliberately broad terms:
“likely to contribute to the achievement of…[the well-being]…objects”
. It is not prescriptive as to the manner in which the carrying out of redevelopment upon a CPO site might make a contribution to such wider benefits. Mr Lockhart-Mummery accepted that one of the more obvious ways in which the carrying out of redevelopment on a CPO site might, at least in principle, be capable of bringing economic/social/environmental benefits to a wider area would be if the redevelopment was likely to act as the catalyst for the development or redevelopment of some other site or sites within the authority’s area.[27]Such a catalytic effect might be direct, e.g. because redeveloping the CPO site would be likely to enable the occupier of another, run-down site in the authority’s area to relocate onto the CPO site, thus enabling the run-down site to be redeveloped. Or it might be indirect, e.g. because the increased attractiveness after redevelopment of a hitherto run-down CPO site was likely to make other sites in the area more attractive for development or redevelopment. It was common ground that such catalytic effects were capable of falling within the scope of section 226(1A).[28]In the present case the Report makes it plain that the Defendant was satisfied that facilitating the carrying out of the Interested Party’s scheme for the redevelopment of the RSS would, by reason of the proposed cross-subsidy, act as the catalyst for the redevelopment of the RHS site in a manner which would contribute to the economic social and environmental well-being of its area. Mr Lockhart-Mummery submitted that the contribution to the achievement of the wider objects must be made by the redevelopment on the CPO site, and the proposed cross-subsidy was to be distinguished from, because it was not related to, that redevelopment.[29]In my judgment subsection 226(1A) is concerned with all of the consequences that are likely to flow from the process of the carrying out of redevelopment on the CPO site, and these are not confined to what might be described as the impact of there being new “bricks and mortar” on the redeveloped site. Thus, disturbance during the redevelopment process and the need to relocate existing occupiers on the one hand, and the job opportunities that would be created during the carrying out of the redevelopment on the other, would both be capable of being relevant (the one negative, the other positive) for the purposes of s.226 (1A).[30]Mr Lockhart-Mummery’s principal submission was that the proposed cross-subsidy of the otherwise unviable RHS redevelopment was “not related” to the redevelopment of the RSS site. In support of this submission he relied on a statement in the Planning Committee report dealing with the Interested Party’s planning application which said that there was no “linkage” between the development of the RHS and the grant of permission for the redevelopment of the RSS, and upon the well established line of authority for the proposition that, in order to be valid, a condition in a planning permission and an obligation under s.106 of the 1990 Act must “fairly and reasonably relate to the permitted development”: see R v Plymouth City Council, exp. Plymouth andSouth Devon Co-Operative Society Ltd. (1993) 67 P. & C.R. 78, C.A.; and Tesco Stores Ltd. v Secretary of State for the Environment[1995] IWLR 759.[31]Both the Plymouth and the Tesco cases were concerned with whether offers by developers to pay for off-site (and in the Plymouth case certain on-site) benefits to be secured by s.106 obligations were “material considerations” for the purpose of determining the developers’ planning applications. In the Plymouth case the Court of Appeal concluded that all of the on-site and off-site benefits fairly and reasonably related to the permitted development and were, therefore, material considerations. Concern was expressed that by adopting this approach to materiality the Court:
“was condoning the sale of planning permissions to the highest bidder.”
See per Lord Hoffmann at p.782 of the Tesco case. Lord Hoffmann’s response to this concern was that the “bargain and sale” metaphor:
“…is an uncertain guide to the legality of a grant or refusal of planning permission. It is easy enough to apply in a clear case in which the planning authority has demanded or taken account of benefits which are quite unconnected with the proposed development. But in such a case the phrase merely adds colour to the statutory duty to have regard only to material considerations. In cases in which there is a sufficient connection, the application of the metaphor or its relevance to the legality of the planning decision may be highly debatable. I have already explained how in a case of competition such as the Plymouth case, in which it is contemplated that the grant of permission to one developer will be a reason for refusing it to another, it may be perfectly rational to choose the proposal which offers the greatest public benefit in terms of both the development itself and related external benefits.”
[32]It is clear from the passages in the Report referred to in paragraphs 13 and 14 (above) that the cross-funding of the redevelopment of the RHS was to be secured by way of a planning obligation. Mr Lockhart-Mummery emphasised the words “related external benefits”, and submitted that the redevelopments of the RSS and the RHS were unrelated, and to treat them as related simply by reason of the cross-subsidy from the RSS to the RHS would be to enable the Interested Party to buy the CPO. In his Skeleton Argument he pointed to the danger of “an auction of the exercise of CPO powers by reference to factors unrelated to the purpose for which the [s.226 (1)(a)] power is given”.[33]While I readily accept the proposition that local authorities should not allow their CPO powers to be “bought and sold”, I do not accept that it is appropriate to apply dicta in cases which are concerned with the lawfulness of planning conditions and s.106 agreements directly, and without any modification, to the power to make CPOs under s.226(1)(a). There are three principal reasons why “reading across” from subsection 70(2) to subsection 226(1A) is not appropriate. The starting point must be the statutory language. Subsection 70(2) of the 1990 Act requires local planning authorities when deciding whether to grant planning permission to:
“have regard to the provisions of the development plan so far as material to the application, and to any other material considerations.”
