MR JUSTICE ELIAS: This is an appeal under Section 288 of the Town and Country Planning Act 1990. The claimants are Mr and Mrs Isaacs who are gypsies. They have three young children attending school. They used to live on a gypsy site but left because the physical conditions were appalling: there was feuding between families and concerns about bullying and the safety of their children.

The family moved on to the site in 2003. The site is in the countryside away from any established settlement, and therefore in a location where residential development would not normally be permitted. The area where the site is located was described by the inspector as follows:

The claimants sought and were refused planning permission to use the site, and an enforcement notice was served in February 2004 to take effect on 24 March 2004. The Isaacs did not appeal the enforcement notice but they did appeal the refusal to grant planning permission. That appeal was considered and rejected in August 2005. The inspector on that occasion concluded that the site was unacceptable as a permanent site because of the fundamental conflict with the policies to protect the local environment. However, a temporary planning permission for one year was granted to enable the family to look for another site and to minimise the impact on the children's education.

The temporary permission expired on 10 August 2006. The claimants had not by then left the site and they made a further application for planning permission on 27 September 2006. That was rejected by the council by a notice dated 28 February 2007. The claimants appealed to the inspector who dismissed the appeal by a decision dated 5 March 2008. They appeal that decision now to this court.

The inspector identified the material planning policies. Both the structure plan and the local plan seek strictly to control developments outside towns, rural centres and villages. Policy STR 1 is concerned with sustainable development in Somerset and the Exmoor National Park. STR 6 sets out strict limits to developments outside towns, rural centres and villages. Policy 36 of the Structure Plan however takes a permissive approach to the provision of sites for gypsies and travelling people, provided the sites are within reasonable distance of a settlement providing local services and facilities.

The South Somerset Local Plan Policy ST 3 is in virtually identical terms to STR 6. Policy ST 5 sets out the criteria which will normally be considered when determining proposals for development. These include reducing the need for travel and encouraging development within urban areas first. Local Plan SG 6 sets out the design criteria for any development. These include the requirement that they do not cause unavoidable harm to the natural environment of the locality and the broader landscape.

Finally local plan policy HG 11 reflects the permissive approach in STR 36. It deals specifically with the circumstances in which permission may be granted for long-term gypsy sites. This is an important policy because it reflects the recognition that because of special problems facing gypsies, the normal planning policies may need to be diluted so as to permit development for gypsy sites in circumstances where other residential development would be refused on the grounds that it is inconsistent with other planning policies.

HG 11, so far as material, is as follows:

National guidance on providing gypsy sites was originally contained in Circular 1/94 but has been up-dated by Circular 01/2006 because it was recognised that the guidance in the earlier circular had failed to result in adequate provision for gypsies and travellers. An objective of the new circular is the allocation of land in the development plan so that there can be a significant increase in the number of gypsy and traveller sites in appropriate locations over the next three to five years. A procedure designed to achieve this is set out. It is envisaged that local authorities will first assess gypsy accommodation needs through the Gypsy and Traveller Accommodation Assessment (GTAA). From that assessment they would determine the number of pitches that are required and feed that into the Regional Spatial Strategy. Modified pitch numbers would then be notified to each local authority and they are required to identify a specific site to match the numbers. There are also transitional arrangements set out in the circular which indicate that sites on the outskirts of built-up areas may be appropriate, as may be rural settings, provided they are not subject to special planning constraints.

The claimants have placed significant reliance on this circular, and some of the provisions need to be set out. Paragraphs 4 and 5 refer to the particular problems which gypsies and travellers face and which the policies identified in the circular seek to remedy:

Paragraph 12 also recognises these problems at sub-paragraph (b). It states that one of the intentions of the circular is -

Paragraphs 47 and 55 deal with issues of sites in rural areas and the countryside. Paragraph 54 states that some sites on rural and semi-rural settings may be appropriate:

Paragraphs 41 to 46 deal with the transitional arrangements before sufficient sites have been made available. Paragraphs 45 and 46 expressly considered the issue of temporary planning permission as follows:

Paragraph 109 of Circular 11/95 referred to in paragraph 45 has also been relied upon by the claimants. So far as is material, it states:

Having set out the background history and the relevant policies, the inspector then set out his reasons for his decision. He first considered the effect of the development on the character and appearance of the rural area.

