Galliard Hotels Ltd & Anor v London Borough of Lambeth

This is an application for judicial review of a decision by the London Borough of Lambeth (‘Lambeth’) to grant planning permission to GLI York Road Ltd, the First Interested Party (‘GLIYRL’), for the development of a 234 room hotel on the site of the General Lying-In Hospital, York Road London SE1. Planning permission was granted on 16^th June 2009. Lambeth’s Planning Committee approved the grant of planning permission at its meeting on 3rd June 2009 but subject to the developer undertaking various planning obligations pursuant to s.106 of the Town and Country Planning Act 1990. An agreement incorporating such obligations was entered into by Lambeth, GLIYRL and the two other Interested Parties on 16^th June 2009. The current application for judicial review is brought by Galliard Hotels Ltd (‘Galliard’) which is the owner of two hotel sites in the immediate vicinity. Galliard itself was granted consent for the Park Plaza, County Hall on Addington Street. The second hotel was originally known as 1 Westminster Bridge Road, but is now called Park Plaza 1 Westminster Bridge (‘1WBR’). Galliard sold its interest in this site to Malbray Ltd. Galliard and Malbray are the Claimants. They were granted permission to apply for judicial review by Mr George Bartlett QC, sitting as a Deputy Judge of the High Court, on 9^th December 2009.

In addition to the Claimants and the Defendant, GLIYRL was represented at the hearing before me. There was a dispute as to whether it had been properly served with the Claim Form and an Acknowledgment of Service had been filed only shortly before the hearing. There could be no doubt that it was proper for them to be heard. Its case had been outlined in a skeleton argument prepared by Mr Harris QC. The Claimants did not object to me doing so. So far as was necessary, I gave permission for GLIYRL to take part. The 2^nd and 3^rd Interested Parties have not appeared or been represented.

The Claim centres on two aspects of the s.106 agreement. The first concerns the undertakings in respect of the required Coach and Taxi Drop-off Strategy. The second relates to the undertaking to make a contribution towards Lambeth’s costs of maintaining its libraries.

In the course of the planning application process concern was expressed that the proposed development did not include adequate space on site for coaches and taxis to drop off and pick up passengers. This led to fears that if the immediately neighbouring streets were used for this purpose, traffic (including buses) would be unreasonably impeded. These fears and concerns were shared by the Claimants who objected to the proposal. An earlier application for development of the site of the General Lying In Hospital as a hotel had been refused by Lambeth in October 2008, in part because of similar transport issues.

Transport for London (‘TfL’) are the public transport authority and also the Highway Authority for Addington Street and York Road. They were consulted about the 2009 application and Lambeth’s officers reported their views to the Planning Committee as follows:

“Whilst TfL acknowledge that it is legal for London Taxis to pick up/drop off on either a red route, or bus stop, this should be discouraged. TfL does not consider the option to pick up/drop at Waterloo Station to be feasible in this location, and instead would encourage continued dialogue with the developers of the 1 Westminster Bridge proposal to share the taxi pick up/drop off area. Alternatively, pre-booked (by the hotel) taxis should be directed to the rear courtyard accessed via the Park Plaza hotel. This will need to be secured by use of a planning obligation, but would have to be agreed with the operators of the neighbouring hotels.

The transport assessment states that there will be minimal coach activity generated as a result of this development. TfL disagrees with this statement, as any hotel located in central London is generally known to attract large organised groups which often arrive and depart by coach. The coach parking bays located on Belvedere Road are deemed to be unsatisfactory for this proposal and instead TfL would encourage continued dialogue with the developers of 1 Westminster Bridge proposal to share the coach pick up/drop off area. Alternatively, the applicant should investigate using access road beside the Park Plaza hotel. A coach and taxi drop off strategy is to be agreed with TfL via s106 obligation.”

The officers’ report identified transport, parking and access issues as one of the main matters which the Committee would have to consider.

The Committee approved the proposal subject to the conditions outlined in the report and subject to certain minor changes to the s.106 obligations. These included “That a coach and taxi drop-off strategy be submitted and approved prior to the commencement of construction.”

