R (on the application of Tesco Stores Limited) v Forest of Dean District Council and (1) JD Norman Lydney Limited (2) Asda Stores Limited (3) Windmill Limited (4) MMC Land & Regeneration Limited1

The Court of Appeal, upholding a decision of the High Court, has confirmed that the quantification of benefits provided under a section 106 agreement to mitigate harmful impacts on a town centre arising from out of centre retail development is not always necessary.

Background

Windmill applied for planning permission for a mixed use industrial and out of centre retail development within Lydney. The site is occupied by JD Norman Lydney (JDN), a camshaft production business, and comprises a foundry and finishing shop. Key elements of the proposal comprise demolition of the finishing shop and erection of a retail store together with car parking and petrol filling station; and the erection of a new finishing shop and offices for JDN.

Planning permission was granted following the completion of a section 106 agreement containing a package of measures aimed at mitigating harmful impacts on the town centre. The reasons for granting permission were the safeguarding of existing jobs at JDN, creation of new jobs and mitigation of harmful impacts through the section 106 obligations.

The High Court

The principal ground of challenge was that the section 106 agreement failed to comply with regulation 122(2) of the Community Infrastructure Levy Regulations 2010 and in attaching weight to those obligations the Council had acted unlawfully. Regulation 122(2) provides that:

“A planning obligation may only constitute a reason for granting planning permission for the  development if the obligation is –

  1. necessary to make the development acceptable in planning terms;
  2. directly related to the development; and
  3. fairly and reasonably related in scale and kind to the development.”

Tesco contended that the Council had insufficient information on the benefits to be secured, namely the type of town centre improvements that would be made, the feasibility of a proposed new market square, the prospects of match funding coming forward to deliver shop front improvements and frequency of a proposed shuttle bus service. Accordingly, it was unable to assess the extent to which the obligations would mitigate the harm and therefore had not complied with the Regulation 122(2) requirement.

Tesco also submitted that its arguments were reinforced by the decisions in the Mid Countiescases2, where the High Court quashed planning permission granted by the same Council for out of centre retail development in Cinderford.

In dismissing the claim, the High Court held that members of the Council’s planning committee were required to decide whether there was sufficient information available to take the section 106 obligations into account and to possess an understanding of and apply the statutory tests, although without “mathematical exactitude”. The Court found that it was a matter for judgement of members to accept that some harm would result to the retail centre of Lydney and to conclude that the benefits were sufficient to mitigate the residual harm.

Further, the High Court held that the facts of the case could be distinguished from those relating to the Mid Counties cases – where Council had failed to grapple with an earlier planning appeal decision concluding that very serious harm to the town centre would arise.

The Court of Appeal

In the Court of Appeal Tesco focused its challenge upon limb (c) of Regulation 122(2). It argued that the Council had no idea at all of the scale of the obligations and that it was therefore impossible for it to express a view as to whether the relationship between the scale of the obligations and the scale of the development was fair and reasonable.

The Court of Appeal found that it was a matter of planning judgement to determine whether the prospect of mitigation was too speculative to amount to a material consideration. On the facts, the Council’s conclusion that the package could mitigate in part the harm to the town centre, although to an unquantified extent, was not Wednesbury unreasonable.

Sullivan LJ noted that “while a planning decision-maker must approach the assessment of the three requirements in regulation 122(2) with appropriate rigour, what is appropriate will vary depending on the circumstances of each case.”

Comment

Planning is not a scientific process and whilst the Court of Appeal decision turns on the facts surrounding the proposal it nevertheless demonstrates that benefits put forward to mitigate harm to a town centre do not always require to be subject to mathematical quantification.