Persimmon Homes (North East) Ltd & Ors v Blyth Valley Borough Council [2008] EWHC 1258 (Admin)

Case No CO/7040/2007

[2008] EWHC 1258 (Admin)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

THE ADMINISTRATIVE COURT

Venue Royal Courts of Justice

Date Tuesday, 20 May 2008

Strand

London WC2A 2LL

B e f o r e:

MR JUSTICE COLLINS

Between

PERSIMMON HOMES (NORTH EAST) LIMITEDClaimant

BARRATT HOMES LIMITEDClaimant

MILLHOUSE DEVELOPMENTS LIMITEDClaimant

Between

BLYTH VALLEY BOROUGH COUNCILDefendant

Computer-Aided Transcript of the Stenograph Notes of

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Mr Peter Village QC and Mr Andrew Fraser-Urquhart (instructed by Macfarlanes) appeared for Claimants

Mr Anthony Porten QC and Ms Nicola Allan (instructed by Sharpe Pritchard) appeared for Defendant

J U D G M E N T

[1]MR JUSTICE COLLINS: This is a claim made by three housing developers pursuant to section 113 of the Planning and Compulsory Purchase Act 2004 seeking to quash a policy known as H4 in the Core Strategy produced by the defendant Council. This is what is known as a "DPD", adopted by the Council in July 2007 following an examination by an Inspector in February 2007 and his report in June. Policy H4, to which I will come in more detail, deals with the proportion of affordable housing required in any housing development in the district of the defendant.

[2]It is necessary to set out the statutory process under the Act, which was intended to speed up and to simplify the process of production and adoption of planning policies for the regions and for the districts within those regions. The relevant provisions of the Act for our purposes start with section 17, which is headed "Local development documents". Sub-section (1) provides:

"(1) Documents which must be specified in the local development scheme as local development documents are— (a) documents of such descriptions as are prescribed; (b) the local planning authority’s statement of community involvement. (2) The local planning authority may also specify in the scheme such other documents as they think are appropriate. (3) The local development documents must (taken as a whole) set out the authority’s policies (however expressed) relating to the development and use of land in their area. ... (8) A document is a local development document only in so far as it or any part of it— (a) is adopted by resolution of the local planning authority as a local development document; (b) is approved by the Secretary of State under section 21 or 27."

[3]There are regulations which have been made under the Act: The Town and Country Planning (Local Development) (England) Regulations 2004 (SI 2004/2204). In Regulation 7 of those regulations, Development Plan documents include Core Strategies, and this case concerns a Core Strategy.

[4]Going back to the Act, section 19(2)(a) provides:

"(2) In preparing a local development document the local planning authority must have regard to— (a) national policies and advice contained in guidance issued by the Secretary of State..."

[5]Section 20 provides:

"(1) The local planning authority must submit every development plan document to the Secretary of State for independent examination. (2) But the authority must not submit such a document unless— (a) they have complied with any relevant requirements contained in regulations under this Part, and (b) they think the document is ready for independent examination. ... (5) The purpose of an independent examination is to determine in respect of the development plan document— (a) whether it satisfies the requirements of sections 19 ... [and various regulations] relating to the preparation of development plan documents; (b) whether it is sound."

It is the question of soundness which is at the centre of this claim.

[6]Section 20 also makes it clear that before a document is submitted for an independent examination by an Inspector appointed by the Secretary of State, it must have complied with all the necessary procedural requirements and guidance that are issued in relation to such documentation. This has sometimes been described as the need for front loading of the process; that is to say, a local planning authority must not submit a relevant document for examination unless satisfied that they have taken everything into account that they should have taken into account in preparing it, and so it is indeed what they wish to be contained in the plan having regard to all the matters to which they ought to have had regard. Of course, there may be submissions and suggestions made which the Inspector may incorporate or require to be incorporated, and equally the local planning authority itself may, having received and considered representations made for the purpose of the examination, accept that certain changes are desirable. Indeed, as we shall see, such a change was accepted by the defendant authority in relation to Policy H4 shortly before the commencement of the examination.

[7]Going back to the Act, section 22 provides that a local planning authority may at any time before adoption withdraw the document, but sub-section (2) makes clear that such a withdrawal cannot take place once the document has been submitted for independent examination, unless - "(a) the person carrying out the examination recommends that the document is withdrawn and that recommendation is not overruled by a direction given by the Secretary of State, or (b) the Secretary of State directs that the document must be withdrawn." One imagines that withdrawal would only be likely to be recommended or directed if the Inspector decides that it is not sound or it does not comply with the necessary matters set out in section 20(5). I suppose there may be other circumstances which could lead to a recommendation for withdrawal, but those are, one would have thought, the most likely ones.

[8]Section 23 deals with adoption. It provides by sub-section (1):

"(1) The local planning authority may adopt a local development document (other than a development plan document) either as originally prepared or as modified to take account of— (a) any representations made in relation to the document; (b) any other matter they think is relevant. (2) The authority may adopt a development plan document as originally prepared if the person appointed to carry out the independent examination of the document recommends that the document as originally prepared is adopted. (3) The authority may adopt a development plan document with modifications if the person appointed to carry out the independent examination of the document recommends the modifications. (4) The authority must not adopt a development plan document unless they do so in accordance with subsection (2) or (3). ... "

[9]That section raises a possible question as to whether the words "the authority may adopt" in sub-sections (2) and (3) give it a discretion to fail to adopt even though an Inspector has made modifications, or it has gone through as they wish. It is not necessary for me to consider whether that is a correct interpretation, or whether the word "may" there simply is used because there are two options, namely modification or no modification, and that once it has gone through the process, it has to be adopted. Otherwise an authority that did not like the modifications which the Inspector had imposed could simply fail to adopt and then try again at a later time. So far as the scheme is concerned, that might be said to be undesirable. But I do not, nor do I need to, reach any final conclusion on that.

[10]Once the document is adopted and becomes one of the Development Plans, then by section 38(6) this is provided:

"(6) If regard is to be had to the development plan for the purpose of any determination to be made under the planning Acts the determination must be made in accordance with the plan unless material considerations indicate otherwise."

[11]For the purposes of an area in England, sub-section (3) of 38 provides:

"(3)... the development plan is— (a) the regional spatial strategy for the region in which the area is situated, and. (b) the development plan documents (taken as a whole) which have been adopted or approved in relation to that area."

Accordingly, this Core Strategy has become a Development Plan when read with the other Development Plan documents which apply in the district. Thus, section 38(6) applies to it.

[12]In that context, section 113 is headed "Validity of strategies, plans and documents", and it applies by section 113(1)(c) to a development plan document and (b) to a local development plan. Sub-section (2) provides as far as material:

"(2) A relevant document must not be questioned in any legal proceedings except in so far as is provided by the following provisions of this section. (3) A person aggrieved by a relevant document may make an application to the High Court on the ground that— (a) the document is not within the appropriate power; (b) a procedural requirement has not been complied with. ... 6) Subsection (7) applies if the High Court is satisfied— (a) that a relevant document is to any extent outside the appropriate power; (b) that the interests of the applicant have been substantially prejudiced by a failure to comply with a procedural requirement. (7) The High Court may quash the relevant document— (a) wholly or in part; (b) generally or as it affects the property of the applicant."

