In Horada v Secretary of State for Communities and Local Government the Court of Appeal has overturned a High Court decision relating to the Compulsory Purchase Order for the redevelopment of Shepherd’s Bush Market. The Court of Appeal has held that market traders who objected to the CPO were substantially prejudiced by the failure of the Secretary of State (“SoS”) to give adequate reasons when he confirmed the CPO. An Inspector had previously recommended that the SoS should not confirm the CPO after a public inquiry.
In 2013, a CPO was made by Hammersmith and Fulham Council to facilitate the regeneration of Shepherd’s Bush Market. Following over 200 objections, a public inquiry was held where the Inspector recommended the CPO not be confirmed by the SoS. This was because the guarantees and safeguards (such as rent levels and retail unit design information) in the proposed scheme were:
“not sufficiently robust to be assured that genuine opportunities exist for current traders or shopkeepers (or similarly diverse businesses) to continue trading in the market“.
However, in his decision letter, the SoS said that he was “satisfied” that appropriate safeguards were in place to protect existing traders through planning conditions and section 106 obligations. The High Court found that the SoS had not erred in law.
In the Court of Appeal, the main argument for the claimant – a trader representing the Shepherd’s Bush Market Tenants’ Association – was that the SoS’ decision letter failed to give adequate reasons for disagreeing with the Inspector. Adequate reasons must be given under the statutory rules governing CPO inquiries. The SoS argued that the recipients of his letter were aware of the relevant issues and therefore no further explanation was required.
The Court held that the SoS had failed to give the adequate reasons required by law. The judges accepted that previous cases indicated that it was not necessary for the SoS to provide a “paragraph by paragraph” response to an Inspector’s decision and that the SoS’ decision letter was intended for recipients that were well-informed. However, they stated that a “reader of the decision letter would have had to have been not only well-informed but also psychic” to have understood the SoS’ reasoning from the “two laconic sentences” that were cited as his explanation.
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This case demonstrates the importance to developers of the SoS providing substantiated reasoning in decision letters – especially where the SoS is going against an Inspector’s recommendation. Indeed, the Court argued that the SoS’ decision letter contained only “bald assertions”.
The failure of the SoS to include such reasoning can cause significant delays to projects while uncertainty over the success of legal challenges persists.
Case: Horada v Secretary of State for Communities and Local Government & Ors  EWCA Civ 169 (18 March 2016)