The inspector noted that the previous inspector had determined that the development gave a "harsh and severely detrimental effect on the appearance of the site and local character." She had concluded that the development "was not compatible with the environmental qualities and landscape assets." Although the impact was localised, the harm was serious. As a consequence of this the claimants had sought to address the landscape concerns. They took advice from the council's landscape officer. They have planted trees and added more hedges in order further to conceal the development. Currently, however, the planting is still immature and it does not disguise the fenced standing area where the mobile home, touring caravan and other domestic structures are positioned. The upper parts of the mobile home can be seen from some distance. The inspector concluded that notwithstanding the mitigating measures -

In conclusion, the inspector thought that -

The inspector then considered the potentially countervailing arguments based upon the status of the claimants as gypsies and their personal difficulties. In this context he specifically addressed the need for additional gypsy sites. The inspector noted that although there were two public sites at Ilton and Tintinhull for gypsies they failed to provide the necessary number of pitches in the South West region. He concluded that the council had fallen short of the advice in Circular 01/2006 regarding the need to take urgent steps to remedy the significant shortfall in gypsy sites. The council's current policies were delivering some additional sites but only slowly and there was no reasonable expectation that they would secure the numbers required.

The inspector concluded that the unmet need for additional accommodation for gypsies in South Somerset was a factor which must be given significant weight. There were no other sites to which the occupiers could currently move although it was anticipated that some pitches would become available on the public sites. However the claimants had set their face against being relocated to such sites. He did not anticipate that there would be a further general gypsy site until at least 2013.

The inspector then turned to consider the personal circumstances of the claimants. He recognised the need for a secure base in order to assist in the education of the children, a factor which the previous inspector had also recognised. He had regard to certain health problems which Mr Isaacs had. He also considered the attempts that had been made to find other sites which he felt could have been more determined and robust.

The inspector then balanced these various considerations, bearing in mind that national policy required him to adopt a more robust approach to sustainable development for gypsy sites than would otherwise be the case. He weighed the adverse effect which a development would have as against a number of countervailing factors, specifically the unmet need for gypsy sites in South Somerset and the health and education considerations. He also took into consideration the fact that the claimants had made unimpressive attempts to relocate and would not go into one of the two permanent sites even if a place became available. Having weighed these considerations, the inspector concluded (paragraph 28):

The inspector then turned to consider the question of temporary planning permission and concluded it would not be appropriate. He summarised his reasons as follows (paragraph 30):

Finally the inspector recognised that Article 8 was engaged because of the effect on private and family life. He concluded that the family took their chance since they had been advised that they would not get relevant planning permission. They had been on the site unlawfully save for the period when they had temporary permission. In the circumstances, and given the adverse effects on the environment, any interference was proportionate under Article 8 (2) (DL 32):

Section 70 of the Town and Country Planning Act states that a local planning authority may grant planning permission either unconditionally or subject to such conditions as they think fit. They must have regard to the provision of the development plan and to any other material consideration.

Section 38 (6) of the Planning and Compulsory Purchase Act 2004 provides:

There are six grounds of appeal although four of them relate to the refusal to grant temporary permission. I will deal with them together.

First, it is said that there is a misdirection in relation to HG 11 which has, or may have, profoundly affected the balancing exercise carried out by the inspector. The second ground is that there was a failure to carry out the duty imposed by Section 71 of the Race Relations Act 1976. The four other grounds all relate to the failure to grant a temporary permission, and are as follows: that there was a failure to take into account a relevant consideration, namely the council's failure to take adequate steps to implement Circular 01/2006; that the inspector erred in law in not assessing the likely period of time for which the claimants would be by the roadside; that the inspector erred in rigorously applying paragraph 109 of Circular 11/95, thereby taking too rigid a view of the circumstances in which he could allow a temporary permission; and finally, that he failed to give proper reasons for this aspect of the decision. I will consider all those grounds in turn.

The first argument is that HG 11 stipulates that gypsy sites will be permitted provided the criteria in the proviso to that policy are met. This is an important exception to the usual position, reflected in a host of particular policy statements, that such permission would not normally be granted for a site in a rural area such as this. It is a recognition of the importance which is now given to authorities having to take steps to accommodate the gypsies' way of life. As the preamble to HG 11 states, other policy plans must be given full consideration when determining planning applications, but "it should also be recognised that a special need does exist for the provision of sites in Somerset."