[13]This case does not allege a failure to comply with any procedural requirement, so the only question is whether the document was within the appropriate power. That effectively means: was the approval of the document tainted by an error of law insofar as it applied to the document as a whole, or to any individual proposal within the document? It is obvious, I would have thought, that a challenge under section 113 can be directed to an individual policy within a particular plan. Were it otherwise and were it necessary to challenge the plan as a whole, even if the challenge was only to an individual policy, that would create a ridiculous situation because the particular strategy or plan or document in question is likely to deal with many different matters, and if all are accepted to be entirely valid and lawful, but only one policy is under attack, it would be quite extraordinary if the whole had to go, and indeed sub-section (7) makes clear that the High Court can quash the relevant document in part. It follows from that that it is possible in an appropriate case to consider one particular policy only.

[14]Guidance has been set out in two relevant documents. The first is Planning Policy Statement 12, which was issued in 2004, and indicated the approach that should be adopted to development plans in the planning system, as it was established by the Planning and Compulsory Purchase Act 2004. The relevant issue of soundness is dealt with in that document at paragraphs 4.23 and 4.24. They provide as follows: "4.23 The policies in development plan documents will be tested thoroughly during the independent examination of the development plan document. Section 20 of the Act sets out the purpose of the independent examination of a development plan document ... 4.24 The presumption will be that the development plan document is sound unless it is shown to be otherwise as a result of evidence considered at the examination. The criteria for assessing whether a development plan document is sound will apply individually and collectively to policies in the development plan document. A development plan document will be sound if it meets the following tests ...

[15]There are then nine separate tests set out under three headings:(1) Procedural;

(2) Conformity; and

(3) Coherence, consistency and effectiveness. It is not necessary for me to read them all into this judgment. The two most material are (iv), under the heading "Conformity", which reads:

"it is a spatial plan which is consistent with national planning policy and in general conformity with the regional spatial strategy for the region or, in London, the spatial development strategy and it has properly had regard to any other relevant plans, policies and strategies relating to the area or to adjoining areas... "

And then (vii), under the heading "Coherence, consistency and effectiveness", reads:

"the strategies/policies/allocations represent the most appropriate in all the circumstances, having considered the relevant alternatives, and they are founded on a robust and credible evidence base..."

[16]4.25 provides:

"Where the development plan document relates to housing, local planning authorities should produce housing trajectories which will demonstrate how the plan will deliver the policies relating to housing provision. This will be important in clarifying the delivery mechanisms of the development plan document which will be part of the test of whether it is sound. Annex B sets out further guidance on the preparation of a housing trajectory."

Again, I do not think it is necessary to go into the details of that in the context of this case because that is not a matter which has been specifically relied on.

[17]In respect of housing, further guidance has been provided in a further Planning Policy Statement, this time numbered 3. That statement did not come into existence until November 2006, which was after the submission by the defendant Council of its Core Strategy for examination. The document itself contains some very important provisions for the purposes of this claim. Paragraph 10, under the heading "Planning for housing policy objectives", provides so far as material:

"These housing policy objectives provide the context for planning for housing through development plans and planning decisions."

Those objectives by paragraph 9 include: achieving a wide choice of high quality homes, both affordable and market housing; widening opportunities for home ownership; improving affordability across the market; and creating sustainable inclusive mixed communities in all urban and rural areas. What should be delivered, according to paragraph 10, include a mix of housing, both market and affordable, particularly in terms of tenure and price, to support a wide variety of households in all areas, both urban and rural. Paragraph 11 provides that there must be collaborative working between local planning authorities and regional planning bodies, as well as early engagement with local communities, stakeholders and infrastructure providers, and local planning authorities will need to work closely with the private sector, particularly developers and householders, to achieve the Government's strategic housing objectives. There must be an evidence-based policy approach, informed by a robust shared evidence base, in particular of housing need and demand through a strategic housing market assessment and land availability, through a strategic housing land availability assessment.

[18]Then paragraphs 27 to 30 are under the heading "Affordable housing". Paragraph 27 states the Government's committal to providing high quality housing for people who are unable to access or afford market housing: for example, vulnerable people, key workers, as well as helping people make the step from social rented housing to home ownership. There was a concurrent statement in November 2006, headed "Delivering affordable housing", a policy statement from the Secretary of State for Communities and Local Government.

[19]Then 29:

"In Local Development Documents, Local Planning Authorities should: – Set an overall (ie plan-wide) target for the amount of affordable housing to be provided. The target should reflect the new definition of affordable housing in this PPS. It should also reflect an assessment of the likely economic viability of land for housing within the area, taking account of risks to delivery and drawing on informed assessments of the likely levels of finance available for affordable housing including public subsidy and the level of developer contribution that can reasonably be secured. Local Planning Authorities should aim to ensure that provision of affordable housing meets the needs of both current and future occupiers, taking into account information from the Strategic Housing Market Assessment."

[20]The new definition of affordable housing is contained in annex B to the PPS, which provides:

"Affordable housing includes social rented and intermediate housing, provided to specified eligible households whose needs are not met by the market. Affordable housing should: – meet the needs of eligible households including availability at a cost low enough for them to afford, determined with regard to local incomes and local house prices. – include provision for the home to remain at an affordable price for future eligible households or, if these restrictions are lifted, for the subsidy to be recycled for alternative affordable housing provision."

[21]Going back to paragraph 29, the fourth bullet point reads as follows:

"Set out the range of circumstances in which affordable housing will be required. The national indicative minimum site size threshold is 15 dwellings. However, Local Planning Authorities can set lower minimum thresholds, where viable and practicable including in rural areas. This could include setting different proportions of affordable housing to be sought for a series of site-size thresholds over the plan area. Local Planning Authorities will need to undertake an informed assessment of the economic viability of any thresholds and proportions of affordable housing proposed, including their likely impact upon overall levels of housing delivery and creating mixed communities. In particular, as the new definition of affordable housing excludes lowcost market housing, in deciding proportions of affordable housing to be sought in different circumstances, Local Planning Authorities should take account of the need to deliver low cost market housing as part of the overall housing mix."

That provision is the crucial one for the purposes of this case. Putting it generally, what is important within it is the requirement that consideration should be given by means of an informed assessment to the economic viability of thresholds and proportions to be adopted in a planning document, and so, in this Core Strategy, when setting the target for the affordable housing to be included in any development.

[22]This PPS came into existence in November 2006. Accordingly, it was not possible for the Council to have regard to it when developing their strategy. What they did was to have regard to the existing guidance documents, to which I need not refer in detail. Suffice it to say that they did not include the requirement to have regard, in the way set out in paragraph 29 of PPS3, to economic viability.