While off-site, or “external” benefits are capable of being “other material considerations”, there is no express obligation in subsection 70(2), such as is imposed by subsection 226(1A) to have regard to them. Local planning authorities are not required to refuse an application for planning permission unless granting it would be likely to contribute to off-site “well-being” benefits. If there is no policy or other planning objection to the development of a particular site, planning permission will be granted even though carrying out the development is unlikely to have any wider benefits.[34]Secondly, the wider benefits which may fairly be said to be “related” to a CPO under subsections 226(1)(a) and (1A) are not necessarily the same as the off-site benefits which may “fairly and reasonably” relate to a grant of planning permission. Generally, the financial viability of an application for planning permission is unlikely to be a material consideration for the purposes of determining the application under s.70(2). In some circumstances financial viability may be material, e.g. if there is a dispute as to how much “affordable housing” should be included in a residential development, but usually, the financial viability of carrying out a proposed development will be a matter for the applicant, and not the local planning authority. The position is quite different in CPO cases under subsection 226(1)(a). Circular 06/04 makes it clear that the financial viability of the proposed redevelopment scheme is a highly material factor in the Secretary of State’s consideration of the merits of authorising compulsory acquisition: see the third factor in para.16 of Appendix A (para.8 above). Paras. 20 and 21 in the main body of the Circular advise acquiring authorities to:
“provide as much information as possible about the resource implications of both acquiring the land and implementing the scheme for which the land is required.”
[35]Paragraph 20 envisages that there may be cases where the proposed redevelopment of the CPO site will not be financially viable, and will need to be cross-subsidised by “financial contributions” from other bodies, including the private sector. Para.21 advises acquiring authorities that, in order to secure the Secretary of State’s authorisation of a s.226(1)(a) CPO, they will have to demonstrate that the implementation of the redevelopment scheme on the CPO site is unlikely to be blocked by “potential financial impediments”. The promotion or improvement of economic well-being is one of the “well-being” benefits under subsection 226(1A).[36]Against this legislative and policy background it would be surprising if the potential financial implications of redeveloping the CPO site, including the possibility of cross-subsidy as a result of facilitating its redevelopment, were immaterial for the purposes of any consideration of the extent to which the carrying out of the redevelopment would be likely to contribute to wider, “well-being” benefits.[37]The possibility of one development cross-subsidising another, highly desirable development is capable of being a material consideration in the determination of a planning application under s.70(2) of the 1990 Act: see R v Westminster City Councilexp. Monahan [1990] I QB 87. In Monahan, which was cited with approval in the Plymouth case, it was proposed that an office development, which was a major departure from the development plan should be permitted because it would cross-subsidise the refurbishment of the listed Royal Opera House. The site on which the offices were proposed was physically separate from the site of the Royal Opera House, but both of the sites were included in the same application. The respondent planning authority granted permission. It was submitted on behalf of objectors to the grant of permission that the cross-subsidy was an immaterial consideration because the two sites were not otherwise related. If cross-subsidy was to be regarded as a material consideration, hypothetical examples were given of the prospect of financial contributions being used to justify the grant of permission for undesirable office blocks elsewhere in London, some distance from the Royal Opera House.[38]Nicholls L.J. was not persuaded by this reductio ad absurdum argument:
“Circumstances vary so widely that it may be unsatisfactory and unwise to attempt to state a formula which is intended to provide a definitive answer in all types of case. All that need be said to decide this appeal is that the sites of the commercial development, approved in principle, are sufficiently close to the Opera House for it to have been proper for the local planning authority to treat the proposed development of the office sites, in Russell Street and elsewhere, and the proposed improvements to the Opera House as forming part of one composite development project. As such it was open to the planning authority to balance the pros and cons of the various features of the scheme. It was open to the authority to treat the consequence, for the Opera House works, of granting or withholding permission for offices as a material consideration in considering the part of the application which related to offices.”
(p.121 D-F) Kerr L.J. said that an application for such widely separated sites:
“would be unlikely to be properly entertained as a single planning application or as an application for one composite development, as in the present case. I therefore say no more about it save that all such cases would, in my view, involve considerations of fact and degree rather than of principle.”
(p.117C) Staughton L.J. agreed, saying that:
“The building of office premises in close proximity, A, is necessary if development B is to occur. It can fairly and reasonably be said to relate to the proposed development which ought to be permitted. The whole is, to quote the words of Kerr L.J., a composite or related development. The offices are not ulterior or extraneous; they are part of the whole.”
