Savills Commercial View

Planning permissions for retail development have a long history of being granted subject to conditions that limit the extent of the retail uses that would permitted. Such conditions are widely known as user restrictions, and have found their way into the day-to-day practice of retail planning. Nearly all participants in the world of retail planning, development, as well as agents in the investment and transaction markets are highly familiar with the effect of user conditions, and especially the wider effect of planning permission being granted without a user restriction.

A case decided by the Planning Supreme Court, issued on 3rd July, challenges many of the assumptions that have become a tenet of the property industry with regard to understanding a planning permission and its conditions. The judgement given by Lord Reed in a case brought by Lambeth Council against the Secretary of State for Housing, Communities and Local Government makes it clear that the absence of a specific condition limiting the retail use of a building granted planning permission for retail purposes does not necessarily mean that there are no restrictions on its retail use.

It is now the case that where an application is made to modify or remove an existing condition that restricts the retail use, the description of development in the decision notice that approves that application can be read as a limitation – or a condition – on the nature of the retail activity that is being granted. It has long been held that a restriction on the retail use could only be by means of a condition, as set out in the judgement in the leading case of such matters known as “I’m Your Man”.

Lord Carnwath in the judgement decided that where the description of what is being approved would be understood by any sensible reader as meaning that an existing condition is being proposed to be replaced by a new one, then that is what the planning permission should be interpreted as meaning.

Although the decision will have wider implications than for the retail sector, there are potentially significant implications for that sector given its exposure to the litigious nature of user restrictions. Certainly there will be a requirement to urgently review previous advice on this matter, and to assess whether previous advice remains correct.

CMS Legal View

The legal reality, that S73 permissions do not ‘vary’ conditions in a permission, but instead create a new permission with different conditions, continues to challenge the planning system. Cases in this area tend to arise either from S73 permissions granted without any conditions or with operationally defective conditions.

Before the Supreme Court decision, developer advisors had relied on a favourable interpretation in the lower courts that, if the planning authority fails in some way to expressly regulate S73 permissions by condition then they could rely on exactly what is (or is not) conditioned in the S73 permission. This approach seemed in the interests of those parties wanting to operate within a consistent, clear and effective planning system.

In 2015 the Supreme Court had already assisted planning authorities in the Trump case by allowing some extrinsic interpretation to give effect to defective conditions where important operational elements for compliance with conditions were omitted. But that was a case where conditions were imposed in the S73 permission. In the Lambeth case no condition in the S73 permission regulated the sale of goods. The Supreme Court then relied on analysis in a 2002 case, Reid, (another no conditions scenario), that contended that the permission that the S73 purported to change (the original permission) was unchanged and therefore continued to regulate the sale of goods.

Lord Carnwath’s judgement refers to the S73 application’s “evident intent” to restrict the sale of goods and that the grant of the S73 permission was “for something” and that must have been what was applied for - not what was claimed as an unrestricted sale of goods.

The Supreme Court’s decision could be seen as an unwelcome step back to examining the parties’ intentions in order to determine the effect of a S73 permission. In other areas the Courts have, rightly, abandoned an intentions approach for example on whether permissions have been lawfully implemented, mainly because of the evidential issues. Also developers, landowners, investors and others operating in the planning system will face an added level of risk where they rely what is on the face of their S73 permissions, not least because they may now have to refer to previous permissions. We might expect a spate of S191 applications for lawful use certificates to provide legal certainty on these permissions..

It may be that the Supreme Court is mindful of the resource constraints in local authorities by taking a softer line in a case that could have easily been avoided with more care when granting permission.

This is a joint commentary with Savills on the Lambeth case.