[23]In October 2004, the Council commissioned Dr Fordham, who has very considerable experience in producing housing need studies, to do just that. The conclusion reached by Dr Fordham as a result of his study was as follows:

"Analysis suggests that any target of affordable housing up to around 83% would be justified (in terms of the need) -- this figure would only marginally be reduced (to 73%) if we were to look at the backlog of need over a ten year period. However, we would not recommend a target level of 83% (or 73%) be appropriate for the Council to seek on future housing developments. This is simply because it is highly unlikely that any site would be able to support anywhere near this level of affordable housing and it is likely that in setting such a target many sites would remained undeveloped (developers being put off by the high affordable housing targets). Therefore in terms suggesting a target to the Council we must draw on our own experience about what might be achievable and realistic. In our view the evidence of the survey suggests that (for example) a target of up to 40% can be justified. Targets of this level (and higher) have been adopted by a number of local planning authorities. At a level of 40% we would not typically expect to find any problems with financial viability, though this site specific matter may require investigation in some cases (eg severely damaged brownfield sites). Additionally we suggest that site sized thresholds below the current Circular 6/98 level of dwellings should be considered. It is also suggested that all additional affordable housing should be social rented with perhaps some limited scope for shared ownership in the more expensive parts of the Borough."

[24]It is relevant to note that, in the area of the Council, property prices are low compared with national figures, and indeed incomes are also low. As Mr Village put it, there had been comment that properties in the area were "cheap as chips". That is perhaps a very crude way of putting the matter, but it does indicate that property prices are low and thus the market price which any developers could expect to achieve would be lower than in most other parts of England, and there is a great pressure upon the Council in relation to the provision of affordable housing because of the low levels of income. It is that that led to the figure of 83 per cent when Dr Fordham considered only need. He did not consider viability in detail in the sense that he did not take evidence from the developers and consider figures in detail, but he used his experience to produce the figure of 40 per cent, which he considered from that experience was one that might well be appropriate for a target for the percentage of affordable housing in any development. However, it is not suggested that he approached the matter in accordance with paragraph 29 of PPS3, which is hardly surprising because that was not part of the guidance that was then in force.

[25]The Council then considered its preferred options for the Core Strategy. The relevant one for our purposes, namely H4, was said to be that of achieving a 30 per cent borough-wide affordable housing target, which was broadly supported because of the difficulty of achieving 40 per cent. Indeed, 40 per cent might have even resulted in less affordable housing being secured, as developers would be deterred. It made the point that house builders and developers wanted a lower target or no target, but this would be detrimental to achieving social and economic objectives, and had therefore been discounted. It was said too that there was support for a lower threshold of 15 in Blyth and Cramlington, but because of the smaller size of sites in Seaton Delaval, consideration should be given to whether a lower threshold of 10 should be adopted. So the proposed policy as at 2 September 2005 was this:

"At least 30% affordable housing will be provided as a proportion of all new housing development in the borough. The Blyth, Cramlington and Seaton Valley development plan documents will allocate a proportion of land for affordable housing in order to meet that requirement. In addition all new housing developments above the following site size thresholds will be required to provide at least 30% affordable housing and will be judged against criteria set out in Policy DC6. Blyth and Cramlington: 15 dwellings. Seaton Valley: 10 dwellings."

[26]In a further draft in April 2006 this was maintained, save only that Blyth and Cramlington was reduced from 15 to 10 because there were identified in the revised urban capacity study a significant number of small sites in Blyth and Cramlington, and therefore the decision was made to reduce from 15 to 10. It is to be noted that the draft provided no flexibility in the target in question.

[27]Following the submission for examination, in December 2006 the Council produced its Core Strategy Submission Draft Technical Paper, which was to be put before the Inspector. This explained how the various proposals in relation to affordable housing had been reached. On page 29 of the document, under paragraph 7 headed "Affordable housing", they stated in 7.4 that the Housing Needs Survey recommended a percentage target of 40 per cent, which was relatively high compared to other districts, and consideration was therefore being given to the most appropriate percentage target. Then it set out five options ranging from "Do nothing - do not secure any affordable housing", through 40 per cent, or option 3 a lower percentage (30 per cent), or variable targets in some areas, or variable targets taking account of the nature of the site. It was decided that option 3 should be taken because as 7.8 sets out:

"30% was considered to be a more realistic target in recognition of site viability issues. Requesting a higher proportion of 40% may result in developers going elsewhere, with a lower target, ie neighbouring Wansbeck, who have a 30% target, and the potential for no housing, including affordable housing to be provided at all."

[28]So far as site threshold is concerned, the explanation was, as I have already indicated, based upon the recognition that there were going to be a considerable number of smaller sites and a belief that 10 should be the appropriate threshold. It is to be noted that in 7.8 there is a reference to site viability issues, but although that is stated, there was no consideration of any detailed material which would have guided the Council in deciding whether a particular target was the appropriate one. The requirements of paragraph 29 of PPS3, which contained what was required and referred to a possible methodology, were not complied with.

[29]In the statement produced on behalf of the Council, Ms Wilson, who led the production of the Core Strategy through the planning system, in paragraph 3.6 says this:

"Faced with a number of large scale housing applications, the Council decided to prepare interim policy to provide consistency, clarity and transparency for developers in terms of how the Council would secure affordable housing in the intervening period until the Core Strategy was adopted. The 40% target recommended by the HNS was relatively high compared to other areas in the North East and was proving difficult to secure in the Borough. In May 2005, DTZ Pieda Consulting, on behalf of the Northumberland Local Authorities, were commissioned to conduct a Northumberland Housing Market Assessment. It found that Blyth Valley and Wansbeck comprise a single housing market. At that time, Wansbeck District Council had established a target of 30% affordable housing through its HNS, which was carried forward to the now adopted Wansbeck Local Plan. Due to the close integration of the two areas the council considered it appropriate to lower the affordable housing target to be consistent with the Wansbeck target. 3.7. The Interim Affordable Housing Policy therefore sought a borough wide affordable housing lower target of 30%. The Council consulted on the draft Interim Affordable Housing Policy which was adopted in August 2005. The Claimants by their agents ... were fully engaged in that consultation process and made representations."

[30]It is obvious, having regard to the dates, that Wansbeck, in reaching its 30 per cent target, had not had regard to the guidance in PPS3. Thus, it is highly unlikely that it considered the question of viability, certainly in terms required by PPS3. However, recognising the existence of PPS3 and the need, if possible, to show compliance with it, the Council produced for the inquiry what is described as a PPS3 Compliance Statement. It is dated on its face February 2006, but that must be a mistake for February 2007. It dealt with affordable housing in paragraph 7, and set out the matters to which I have already referred, explaining how the Council reached 30 per cent. In 7.4 this is said:

"The Core Strategy complies with PPS3 in that it sets a Borough wide target for the provision of affordable housing based on an up to date assessment of need (paras 22 & 29)."