Here the inspector concluded that the development was inconsistent with criterion 1 of HG 11. When referring to that policy, he said (DL 5):

Mr Cottle, counsel for the claimants, submits that there is no basis for the conclusion that criterion 1 of HG 11 was not complied with. It was not the view of the earlier inspector (who did however find a breach of criterion 2), nor was it suggested by the council that this development was inconsistent with criterion 1. Indeed, the hearing before the inspector took place without this criterion being identified as an issue at all. Furthermore the inspector gave no reasons for that conclusion. He simply stated it as a bald conclusion at the end of DL 14, and there was no context which would make it possible to infer what the reasons were. That would be a pure matter of speculation.

Moreover the only reference to the policy - in DL 5 - suggests that the inspector may have misunderstood the policy and concluded that the claimants could only be in compliance with it if there was no harm to the character of the area resulting from the development. That was plainly not right. The whole point of the policy was to permit certain developments for gypsies even though the development may cause some harm to the character of the area. It was only if the harm is caused in a manner identified in criterion 1 of HG 11 that it will conflict with that policy. This is a matter of great significance since, if the claimants did in fact comply with this policy, it would inevitably change the balance of the material considerations. The development would be consistent with one of the policies of the development plan, and it was a policy of particular significance when gypsies were the applicants.

Mr Coppel, counsel for the Secretary of State, said that there was evidence before the inspector to justify his conclusion that the development was inconsistent with HG 11. For example, a witness for the council referred to Mr Isaacs selling logs on the site, and indeed the first inspector had found that such activity went on. There was also some evidence of noise and vehicles using the site. The fact that the issue was dealt with somewhat cursorily by the inspector reflected the fact that it did not figure significantly in the submissions to the inspector.

Mr Coppel further reminded me of the well known principles concerning the giving of reasons, summarised by Lord Brown of Eaton-under Heywood in South Bucks District Council and another v Porter (No 2) [2004] UKHL 33, [2004] 1 WLR 1953, 36. He relied in particular on the observations that it was necessary to bear in mind that the reasons are directed to an audience which is fully acquainted with the issue involved and the arguments advanced; that the inspector need only refer to the principal issues and not every material consideration; and that is necessary to identify substantial prejudice before a reasons challenge can succeed.

In this case there was no prejudice from the failure properly to give reasons, and indeed no prejudice even if the inspector was wrong with respect to HG 11. It was obvious that the development was fundamentally at odds with a whole series of policies. The crucial issue was whether or not other material considerations outweighed the conflict with the development plan and the serious harm to the rural surroundings. It was plain that the inspector considered that they did not. It is fanciful to believe that the decision could have been different even had there been compliance by the claimants with HG 11.

As to the inspector's reference to HG 11 in DL 5, Mr Coppel accepts that it is inaccurate but submits that it was merely a shorthand description of the policy. It would be unjust to the inspector to assume that he did not understand perfectly well what the policy was about. He had in that very paragraph referred to the permissive approach to the provision of gypsy sites in Policy 36, and later in the judgment he referred specifically to paragraph 54 of Circular 01/2006 which recognises the more lenient approach given to gypsy applications.

I see considerable force in that submission and as a matter of fact it may well be right. However I am left in some doubt as to whether the inspector might not have fully appreciated the significance and scope of this policy. Moreover it is far from clear why the inspector found that the development was not in accordance with Policy HG 11. Lord Brown stated that the reasons must not give rise to a substantial doubt as to whether the decision maker may have erred in law, such as by misunderstanding some relevant policy. I am left in that doubt, and it is genuine rather than forensic doubt, to use the language of Sir Thomas Bingham MR in Clark Homes Ltd v Secretary of State for the Environment (1993) 66 P & CR 263 at 271-272.

I would not have been persuaded that there was any error here merely as a result of the general summary of the policy HG 11 in DL 5, albeit that is inaccurate. Summaries sometimes are. But this is compounded by the finding, without reasons, that the development is inconsistent with criterion 1 of that policy because of the harm to the character of the area. That finding is at least consistent with the misunderstanding of the policy on which the claimants rely. If the inspector had understood HG 11 as requiring that the development should cause no harm to the character of the area, then that would explain the absence of any explanation as to the particular means by which that harm has to be caused. It seems to me that this is at least a possible explanation for the inspector's analysis of this policy, and I cannot dismiss it as fanciful.

