Kebbell Development Ltd., R (on the application of) v First Secretary of State

SIR RICHARD TUCKER: This is an application by the claimants, Kebbell Development Limited, under section 288 of the Town and Country Planning Act 1990 to quash the decision of the first defendant, the Secretary of State, by his Inspector, contained in a letter dated 8th October 2002, whereby he dismissed the claimant's appeal against the refusal by the second defendant, the Harrogate Borough Council, to extend time under section 73 of the Act.

The application relates to land known as Field No 6400 Knaresborough Road, Bishop Monkton, Harrogate. The matter arises out of a section 106 Deed of Agreement, dated 10th March 1998, made between the then owners of the site and the Council, whereby the owners transferred certain land to the Council for a nominal price of £1. In consideration of that Agreement, there followed shortly afterwards a decision made on 16th March 1998 whereby outline planning permission was granted to the owners for the erection of seven bungalows on part of the land.

That grant was subject to certain conditions, the second of which was in these terms:

The Agreement contains certain obligations set out in the second schedule. In summary, they were:

In pursuance of the Agreement, the land was transferred to the Council on 1st July 1999. No application for approval of the reserved matters was made before 16th March 2001 and accordingly time expired.

It was the submission of Mr Mould for the first defendant, not dissented from by Mr Harry Wolton QC for the claimant, that planning permission thereafter ceased to be capable of implementation, subject to any extension of time and grant of permission under section 73.

The claimants acquired the land some time between March and September 2001, that is to say after time had expired. Mr Wolton agrees that they should have been aware of the problem which that created. He is unable to explain why application had not been made within the time permitted by the Agreement, save to say that an error had occurred.

However, on 17th September 2001, six months after time had expired, the claimants applied under section 73 to carry out the development without complying with the time limit for reserved matters.

The Council refused the application and the claimants appealed. The first defendant, by his Inspector, dismissed the appeal by the decision letter to which I have referred.

The Planning Authority justified their refusal of the application by reference to changes in planning policy which had occurred since the date of the original grant.

Mr Wolton concedes that an application under section 73 is an application for a fresh permission and that, where, as here, there is an application to extend time, the Local Planning Authority or the Secretary of State is not required to ignore the practical consequences, and that the section 73 application should be determined on the facts at that time. This, however, is subject to material considerations arising from the terms of the Agreement.

Among these considerations is the fact that it was contemplated when the outline permission was granted that the development might not be begun until a date just before 16th March 2003, regardless of changes in policy. It would have been possible for the Council and the Inspector to permit a short extension of time and still keep within the overall five year limit.

Mr Wolton submits that in fairness the application ought to have been granted. He recognises that an Inspector's decision cannot be challenged merely because someone does not agree with it. He has to show either that the decision is not within the powers of the Act or that any of the relevant requirements have not been complied with. Mr Wolton submits that the Inspector erred and that his decision is flawed in a number of respects.

First because the Inspector failed to have any or any proper regard to the fact that the claimants' obligations under the agreement were not only to transfer the land to the Council for recreational facilities for the benefit of the public, but also are continuing in relation to their requirement to carry out works of drainage.

Thus, although in paragraph 18 of his decision letter the Inspector refers to the lack of any continuing obligation on the Council to view the proposed development in perpetuity, he makes no reference to the continuing obligation on the part of the owners relating to drainage.

Second, it is not suggested by the claimants that there should be any obligation in perpetuity, only for a period of five years.

Mr Wolton submits that these are material omissions and misdirections.

It is recognised that the Inspector had to strike a balance between changes of policy on the one hand and the continuing obligations on the part of the land owner on the other, but Mr Wolton submits that this exercise was not properly carried out.

Mr Mould for the first defendant, the Secretary of State, submits that the obligation on the part of the Council was completed by the grant of outline planning permission and that as a matter of fact that permission has expired because certain conditions were not complied with. Mr Mould refers me to the case of R v Leicester City Council ex parte Powergen United Kingdom Limited 81 POCR 47, where Schiemann LJ concurred with the analysis by Sullivan J of the effects of section 73 in the case of Pye v Secretary of State for the Environment [1998] 3 PLR 72.

I have to some extent already dealt with the effect of this analysis, with which Mr Wolton agrees, that the Local Planning Authority are entitled to have regard to any changes in planning policies that have occurred. However, there was nothing in this judgment to suggest that other material considerations should be ignored.

Mr Mould submits that the Inspector's reasoning was impeccable and that he drew a proper balance between planning policies and the benefits to the public. Mr Mould further submits that the claimants can have no complaints about lack of fairness. If they had complied with their obligations and if application had been made in time, they would have been able to implement them with permission which had been granted in outline, in accordance with its terms.

There is much attraction in Mr Mould's submissions. There is no doubt that there has been a change in planning policy and that the Inspector was fully entitled to have regard to it. However, there is greater attraction in my view in Mr Wolton's submission that the parties freely entered into a bargain with each other when they reached the section 106 Agreement. That bargain contained a continuing obligation on the part of the land owner, and the corresponding obligation on the part of the Local Planning Authority ought not to be summarily ended without careful consideration of the whole position.

In my view, the Inspector did not give the full consideration which he should have done to this continuing obligation on the part of the owners, and on this narrow ground I conclude that his decision, so careful in other respects, is fatally flawed.

The claimants had a legitimate expectation of a substantive benefit, and in my view it would be unfair to frustrate that expectation without giving full consideration to it before reaching a decision relating to it. In these circumstances, and on those findings and conclusions, I quash the Inspector's decision.

Are there any ancillary applications?

MR GREEN: My Lord, in those circumstances, I ask for the claimants' costs of the application. A schedule has been provided to your Lordship and I think my learned friend also has a copy of it.