That, I fear, is simply inaccurate. It may well produce a target which is based on an up-to-date assessment of need, but paragraph 29 requires more than that, and specifically requires that it is based upon the economic viability of the relevant target, assessed in accordance with the approach set out in paragraph 29. Thus, as it seems to me, it is quite impossible to say that Policy H4, as set out by the Council, does comply with PPS3. I entirely accept Mr Village's submission that, in that respect, it clearly does not, and in fairness, Mr Porten did not submit that it did. His submissions are that, even without that, for reasons to which I will come, there was no unlawfulness in the approach adopted by the Inspector and in the upholding, with modifications, of Policy H4.

[31]Mr Village relied upon two previous applications which had led to grants of planning permission by the Secretary of State -- conditional planning permissions in each case. Both were very substantial housing developments. One was known as the Southern Development Area, involving a combination of 850 and 170 dwellings (there were two separate applications which covered broadly the same area). That was in March 2006. The other, in respect of which conditional permission was granted in January 2007, known as the South West Sector, involved 750 dwellings. What Mr Village relies on in particular are the observations of the Inspectors who dealt with those inquiries. So far as the first is concerned, the SDA, that contained 44 affordable units out of 170, and that was of course considerably below the 40 per cent. In fact, I think it comes out at 26 per cent, if I am not mistaken. The Inspector commented that there was a ridiculously wide divergence of opinion from 0 per cent to 83 per cent, including a variation in the figure sought by Blyth Valley from 10 per cent to 40 per cent. The Inspector simply said that, in his view, the 44 was acceptable.

[32]He also stated that, as his recommendation on an appropriate percentage of affordable housing for the Southern Development Area, he doubted if a figure of more than 10 per cent should be applied. That was even if there was a sound case for any specific provision where Blyth was a low housing cost town in one of the lowest housing cost areas of the country. On the evidence put forward at the inquiry, an imposed figure for a sizeable element of affordable housing in the Southern Development Area would be hard to defend. However, the Secretary of State did not accept that a particular figure was an appropriate one, and his conditional grant was on the basis that the relevant condition left for the parties was to discuss the appropriate level and for the Council to agree a level, or to impose a level in the absence of agreement before any development could take place. I gather that in fact no agreement has been reached.

[33]At a second inquiry, the SWS inquiry, the Inspector dealt with the question of affordable housing. He had before him the 83 per cent and 40 per cent. He referred to the SDA inquiry, and the view of the Inspector in that -- the study of the HNS that is -- was not a sound evidence base upon which to rely. He went on:

"No new evidence on the need for affordable housing was submitted to the inquiry. The emerging LDF Core Strategy proposes a target of at least 30% on new housing schemes, but that figure appears to be based on viability rather than need issues, and as a consultation draft the proposal can be given little weight."

[34]That, I am bound to say, is a slightly curious statement because the whole point is that the figure was based on need rather than viability, as I understand it. The Inspector appears to have got it totally the wrong way round in those observations. On the other hand, he may have taken the view that, when he said "based on viability", he was simply relying on the Council's approach that they had reduced the 40 per cent to 30 per cent because of the view they had taken on the question of viability. If that is what he meant, that is understandable, but it does not mean that viability was dealt with on the basis of the approach which paragraph 29 showed to be appropriate. Indeed, again it is hardly surprising because PPS3 was not in existence at that time.

[35]The Inspector went on:

"In these circumstances the Council is content that, as at the SDA inquiry, affordable housing should be dealt with by a condition which leaves the proportion to be agreed later. Arcot [the developers] endorses this approach, arguing that planning decisions should be made on a consistent basis. Whilst it would be much more satisfactory to establish the percentage of affordable housing prior to the application being determined, there is insufficient information on which to make a rational decision. Ultimately, there is no need to suppose that a suitable condition would not deliver an appropriate level of affordable housing."

[36]In her "minded to grant" decision letter, the Secretary of State agreed with this approach and expressly accepted that there was insufficient information on which to make a rational decision in terms of the proportion of affordable housing. What I might call a somewhat open-ended condition was therefore imposed, and again, as I understand it, no agreement has been reached. Perhaps having regard to the desire of the Council as against that of the developers, that is not altogether surprising. It may be thought that such a condition is not likely to produce a satisfactory result. Indeed, I am told that a further inquiry is going to have to be held to deal with what is the appropriate level of affordable housing in these schemes. Both, as I understand it, are obviously substantial schemes and both are on Greenfield sites so that there is a degree of infrastructure required.

[37]There is one element which has been raised and that is the question whether the Council had agreed a figure of 10 per cent, which was what was being put forward at the SDA inquiry by the developers. It seems to me that that is not really an issue which I need to determine. Mr Village has relied on a letter of 22 December 2004, but it is to be noted that that letter does not in terms accept that the figure of ten per cent is one which should be applied. It of course notes that that is the figure that is being put forward by the developer, and indicates that that is a matter that can be the subject of negotiation for the purpose of the section 106 agreement. But, from what I have seen of the correspondence, I do not think that it goes so far as to indicate that the Council itself was at that time approving ten per cent. But even if it was, it is clear that by 2006 it had either changed its mind or indicated that it had never actually thought in terms of 10 per cent. Indeed, having regard to the approach to which I have referred, following from Dr Fordham's HNS and his view that 40 per cent would be appropriate, it is, to say the least, improbable that the Council would have committed itself to agreeing to a figure of ten per cent. However, I do not think that that can in any way be regarded as determinative or an important consideration for the purposes of this case.

[38]The developers made representations to the Inspector in relation to Policy H4, as did the Council. The developers' submissions included a proposal that the new policy should read:

"New residential development should seek to provide affordable housing consistent with the overall strategic target of 10% having regard to the: • Identified local need; • Nature and scale of the location and the development proposed; • Characteristics of the site; and • Economics of provision. This is to be informed by the Strategic Housing Market Assessment covering Blyth Valley Borough Council and the outputs of the sub-borough areas. All new housing development above the following site threshold of 15 net additional dwellings will be considered in the context of the above strategic target and criteria."

[39]They drew attention to paragraph 29 of PPS3 and what it required, made the point that the Fordham HNS did not address those matters, drew attention too to the previous Inspector's findings, and asserted that there was indeed insufficient information on which to make a rational decision as to the appropriate percentage of anything other than a 10 per cent target. They said that the needs assessment underpinning the Core Strategy had been discredited by previous Inspectors, and was not a sound evidence basis upon which to rely, and the 30 per cent affordable housing target was nothing more than Council's assessment, without developer input, as to what the Council perceived could be viably delivered in the borough.

[40]The Council itself produced its own Core Strategy submission in relation to housing, in which it supported the approach that it had made and which I have already referred to. There is a dispute as to whether it is accurate to state, as does Ms Wilson, that there was extensive consultation with stakeholders -- a regrettable jargon word which we have to use nowadays but which is intended to cover the developers. What she says in paragraph 5.15 of her statement is this:

"In addition, the HNS was subject to extensive consultation with stakeholders in any event. At each stage of the consultation process it was placed on deposit with the core planning documents. There was every opportunity for stakeholders to comment on the HNS and the claimants' consultants participated in that process. Their representations are recorded in the Schedule of Responses [all that does is to indicate that they were named as those who were able to make representations, although I do not think the representations as such, other than of course the later ones, are referred to]. Also NLP [the representatives] for the claimants and representatives of other house builders attended the Consultation Workshop held in June 2006. 5.16. Further, whilst the HNS provides the evidence base for the Core Strategy, it does not form policy. The policies are found in the Core Strategy, and those policies, including Policy H4, were subject to extensive consultation at various stages of the adoption process, including: (i) The issues and Alternative Options consultation in July 2005; (ii) The Interim Affordable Housing Policy consultation in 2005; (iii) The Core Strategy Preferred Options consultation in September 2005; and (iv) The Core Strategy Submission Draft consultation in April 2006."