My concerns are further exacerbated by the fact that the inspector did not give that policy the potential significance that might have been expected. It ws very important to the claimants because it carves out an exception to the general tenor of the policies which all strongly militate against permission being granted in an area of this kind. Indeed, in reality if the development was inconsistent with this policy the claimants had very little prospect of the application succeeding. Whilst compliance with that policy does not of course begin to dictate that permission should be granted, it is potentially an important consideration in support of the application which the inspector would have to take into account.

Nor do I accept that the court can properly make good the lack of reasons as to the nature of the incompatibility of the development with HG 11. They are not made clear from the context and, given the potential significance of this policy for the claimants and the fact that this was not an issue which was apparently in dispute, it was incumbent on the inspector to explain this conclusion. He needed to say why criterion 1 was not satisfied, and he might have considered whether any problems might have been met by a condition.

I also bear in mind, and agree with, the observations of Mr Justice Newman in Wycombe District Council v First Secretary of State and Bellway Homes Ltd [2005] EWHC 120, paragraph 5, when he said:

Accordingly on this first ground alone, I consider that the decision must be quashed. If, as the claimants submit, there is or may have been, compliance with HG 11, then that changes the balance of the competing factors. It would be quite wrong for me to take the view that in those circumstances the outcome would necessarily have been the same. The development would at least be consistent with a potentially important policy specifically designed to deal with applications from gypsies. It must be a rare case indeed where the decision can be upheld notwithstanding such an error, however much the court may suspect that the ultimate outcome may be the same.

There is a statutory obligation on public bodies - and that includes the inspector - to comply with the duty imposed by Section 71 of the Race Relations Act. This is as follows:

There are two elements to sub-section (b). The first is a duty to have due regard to the need to promote equality of opportunity; the second is the duty to have regard to the need to promote good race relations.

In R (Elias) v Secretary of State for Defence [2006] 1 WLR 3213 at paragraph 274, Lady Justice Arden said:

Mr Cottle correctly submits that the fact the claimants did not refer specifically to this duty, or raise any issues which apparently engaged it, does not relieve the inspector of the obligation to comply with it.

The inspector did not specifically refer to this duty. However as the Court of Appeal noted in R (on the application of Baker and others) v Secretary of State for Communities and Local Government [2008] EWCA 141, that does not mean that he did not take it into account. As Lord Justice Dyson observed at paragraph 37, the question in every case is whether the decision maker has in substance had due regard to the statutory obligation.

The Baker case is in my judgment highly material to this submission. In that case the claimants were Irish travellers who resided in certain plots on land in the Green Belt. They were refused planning permission by the council and the Secretary of State rejected their appeal. A further appeal to the High Court was dismissed and the matter came before the Court of Appeal. An issue was whether the Secretary of State, through the inspector, had discharged the duty under Section 71 (1) (b). It was alleged that she had not paid due regard to the need to promote equality of opportunity between racial groups. The Court of Appeal held that she had, notwithstanding the failure expressly to refer to this provision.

An important element in the court's reasoning was that the inspector had taken into consideration Circular 01/2006. As we have seen, that identified in terms the problems which gypsies face and their lack of opportunities compared with other groups, leading to their having the worst health and education status of any group in Britain. Lord Justice Dyson said at paragraph 40:

In subsequent paragraphs Lord Justice Dyson identified other indications which showed that the inspector had been fully alive to the factors which adversely impacted on the claimants' lack of opportunities.

In view of this decision Mr Cottle accepts that he cannot submit that the inspector did not have regard to the need to promote equal opportunities. As in Baker , it is plain that the inspector was alive to the plight of the claimants and the fact that this was the result of their gypsy status. However Mr Cottle says that this does not apply to the quite separate obligation with respect to having regard to the need to promote good race relations. He submits that it is very well established that unauthorised encampments exacerbate racial tensions, and indeed that much was conceded by the council. Therefore, it is said that the inspector must have recognised that since the claimants would necessarily be forced into an unlawful encampment, this should have been a matter for consideration notwithstanding that they were already in an unauthorised encampment.