(p.122F)[39]The fact that the site for the office development and the Royal Opera House site were included in the same planning application was a relevant, but not the determining factor in the Court’s decision. The contents of a planning application are for the applicant to decide: he may choose to include two wholly unrelated proposals in the same application. The Court regarded the question whether there was a “composite or related development” as one of fact and degree in each case. See also the judgment of Hoffman L.J. (as he then was) at page 88 of the Plymouth case, in which he referred to the Court’s finding in Monahan that there was a nexus between the office development and the improvements to the Royal Opera House on the basis of(1) the financial dependency of the one part of the development on the other and(2) their physical proximity.[40]When considering whether the proposed cross-subsidy from the Interested Party’s proposed redevelopment of the RSS to the restoration of the listed buildings on the RHS was, as a matter of fact and degree, a material consideration which the Defendant was entitled to take into account when deciding whether to facilitate the carrying out of the Interested Party’s redevelopment scheme, particular regard must be had to(a) the statutory obligation to take wider, off-site “well-being” benefits into account; and(b) the significance of financial viability and economic well-being in the CPO context. Bearing these two factors in mind, the Defendant was legally entitled to have regard to the proposed cross-subsidy under subsection 226(1A). The weight that it attributed to that factor, whether it was “a decisive advantage”, or of little consequence, was for the Defendant to decide, subject to the question of Wednesbury reasonableness, which is not in issue in this appeal.[41]That brings me to the third reason why a “read across” from the limitations upon the exercise of the subsection 70(2) power is not appropriate in the context of s.226. In part, the Court’s concern in constraining the apparent breadth of the “material considerations” that may be taken into account by local planning authorities under subsection 70(2) has been the:
“public interest is not allowing planning permissions to be sold in exchange for benefits which are not planning considerations or do not relate to the proposed development.”
See per Hoffmann L.J. at p.90 of the Plymouth case. Subject to the Secretary of State’s power to “call in” any application for planning permission for determination by him, local planning authorities are free to grant any planning permission they wish. The concern that they might be improperly influenced to “sell” planning permissions does not apply to CPOs made under s.226. While local authorities may make such orders, they must be confirmed by the Secretary of State: see subsection 226(1). If there is an objection to the CPO from a landowner, such as the Appellant, whose interests would be adversely affected by the proposed compulsory acquisition, the Secretary of State will appoint an independent Inspector to conduct a public inquiry at which witnesses appearing in support of the making of the CPO can be cross-examined by the objector. The Inspector’s report and recommendation will be considered by the Secretary of State when he decides whether or not to confirm the CPO. If the Secretary of State concludes, as a matter of fact and degree, that there is no genuine nexus between the proposed redevelopment of the CPO site and an alleged off-site “well-being” benefit, and that what is proposed is, in reality, the sale of the acquiring authority’s compulsory acquisition powers to the highest bidder, then he will give that alleged benefit no weight. Thus, the procedures for authorising compulsory acquisition contain sufficient safeguards to prevent “the auction of CPO powers”.[42]Elias J. explained why he did not consider that the RHS benefits fell within subsection 226(1A) in para.35 of his judgment:
“I accept the submission of Mr Lockhart-Mummery that in order to fall within subsection (1A) in relation to the RSS development, these benefits must flow from the RSS development alone, since that is the site covered by the CPO. The justification for the CPO is that it facilitates that development, not some other development at a different site. I do not accept that the fact that a link between the two developments can be achieved by a section 106 agreement (or some other linking device) entitles the Council to treat what are in reality well-being benefits resulting from the RHS development as if they were generated by the RSS development….”
I am in complete agreement with the proposition that, in order to fall within subsection 226(A) the benefits in question must flow from the redevelopment of the CPO site (the RSS). However, for the reasons set out above I do not accept that the cross-subsidy of the redevelopment of the RHS must be excluded from consideration as one of those benefits. The likelihood of the redevelopment of a CPO site leading, whether because of cross-subsidy or for any other reason, to the development or redevelopment of other sites in the authority’s area is precisely the kind of wider benefit that subsection (1A) requires the authority to consider.

Conclusions

[43]For these reasons I would uphold the Order of Elias J. and dismiss the appeal on the basis that the Defendant was entitled to take the RHS benefits into account because they fell within subsection 226(1A).[44]In view of this conclusion it is unnecessary to deal with the alternative submission that the RHS benefits were material considerations under subsection 226(1)(a) in any event. I would merely add that the prohibition in subsection 226(1A) does not purport to cut down the considerations that are capable of being material under subsection 226(1)(a); it merely ensures that wider “well-being” benefits are not ignored, but are always treated as material considerations by requiring acquiring authorities to be satisfied that they are likely to flow from the redevelopment of the CPO site, as a precondition for making the CPO.[45]I would therefore dismiss the appeal.[46]I agree.Lord Justice Ward[47]I also agree.

Cited in 1 later judgment