[41]No doubt they were able at all stages, certainly after the HNS, to respond, and it may well be that they could have made observations in relation to the HNS itself. But at that stage the HNS was dealing only with need, and there was no point, so far as they were concerned, in raising the issues of economic viability because those were not material to the exercise that was being carried out in the HNS.

[42]It is perhaps worth noting that although, as I have already noted, the Fordham Report does touch on viability, it does so simply on the basis of Dr Fordham's own experience. He does not suggest that he had considered any specific representations relating to it. He produced a report for the purpose of the examination. He describes it as a statement. He points out that, so far as a percentage target is concerned, there was no satisfactory Government guidance on levels of affordable housing target; that the HNS produced a suggested target of 83 per cent which was clearly, to use his words, "unfeasible and undesirable". He went on:

"In practice affordable housing targets have been set by custom and practice once a reliable evidence base has been established. Thus targets are a yes/no feature of the planning system: they can only be set if there is robust evidence of need but cannot be mechanically worked out from any given level of housing need."

[43]In paragraph 5.5, commenting on objective statements, he says this:

"(iv) In para 2.7 the Objector [in that case George Wimpey] recites from the recently published (Nov 2006) PPS3 and the general requirement for Strategic Housing Market Assessments. Clearly the 2004 HNS was written long before this. However it does contain analysis of the housing market which conforms to what is required by PPS3. The Objector points to the requirement for stakeholder involvement, which clearly was not met in 2004. However, as the leading firm in the SHMA field (we are carrying out SHMAs for about 50 local authorities, and nearest to Blyth Valley would be the one we are starting in Newcastle) we can safely say that no stakeholder involvement has ever resulted in errors in the analysis of housing need being pointed out."

[44]Dr Fordham's conclusion is as follows:

"The Objectors seek to cast doubt upon the 2004 HNS, and upon the sense of the 30% draft target in Policy H4 which the Council has set following it. In neither case is the objection well founded. Despite attempts to imply it, no detailed consideration has yet been given to the 2004 HNS, and no conclusions drawn by Inspectors from any such consideration. The only comments have been about the low level of house prices in Blyth Valley. As chapter 4 shows, this has changed a lot since 2004, and all in the direction of increasing rather than decreasing the level of housing need and thus of any affordable housing target. The 30% level looks more modest now than it did a year or two ago. The Objectors have not made any coherent case against either the HNS or the draft policy."

[45]In their submissions, representatives of the claimants referred specifically to paragraph 29 of PPS3, made the point that account had not been taken of the economic viability, that 40 per cent was an arbitrary target which had been reduced to 30 per cent and no reason had been provided for that reduction. Similarly, other representations on behalf of developers stated:

"The requirement now involves undertaking a Strategic Housing Market Assessment, which may form part, all, or more than a local planning authority's area, and should be prepared collaboratively with stakeholders. The SHMA will determine not only the overall proportion of households requiring affordable housing, but also the likely profile of housing types and tenures required, the size and type of affordable housing required and in which locations. The implication is that the distribution of need and demand may vary across a housing market and/or local authority area. Separate targets should also be set for social rented and intermediate affordable housing. It is apparent that the 2004 Fordham Study, which is based on guidance published in 2000, cannot possibly provide an adequate and up-to-date evidence base to satisfy the government's latest requirements, particularly when their latest guidance on preparing an SHMA has yet to be published."

[46]Facts on guidance was published in March 2007. That for some reason was withdrawn and superseded by a further document in August 2007. However, I gather from counsel that neither document contains any assistance as to how the question of economic viability should be ascertained. However, it may well be that that was unnecessary since it is fairly obvious how that can be and should be approached, namely by producing figures which show broadly the expected return from any development, and how in the context of Blyth, and having regard to the low cost of housing because of the situation there, the relevant percentage that can be borne having regard to all those conditions in order to attract developers to engage in developments which will provide for the Council the housing that is needed in their district.

[47]How then should the Inspector have approached the issue, bearing in mind that PPS3 did not come into existence until after the Core Strategy had been submitted for examination? There was at the time no specific guidance as to what he should do in relation to material which came into existence, whether in the form of guidance such as this or any other development which would affect a policy, or, I suppose, the strategy as a whole.

[48]There is some possible guidance which can be derived from PPS12. One sees that in Annex D there is an indication of what should be contained in the independent examination. D4 refers to submission of additional material, and states:

"Prior to the start of the examination the Planning Inspectorate will set deadlines for the submission of any further material from those seeking a change to the statement of community involvement together with the deadline for any local planning authority response."

That relates to the statement of community involvement and perhaps is not of the most obvious relevance.

[49]It is made clear that the Inspector should determine the procedure to be used at the formal public examination unless the whole is to be dealt with by written representations. I should say that this is not a traditional planning inquiry. It is, as its title suggests, an examination. Inspectors are encouraged to make it relatively informal, and it can be, and frequently is, I understand, carried out by means of discussion. Although formal evidence can no doubt be given and tested if the Inspector decides that that is essential for the purpose of reaching the necessary result, that would be rare, and generally speaking it is dealt with on the basis of written documents being presented, and then discussion between the interested parties and the Inspector based upon those written documents.

[50]In approaching the assessment of soundness, D9 reflects what has already been referred to in the body of the document:

"The presumption will be that the submitted development plan document is fundamentally sound unless it is shown to be otherwise as a result of evidence considered at the examination.79 The local planning authority will rely on the evidence, collected through the preparation process of the development plan document, to demonstrate that the plan is sound; others will need to demonstrate why that is not the case. As part of their evidence in relation to housing the local planning authority should produce housing trajectories which will demonstrate how the plan will deliver the policies relating to housing provision. This will assist in clarifying the delivery mechanisms of the plan which will be part of the test of whether it is sound."

That is based on the assumption that the local planning authority will have gone through all the necessary procedures and obtained for itself all the necessary information in order to produce a document which reflects, and properly reflects, the requirements that are necessary in its district. That reflects back on the nine tests of soundness, which are set out and which I have already cited in paragraph 4.24 of PPS12. That in itself reflects the requirement of what has been described as front loading. The whole point is that LPAs should not submit the documents for examination until they have ensured that they have taken all the necessary steps to produce a plan which is in conformity with all the requirements of the Act.