Even if the inspector thought that there would be no adverse consequences with respect to the promotion of good race relations, this issue should have been addressed and it was not.

I reject this submission essentially for the same reasons as given in Baker . I accept that Baker is not precisely on the point in the sense that it does not strictly establish a binding decision with respect to Section 71 (1) (a). But in my view the same reasoning applies here. Circular 01/2006 recognises in terms (at paragraphs 4 and 12 (b) reproduced above) that one of the reasons for providing sites for gypsies is the need to eliminate the conflict, distress and anti-social behaviour associated with unauthorised encampments. That is plainly a reference, amongst other matters, to the potential for racial tensions. The inspector then specifically referred to these conflicts in this decision (DL 32) when he said that -

I would put this point on a more general basis. The classic situation where the Section 71 obligation bites is where some policy is in the course of being considered. The duty, to put it loosely, to have regard to race relations implications is very important. But where a policy has been adopted whose very purpose is designed to address these problems, compliance with Section 71 is, in my judgment, in general automatically achieved by the application or implementation of the very policies which are adopted to achieve that purpose.

Of course, there may in some cases be additional problems over and above those which the policy is directed to ameliorate, and which will need specific consideration. Perhaps, for example, there is evidence of special tensions over and above those which might naturally be expected to arise from the fact that the claimant is a gypsy who will have to relocate to an unauthorised site. But that is not this case. In my judgment the inspector was having regard to the requirements of Section 71 by seeking properly to apply the policies which had those very considerations in mind.

I turn finally to these various grounds. The first argument is, in considering whether or not to grant temporary permission, a relevant factor was the failure by the council to act promptly in accordance with the circular. Reliance is placed on the following observations of Lord Justice Wall in First Secretary of State and others v Chichester District Council [2004] EWCA Civ 1248, a case in which it was alleged that the inspector had erred in concluding that the council refusing planning permission had infringed Article 8. He said at paragraph 91.3:

I reject this submission. I do not agree that the fact of failing to comply with the policy, or at least failing to do so expeditiously, is of itself a relevant factor. The purpose of planning law is not to punish local authorities who are in breach of their duties. That could compel the grant of permission when it was plainly contrary to the public interest. The real issue here was the fact that the council's failing meant that there were fewer sites available than there would otherwise have been. That in my judgment is what Lord Justice Wall was focusing upon. The council's actions, or lack of them, affected the degree of the unmet need. That was plainly a relevant factor but one which the inspector manifestly had firmly in mind in this case.

The second ground is that the inspector ought to have made a determination as to how long the claimants would take to find another site. That cannot conceivably be an error of law. The inspector would be speculating without evidence, or at least with very little evidence. He did consider whether it was likely that a site would become available within the relatively near future, a factor which paragraph 45 of Circular 01/2006 requires the inspector to take into account, and he concluded that this was not likely. In my judgment, no further analysis of this matter was required.

The third ground is this. The inspector stated in terms that he was giving effect to paragraph 109 of Circular 11/95 which I have set out above. That paragraph of the circular has been criticised by His Honour Judge Gilbart QC in McCarthy v Secretary of State for Communities and Local Government [2006] EWHC Admin 3287 on the basis that implicit in the paragraph is the assumption that the harmful effects of the development are necessarily the same whether a permanent or temporary permission is granted, and that a temporary permission should never be granted if a permanent permission would be inappropriate. I accept that this is a literal reading of the paragraph, although the end of the paragraph itself, as well as paragraph 110, identify circumstances where a temporary permission could be granted which is plainly at odds with that assumption.

I agree that the paragraph is far from satisfactorily drafted, although I suspect that the intention of paragraph 109 might be gleaned from the particular example given. If the adverse impact on the amenities or character of the area is such that a permanent permission (with conditions if necessary) cannot be justified, then a temporary permission cannot properly be granted on the basis that the adverse impact, although serious enough to refuse a permanent development, might not be so serious as to refuse a temporary one. There would have to be other factors, some of which are identified in paragraphs 109 to 110, to justify granting a time-limited permission.