Perhaps I can invite my learned friend to make whatever observations he has to make about it?

MR MOULD: My Lord, I do not resist the application in principle, obviously.

SIR RICHARD TUCKER: No.

MR MOULD: But all I say is this, that whilst not intending any disrespect, I do respectfully invite your Lordship to question whether on assessment the case merited the attendance of both my learned friend Mr Wolton and Mr Green.

It is a case which your Lordship has heard effectively in half a day and I do wonder whether, with respect, whatever view my learned friend's clients may take, and it is entirely a matter for them of course as to the legal representation that they decide to instruct on their behalf --

SIR RICHARD TUCKER: When I was at the Bar and was in silk, it was customary always for juniors to attend.

MR MOULD: Yes.

SIR RICHARD TUCKER: But I am aware that the practice has now changed.

MR MOULD: Indeed so, and of course one might make submissions about whether it should be junior or senior counsel. What we say simply in this: in the interests of keeping costs in proportion to the issues before the court, in this case the proper basis that I would invite your Lordship to take, if your Lordship is attracted by it, is to say that certainly the claimant should have Mr Wolton's costs, both for advising and of the hearing, but, with respect, Mr Green's costs should not be allowed on assessment.

So I would invite your Lordship to assess the costs in the sum of £10,997 minus £2,250, which is £8,747, I think.

SIR RICHARD TUCKER: Yes. Do you quibble with the rate of payment for counsel? Again, I must not hark back to my days at the Bar, because I know inflation has had its impact.

MR MOULD: I am not complaining, in addition to the point I have just made, about the actual rate that has been set out for my learned friend Mr Wolton. But if your Lordship was of the view that some allowance should be made for both counsel, then I would invite a substantial discount overall.

Your Lordship has my point.

SIR RICHARD TUCKER: Yes.

MR MOULD: What I say is that there ought to be a substantial allowance to reflect the overall scale of litigation involved in relation to counsels' fees.

SIR RICHARD TUCKER: Thank you.

What do you have to say about that, Mr Green?

MR GREEN: My Lord, I must sing for my supper. In my submission, the overall cost is not unreasonable, given the sort of costs incurred in these sorts of applications.

As to the particular matters raised by my learned friend, of course if I had not played a part, then Mr Wolton would have had to have done more. So his costs might well have been increased as a result, and that is a matter that I would invite the court to take account of.

This was obviously a matter of plainly very great concern to those instructing me. Your Lordship will appreciate the position they were in, with land but without planning permission. In my submission, it was not unreasonable for them to devote the resources they have done to try to rectify that position, based on their understanding of the bargain between the parties.

So in my submission, the overall cost is reasonable, given the nature of this sort of application and the facts of this case, and the particular items referred to are not unreasonable items of expenditure.

SIR RICHARD TUCKER: Thank you.

I propose to deduct the total sum of £2,000 from the costs. That does not mean that Mr Green will not be paid, but simply that the respondents will not be required to pay it themselves.

Subject to that, I make an order for costs in the claimants' favour in the sum of £8,997.

MR GREEN: I am obliged.

MR MOULD: My Lord, there is one other matter. I do invite your Lordship to grant permission to appeal.

In my submission, there are two grounds. First of all, your Lordship has been kind enough to indicate that he saw some force in my submissions, and on that ground, I respectfully submit that there is a real prospect that the Court of Appeal may take a different view on the merits of this case.

My Lord, there is a second point and that one I alluded to in passing in my submissions to your Lordship, and that is that my learned friend founded his case on a point of law on the application of a dictum of Lord Denning in the case of Newbury. I indicated that I would wish to develop the submission that that as a foundation stone for his case in this matter overall is a decidedly weak one, and certainly to seek to show the Higher Court that, in so far as this decision before the Inspector was argued on that basis, and indeed to a degree in this court, that that matter should be reconsidered in the light of more recent decisions, including that in their Lordships' House in Reprotech.

SIR RICHARD TUCKER: You will have noted that I did not refer expressly to Lord Denning's dictum.

MR MOULD: I did note that, my Lord.

SIR RICHARD TUCKER: Although I did of course refer to a bargain between the parties.

MR MOULD: That of course is something which I would wish to raise in the Court of Appeal, because I would place more at the forefront of my submission the structural argument that to base this case on there being a contract between the Local Planning Authority and the developer, and to say that that as it were affected the discretionary decision of the Authority as to whether or not to grant an extension of time for implementation of this scheme, is at the very least to bring private and public law concepts into potential conflict in the way that their Lordships' House in recent cases has said is an incorrect approach.

So, my Lord, I say that there is an issue here as to this particular case, which your Lordship has been kind enough to accept is by no means clear cut, and that there is that broader issue which that case brings into relief, once one delves below the surface as it were, which I have not dealt with in great detail in submissions in this court because I was content to seek to argue the case on its own facts, as it were. But I would wish to raise that point in greater relief, if your Lordship were to permit me to do so, before the Court of Appeal.

So on that basis, I invite your Lordship to consider the grant of permission to appeal.

SIR RICHARD TUCKER: What do you say, Mr Green?

MR GREEN: My Lord, on the first point, my learned friend was of course persuasive, but not sufficiently persuasive, and that would not in my submission be sufficient grounds by itself to grant permission.

On the more significant second point, as your Lordship made clear, no reference was made to Lord Denning's dictum. The alternative ground advanced by the claimant, that of a legitimate expectation, found clear expression in your Lordship's judgment, and that is, as I understand it, the basis on which the claimant succeeded, but that is not a private law. That is a matter of public law, and there is in my submission no confusion in your Lordship's judgment between the two. That is a public law matter and your Lordship has granted public law relief as a consequence.

SIR RICHARD TUCKER: I am disposed to grant permission, Mr Mould.

MR MOULD: I am grateful.