[51]I should only add that D46 makes it clear that the Inspector can choose to keep the examination open after hearing all those who wish to be heard, and holding all the programmed sessions, while the report is written, and this will enable him to seek clarification on matters which might have been raised under the written representations process, and to address, if necessary, any new matters which might arise during or after the formal examination process. But that was subject to the proviso that they do not materially affect the substance of the plan, and that must extend to the substance of any particular proposal in the plan. That is consistent with an approach which has been set out in a document which has been produced in June 2007 by the Planning Inspectorate, headed "Lessons learnt examining development plan documents". That of course did not exist at the time of the inquiry with which we are concerned, but it is to be noted that in paragraph 1.15 this is said:

"If proper front loading has taken place, there should be no need for pre-hearing changes, other than in exceptional circumstances. It is clear that to date there has been insufficient appreciation of the critical importance of frontloading by all interested in or affected by the planning of an area. This includes LPAs, key stakeholders such as statutory bodies and infrastructure providers and the development industry. Problems have arisen in the early examinations where LPAs have sought changes in response to submission stage representations. If the plan preparation process has been engaged in by all effectively there should be no surprises and no need for an LPA to provide any more material than that provided in the submission documentation. If the LPA consider it necessary to make material changes to the submission document it suggests that they have not submitted what they consider to be a 'sound' plan."

[52]Then the point is made that if there are so many changes that the final document no longer closely resembles a submitted version, this may indicate unsoundness, and if the change alters the sense of a policy, or how it was to be applied, or introduces new material, it would need to be advertised, and effectively this would take the process back to the submission stage at best, and possibly further. Thus it is said that where an LPA seeks change to any substantial extent, it may be that the Inspector will decide that the change is too substantial to be accommodated in the submitted document and recommend the document be withdrawn as unsound.

[53]In 2.4, the following point is made:

"Inspectors have to reach conclusions on the issues of soundness (to which the representations relate), not the representations. Where representations made at preferred options stage are made again in similar terms on the submission of the DPD, LPAs should have considered the matters at preferred options stage and will not need to do further work in response to the representation."

[54]However, it is recognised that there may be fresh developments after the submission, and those may require an adjournment to meet the new matters, if that is possible, or if the changes are fundamental, the Inspector can decide that the matter should be withdrawn, or alternatively the Inspector, if satisfied that there is sufficient proper material for him to base his decision on, can go ahead and do so.

[55]I must now refer to the Inspector's report and see whether that measures up to what is required and whether there are any errors of law contained in it. I do not propose to read the whole of it, simply to refer to the material parts.

[56]In dealing with the conformity tests, the Inspector referred in paragraph 4.5 under "Test 4" to the identification of inconsistency with national policy at an early stage in the preparation of CS, and that necessary changes had been made such as the deletion of retail growth and so on. He went on:

"Most significantly, GO-NE have been consulted on this matter throughout and at the Examination confirmed that, in their opinion, the CS complies with national policy. Planning Policy Statement 3 (PPS3) was published in November 2006 after the submission draft CS was released. Changes have therefore been proposed to the CS to ensure that it conforms with PPS3. These are considered in section 7 of this report."

[57]At 7.2, the Inspector, in dealing with Test 7, says this:

"The alternative and preferred options papers produced by the Council clearly state the evidence base that has underpinned the selection of options and alternatives. The evidence base includes an up-to-date Urban Housing Capacity Study, a Housing Needs Assessment, an Open Space, Sport and Recreation Needs Assessment, a Retail Capacity Study and an Industrial Land Capacity Study amongst other documents. Supporting text in the CS summarises how the policies have been developed from the evidence base. National policy and good practice guidance, where available, has been followed in the preparation of all evidence base documents and both GO-NE and the NEA have not sought to doubt the credibility of the evidence used in the preparation of the CS."

And that includes the housing aspect.

[58]The question of affordable housing is dealt with in paragraphs 7.29 through to 7.37 of the report. This is where he deals with Policy H4. He states:

"7.29 The Housing Needs Survey (HNS) of 2004 concluded that there was a need for 83% of housing to be affordable housing. Though the HNS was reliant on data such as the 2001 census no evidence has been brought forward to indicate that the housing needs situation in Blyth Borough has changed significantly since 2004. Blyth Valley remains one of the Boroughs in the country where the cost of housing is low but it is also one of the Boroughs that has the lowest income levels. Uncontested evidence indicates that between 2004 and 2006 house prices rose by 40% whilst incomes rose by around 10% and that a crude price to income ratio rose from 4.3 in 2003 to 5.3 in 2006. A reconsideration of the HNS in 2006 indicates that between 2003 and 2006 the number of households on the Council's Housing Register more than doubled and though this is not necessarily a reliable indicator of housing need it does add to a conclusion that the 2004 HNS remains a credible and robust evidence base. There is no evidence to indicate that any stakeholders have been excluded from the HNS process. The HNS is a public document and no statistical evidence has been produced to undermine its conclusions. The reconsidered HNS is not undermined by the adoption of PPS3."

That is of course all correct, insofar as the HNS was concerned with need and did not consider any material that went to viability.

[59]The Inspector then deals with the proposed amendment to H4, which would accord with PPS3, to seek a target rather than that the target should be a prescriptive 30 per cent.

[60]Before I go further, it is perhaps important also (and I should have referred to this earlier when I considered the policies as put forward by the Council) that there are explanatory notes which are set out in relation to the relevant policy. The notes in the April 2006 document make it clear that the policy sets out the overall percentage target of the site threshold which would be adopted. The area based DPDs will contain more detailed policies.

[61]In the February 2007 proposals that were put forward for the purpose of the inquiry in which the target was made a target rather than something which had to be applied, it was made clear that it was accepted that there was a need to consider individual developments on their own terms.

[62]However, going back to the Inspector's report, at paragraph 7.31 he deals with the comments after the South-West Sector and SDA Inquiries recommending in favour of lower percentages, and he doubts whether 40 per cent or 30 per cent would be realistic, but he said they were not assessing the suitability of a borough-wide target for inclusion in the CS.

[63]In 7.32 he said this:

"The Council stated at the Cramlington South-west Sector Inquiry that 30% affordable housing would result in the development being unviable. This and other major housing commitments will be assessed, for provision of affordable housing, on site specific circumstances and the viability issues in each case. PPS1, at paragraph 8, states that '…applications for planning permission should be determined in line with the plan, unless material considerations indicate otherwise' [that of course is a reflection of section 38(6) of the Act]. This approach is followed for each planning application and if material considerations dictate that the 30% target for affordable housing required by policy H4 is not achievable then the Council would seek a lesser percentage provision. This approach was followed at both aforementioned Inquiries and should be followed for any future application for housing development within Blyth Borough."

That, as it seems to me, is an important paragraph because it will be able to be relied on by any applicant for planning permission for housing development, and the Inspector makes it as clear as it could be that the 30 per cent is a target, and must be regarded only as a target, and that if there is evidence in any individual development that that target is not able to be met, then that will have to be considered. Nonetheless, it is equally important to bear in mind that the target set must be a target which is not flawed by any deficiency in the process which has led to it being imposed, and if it is a flawed target, it should not stand as one which is to be achieved.