I would however respectfully agree with His Honour Judge Gilbart that it would be an error of law for an inspector to assume that since he did not think a permanent permission should be granted, then a permission for a limited time was bound to fail. However as the same judge recognised in Langton and McGill v Secretary of State for Communities and Local Government [2008] EWHC Admin 3256 at paragraph 30, paragraphs 45 to 46 of Circular 01/2006 are in any event at odds with that particular reading of paragraph 109. They recognise that a temporary development is not necessarily as harmful as a permanent one, so that the former can be granted in circumstances where the latter would be inappropriate. Accordingly, the application of those paragraphs involves a departure from what is required, on one reading at least, of paragraph 109.

In this case the inspector applied paragraph 45 of Circular 01/2006. He did the balancing exercise which that paragraph requires. He did not, therefore, fetter himself in the way Mr Cottle contends. (This seems to be also what occurred in Langton and McGill when essentially the same argument - advanced in that case too by Mr Cottle - was rejected for this reason.) It follows that I reject this ground of appeal on the facts.

Finally it is said that the reasons with respect to this aspect of the case are inadequate. It seemed to me that this was substantially reiterating the other grounds relating to the refusal to grant temporary permission. In my judgment it is plain why the inspector refused temporary permission. It was because of the harm to the character of the area coupled with the fact that there was no realistic prospect of a site becoming available within the relatively near future. If he approached the matter properly, as I think he has, then his decision cannot be faulted on a reasons challenge.

Nevertheless for the reasons give earlier in the judgment, the appeal succeeds and this decision must be quashed.

MR COTTLE: In those circumstances we would ask for costs to follow the event.

MR JUSTICE ELIAS: ( To counsel ) You cannot oppose that.

MISS HANIF: There are two matters. Bearing in mind that the claimants have lost on four points and succeeded on one, my primary submission would be - taking a broad-brush approach - rather than giving the claimants a costs order in respect of point 1 and the first defendant a costs order in respect of points 2 to 5, the more appropriate order would be simply for the parties to bear their own costs. If you are against me on that, my second submission is that there ought to be a percentage reduction on the amount of costs claimed by the claimants to reflect the fact that they have not succeeded in the entirety of the case.

MR COTTLE: We began at 11 a.m. and it spilled over into the short adjournment. I had not finished on ground 1 by the time we were approaching the short adjournment. That was the substance of my opening argument to you. Then I took some time in reply. It would have spilled over into the afternoon anyway.

MR JUSTICE ELIAS: It is not quite a day. I agree with you about time in court, but it is the preparation involved in drafting the submissions.

MR COTTLE: That would be a fraction. It would not be proportionate to the whole cost of the case because we properly brought the case. In those circumstances it is not like a two-fifths or a three-fifths scenario. It is only a fraction in terms of the paperwork.

MR JUSTICE ELIAS: I recognise that some arguments have been advanced that have not succeeded, but the claimants have succeeded and on a point that did take a considerable part of the time. I think it is appropriate to award 80 per cent of costs.

MISS HANIF: I am instructed to make an application for permission to appeal in respect of ground 1. I say that in both claimants' cases there is a compelling reason why we should be heard. It is a matter of importance to the first defendant.

MR COTTLE: It is absolutely unarguable, my Lord, absolutely unarguable. You should be robust in your conclusions. Hopeless.

MR JUSTICE ELIAS: I do not think it raises the issue you think it raises. You will have to persuade the Court of Appeal.

MR COTTLE: I ask for detailed assessment of the claimants' publicly funded costs.

MISS HANIF: My solicitors point out that if time for appeal could run from the date of the approved judgment - - - - -

MR COTTLE: There are two things. It is appeal allowed; matter remitted for reconsideration; first defendant to pay 80 per cent of the claimants' costs; detailed assessment of the claimants' publicly funded costs, if I could ask for that.

MR JUSTICE ELIAS: I have not seen any indication of costs.

MR COTTLE: No. We are publicly funded. We have to have detailed assessment of our solicitors' and party's costs.

MR JUSTICE ELIAS: Yes, detailed assessment.

MR COTTLE: That is right. They are paying our costs, 80 per cent, but a separate order is for detailed assessment of our publicly funded costs.

MR JUSTICE ELIAS: Yes.

MR COTTLE: I hope for the record that I can clear the names of my clerks who delivered and got a receipt from the Administrative Court.

MR JUSTICE ELIAS: I understand that. There is no problem about that. I recognise it is no fault of your chambers.

MR COTTLE: We were told that there was no record.

MR JUSTICE ELIAS: I am not quite clear about what happened.