[64]Going back to the report, the Inspector deals in 7.33 with the point that 30 per cent would only satisfy part of the significant need as demonstrated in the HNS, but it was consistent with that in the neighbouring authority. The Inspector continued:

"The Council has considered alternatives ranging from 10% to 40%. A 40% target would not be viable and a 10% target would not adequately address the significant need. In these circumstances a 30% target is the most appropriate option. There is no evidence to suggest that committed sites will not be brought forward with a target of 30% affordable housing or that such a target will risk the delivery of sites identified in the UCS. At no time has the Council suggested that failing to achieve 30% affordable housing on sites early in the plan period would result in them seeking a higher percentage on sites in the latter part of the plan period. The policy would be applied on a site by site basis. 7.34 Paragraph 29 of PPS3 states that 'The national indicative site size threshold is 15 dwellings' but indicates that local planning authorities can set lower minimum thresholds where viable and practicable. No evidence has been brought forward to suggest that, as a matter of principle, a site for 10 dwellings cannot support an element of affordable housing. It may be that a site suitable for 10 dwellings could not support affordable housing at 30% but it might support a lower level of provision. If the site size threshold was 15 dwellings then all sites for 14 dwellings or less would provide 0% affordable housing. A site size threshold of 10 dwellings is appropriate in a Borough where there is a current high level of need, where house prices are increasing at a rate far in advance of income and where the UCS identifies a significant number of smaller previously developed sites. ... 7.36 Following the Examination housing round table hearing the five housing consultants present collectively proposed an amendment to policy H4 which was accompanied by a resume of their concerns regarding the HNS and other matters. The Council had no opportunity to produce counter evidence because the consultants' response to the request was produced at the closing session of the Examination. However, the document produced by the consultants has been considered as simply repeating that which was commented on at greater length in their individual representations or at the hearing. There is nothing of substance in the collective document that was not in previous representations or was not discussed at the hearing. 7.37 The government published, in November 2006, 'Delivering Affordable Housing', a document designed to support local authorities and other key parties in delivering more affordable housing. The Council's approach to the delivery of affordable housing generally accords with the advice in this recently published document. The document requires local authorities to develop a strategic approach to housing by undertaking Strategic Housing Market Assessments (SHMA). Practice guidance on SHMAs and an advice note on 'Identifying sub-regional housing market areas' were published shortly before this report was completed. With the guidance and advice now in place the Council should move swiftly to implement government initiatives on delivering affordable housing by undertaking viability studies on UCS sites and by commissioning an SHMA for the Borough."

[65]Thus the Inspector clearly took the view that, notwithstanding the coming into force of the guidance in PPS3 and the fact that the HNS had not in terms considered viability, nonetheless it was, generally speaking, not undermined by the adoption of PPS3, and in any event the Council had to consider through an SHMA the question of viability of the percentage of affordable housing for the various sites which were set out for housing purposes in the borough.

[66]It is accepted, and has to be accepted, that Policy H4 was not and cannot comply with PPS3 since it does not consider viability. Indeed, viability was referred to, and Dr Fordham, as I have had already indicated, used his expertise to produce a figure of 40 per cent. But no detailed evidence which needs to be taken into account in accordance with the PPS3 has been produced or referred to. It is said on behalf of the Council that the claimants could produced but did not produce such evidence to be placed before the Inspector, or indeed at an earlier stage to be placed before the Council in order to challenge the figure that the Council was proposing of 30 per cent. That means, it is submitted, that it has not been shown that the policy is unsound because the assumption is to be made that it was sound, and in the circumstances all that the claimants have done is to make assertions themselves. The Inspector was entitled, as he said, to rely on the material put forward by the Council.

[67]Mr Porten suggested that once the strategy had been submitted, there was effectively a freeze; that nothing further could or should be produced, and the Inspector had to decide on the material before him whether it was or was not sound. That seems to me to put the matter far too high. It is clearly open to an Inspector, and indeed the document produced by the Planning Inspectorate of June 2007 indicates as much, to adjourn to consider or to obtain the necessary information on any new development. It is a matter for him in the circumstances to decide whether it is necessary to do that.

[68]For his part, Mr Village submits that the figure of 30 per cent is one which has been, as it were, plucked out of the air. There is no indication as to how that particular figure has been reached, merely that it lies somewhere between 10 and 40, and is consistent with the 30 per cent which has been applied in the neighbouring Wansbeck district, and thus it is sensible that a similar approach should be adopted, or else developers would not come to Blyth at 40 per cent when they could go next door to Wansbeck at 30 per cent. It is only a target, as I have indicated, and the Inspector made clear that in individual developments the question of viability had to be considered, and indeed it had to be considered through the SHMA.

[69]Mr Village makes the point that the SHMA is not something that would go to an independent examination. It is a document which the Council would produce and which then will be applied by the Council, although of course the developers will have an input and will be able to make their representations. The only basis for challenge to such a document would be by judicial review. There would be no question of an independent consideration of its validity. Any applicant would have to consider and give evidence about the economic viability, and if they could show in any development that 30 minus X per cent was appropriate, then the figure reached is the one which should be applied. However, as I have said, targets would be applied and it would be for the developers to establish that the 30 per cent was not achievable. That means that it is important that a proper and lawful target should be the starting point.

[70]The question that I have to decide is whether the material before me shows that the starting point, the 30 per cent, is one which is flawed, and flawed because no consideration in reaching it was given to the issue of economic viability. It was simply based, first of all, on Dr Fordham's views that 83 per cent would be unacceptable but that 40 per cent might be; then the Council's views, supported really by no independent material other than that their experience was that the 30 per cent indication had not put off those possible developers, although 40 per cent had. However, it is perhaps of significance to note that the major developers, who are represented as claimants here, are clearly not prepared to accept a figure of 30 per cent.

[71]Assuming that the Inspector was concerned that the figure of 30 per cent was not in accordance with the appropriate approach, what should he have done? He could perhaps have substituted a provision which made it clear that the appropriate percentage should be considered on each application, and that it should be as high as was reasonably possible, or he could have decided to adjourn the examination to receive evidence relating to that issue and to obtain a reliable figure.

[72]Mr Porten has placed some reliance on the observations of Beatson J when he considered an application for an interim order which was made by the claimants. What he said in paragraph 23 of his judgment was this:

"I also do not consider the non-consultation on the underlying study point a strong point. The relevant part of the guidance PPS3 in relation to this were only promulgated in November 2006. To apply the standards set in them in 2006 to a document competed in 2004 is a recipe for great complexity in process Planning policies are evolving and if each time a policy evolves then all steps that have been taken an earlier stages of a process have to be rethought in term of the new situation, this is a recipe for chaos. The trend in planning law has been to speed up the process."

[73]Having said that, it is surely important that a policy and a plan should accord with any relevant Government guidance. Thus, if the new development, that is to say guidance or some consideration in the process which affects a particular policy, if that is fundamental, it is no recipe for chaos for steps to be taken to ensure complicity. Much will depend, perhaps everything will depend, upon the circumstances. Individual policies may be able to be modified in such a way as to enable the new developments to be sorted out later and a review to take place. But what is wrong, in my view, is to let a policy be established which may be unsupportable on a proper consideration of all material factors. It seems to me that on the material I have had placed before me, that is the situation in this case. The 30 per cent has been produced on the basis of material which is not supported by the guidance and which ignores a highly material factor, namely the economic viability of the relevant target. True it is, as Mr Porten submits and as the Inspector himself pointed out, that individual applications will be dealt with on the basis of an assessment of economic viability. On the other hand, the target will be there. It is set out as what is to be achieved and it is what section 38(6) of the Act will require to be taken into account as the relevant planning policy. In my judgment, that, in the circumstances of this case, means that there is a legal flaw.

[74]Accordingly, and for those reasons, it seems to me that this claim should succeed. Accordingly, that policy will be quashed. The result of that, I assume, will be that there will have to be a fresh consideration of that policy, and a fresh Core Strategy which will be limited to that policy. In the meantime, it is obvious that the Council is entitled, because of the need for there to be a provision of affordable housing, to insist that until any new policy comes into being, affordable housing is provided and is provided to whatever extent can be shown to be proper in the circumstances of the individual case. What I am getting at is that the absence of the policy does not and cannot mean that a development can properly go ahead without there being any affordable housing. The extent of it, of course, will depend upon the circumstances of any individual case.

[75]MR FRASER-URQUHART: Thank you, my Lord. My Lord, if your Lordship goes to page 2 of tab 1, your Lordship will see the claim form and that sets out the precise Policy H4 and also the paragraphs in the supporting text which the claimants would invite your Lordship to incorporate into the order.

MR JUSTICE COLLINS: Those are what will have to be quashed.

[77]MR FRASER-URQUHART: My Lord, yes. The other matter is the matter of costs, and I make an application for our costs of these proceedings.

MR JUSTICE COLLINS: What do you want, a detailed assessment or --

[79]MR FRASER-URQUHART: No. One came to court yesterday wondering whether it might be a one-day hearing and therefore suitable for summary assessment and schedules were prepared on that basis. But on the basis that it has gone over into a second day, I think those schedules incorporated (inaudible).

MR JUSTICE COLLINS: Mr Porten, I do not think you can resist the principle of costs, can you?

[81]MR PORTEN: No, my Lord, but I would ask for detailed assessment.

[82]MR JUSTICE COLLINS: In that case, a detailed assessment if not agreed. You have another application?

[83]MR PORTEN: My Lord, I do. As your Lordship appreciates, I am not aware, it may be that there have been, but I am not aware of any other applications under section 113 which have yet come before the courts.

MR JUSTICE COLLINS: I am not aware of any either.

[85]MR PORTEN: The effect of this presumption is new of course to this proceeding.

[86]MR JUSTICE COLLINS: I can see the importance. I assume that you will consider carefully because this is a case which clearly depends upon its own circumstances.

[87]MR PORTEN: Whether to take up permission is something that will have to be considered, but I am bound to ask now and have that option open.

[88]MR JUSTICE COLLINS: I think at the moment, subject to Mr Fraser-Urquhart, that I should not deny you permission because obviously we are in a new area, as it were, and, Mr Fraser-Urquhart, unless you have any submissions on the point --

[89]MR FRASER-URQUHART: My Lord, yes, I have submissions on substance and also in terms of the procedural matters. If I could deal with the procedural matters first. If your Lordship does consider it appropriate to grant permission for appeal, I would just indicate that there are planning applications proceeding towards appeal very soon in June which obviously are affected by the outcome of this case. That, as your Lordship will have seen, is the basis upon which we thought it appropriate to make applications for interim relief, and therefore if there is to be an appeal to higher places, I would ask, if it is within your Lordship's powers, to indicate that the matter needs to be expedited so that a decision can be reached.

[90]MR JUSTICE COLLINS: That is a matter for the Court of Appeal if they decide to go to the Court of Appeal. I not think I have any power to make any specific directions in that respect.

[91]MR FRASER-URQUHART: I thought that was likely to be the position. I just wanted to make sure that is clearly --

MR JUSTICE COLLINS: If you can show me any power, but I do not think I have any.

[93]MR FRASER-URQUHART: I certainly cannot. But that also goes to the matter of whether it is appropriate to grant permission, and I know it is not usual for submissions to be made.

MR JUSTICE COLLINS: Well, yes, it is.

[95]MR FRASER-URQUHART: In the circumstances I would say that it is not appropriate in this case. It is a new area of law, yes, but it builds upon a well understood line of authority which related to section 287 of the 1990 Act. Your Lordship, in my submission, is simply applying and has applied properly, we say, normal principles relating to that jurisdiction, and there is nothing that is so new in what has been put before your Lordship that it requires, as a matter of principle, as a matter of new law, examination by the Court of Appeal. In those circumstances, it is simply a question of the robustness of your Lordship's decision, and, in my submission, it is robust, it is the appropriate outcome and it is not something with which it is necessary to trouble the Court of Appeal.

[96]MR JUSTICE COLLINS: I have decided that, for the reasons I have given, I do not think that the starting point is correct, but I can see that there is an argument that, because of the presumption, then the Act requires a rather different approach, namely that you have to show that it is going to produce or will produce something which is wrong and, more importantly, prejudicial. At the moment, it clearly is prejudicial to you in the sense that you are faced with a target of 30 per cent, at least that is my view, but there is a contrary view that because it is not inflexible and because of what the Inspector said, it does not actually produce the necessary prejudice. So it seems to me that those are issues which may need consideration in the light of the different approach that we have under section 113 from that which existed before. Let me put it this way, I would have had no hesitation in the light of the material in deciding in your favour if we had been looking at it under the old basis, ie that the Inspector just got it wrong in that respect, but the new basis I can see, and indeed Mr Porten made it a part of his argument, could suggest a different approach. It is for that reason that I think that it is appropriate for me to grant leave to appeal. As I say, it will be for them to decide whether in the circumstances of this case they should do that or whether they should simply reconsider the target in the light of the full evidence upon it.

[97]I make it clear -- indeed it is obvious -- it may be that the evidence in due course will support a 30 per cent. I am not saying that 30 per cent cannot be appropriate, merely that I cannot say that, in all the circumstances, it will be because they have not gone through the proper hoops, if I can put it that way.

[98]MR FRASER-URQUHART: I will save anything further for the Court of Appeal if appropriate. (pause)

[99]MR JUSTICE COLLINS: You know we have to fill in this wretched document, which says why we are giving leave or refusing leave. What I have put is:

"Although the case depends on its own circumstances, the approach under section 113, ie an assumption of soundness, is new, and should, if the defendants' wish, be considered by the Court of Appeal."

[100]MR PORTEN: I am grateful.

[101]MR JUSTICE COLLINS: Thank you, gentlemen. I am sorry that I was rather longer than I hoped. That is always the trouble with an extempore, but I suppose actually there was quite a lot of material to go through.