Clause 6 of the deed into which the Interested Parties then entered with Lambeth provided that the developer (GLIYRL) would observe and perform the covenants and undertakings contained in Schedules 3 – 9 to the Deed and that they were to be regarded as planning obligations for the purposes of the Town and Country Planning Act 1990.

Schedule 8 contained the Coach and Taxi Drop Off Strategy. It said:

Coach and Taxi Drop Off Strategy

1.

The Developer covenants with the Council to submit to the Council for approval (in consultation with TfL) a Coach and Taxi Drop Off Strategy prior to implementation of the Development.

2.

The Developer shall not implement the Development or any part thereof unless or until the Council (in consultation with TfL) has approved the Coach and Taxi Drop Off Strategy in writing.

3.

The Coach and Taxi Drop Off Strategy shall include (amongst other things) the following elements:

(i)

arrangements for utilising the coach and taxi drop off areas to be provided on the adjacent development at 1 Westminster Bridge shown for identification purposes edged red and green (respectively) on Plan 2;

(ii)

arrangements for the Developer to secure a contract with a taxi service provider to drop off patrons visiting the Hotel in the rear courtyard of the Hotel shown for identification purposes edged green on Plan 3;

(iii)

arrangements for utilising the existing coach drop off areas located adjacent to the Premier Inn on Belvedere Road shown for identification purposes edged red in Plan 4;

4.

The Developer covenants with the Council to use and Occupy the Development fully in accordance with the Coach and Taxi Drop Off Strategy approved pursuant to paragraph 1 above, subject to revisions to the said Strategy that may be agreed in writing between the Developer and the Council from time to time.

5.

The Developer covenants with the Council to use the existing coach drop off area referred to in paragraph 3(iii) above at all times and shall use no other area unless or until an agreement is in force that permits the Developer to use the coach drop off area referred to in paragraph 3(i) above.

6.

The Developer covenants with the Council that the arrangements referred to in paragraphs 3 and 5 above (or such amended arrangements as may be agreed between the Council and the Developer from time to time) shall be communicated to the staff and patrons working or visiting the Hotel via the Approved Travel Plan.”

As I have said, “the adjacent development at 1 Westminster Bridge” was owned and controlled by the Claimants. Mr Bailey, their Planning and Urban Design Manager, says that the Committee was told that the Claimants would not give their consent to the use of their land for the GLIYRL hotel. Mr Bailey’s witness statement (not challenged by GLIYRL in this respect) says that GLIYRL’s own consultant had noted that the Claimants were unlikely to co-operate. This leads to the Claimants’ first ground of challenge. They argue that the Defendant failed to take account of a material circumstance, namely either the need for them to agree to the Strategy before it could be delivered, or, if the Council did take account of the need for their agreement, it failed to take account of their stated view that their consent would not be forthcoming and consequently that the Strategy was unattainable. In the further alternative, the Claimants argue that it was unreasonable for the Defendant to grant permission for the development in circumstances where the Strategy could not be delivered.

That was the way that the Claimants put their challenge based on the Coach and Taxi Drop Off Strategy when the Claim Form was issued on 15^th September 2009. Since then events have moved on.

The Claimants did maintain their refusal to allow GLIYRL to use their site on 1 Westminster Bridge Road. In addition, it transpired that GLIYRL could not use either the existing coach drop off areas adjacent to the Premier Inn on Belvedere Road (see paragraph 3(iii) of Schedule 8). However, TfL modified its views about coaches stopping on York Road. As was apparent from the report of the officers to Lambeth’s Planning Committee on 3^rd June, TfL would normally discourage the use of red routes for embarking or disembarking passenger. York Road is a red route. That report also recorded that TfL was not persuaded that coach movements would be minimal if planning permission for GLIYRL’s hotel was granted. The hotel was to be run by Whitbread Group plc (the 2^nd Interested party) as part of its Premier Inn chain. Subsequently, it seems, GLIYRL had presented TfL with survey evidence of the very low occurrence of coach parties at other Premier Inns in central London. Over the previous two years, the data provided by GLIYRL showed that just 6 coach parties had been to the County Hall Premier Inn, 3 to the Tower Bridge Premier Inn and none to Euston or Kings Cross. If usage was at this level, TfL considered that Bus Stop ‘F’ on York Road, which was directly opposite the site of the proposed hotel, could be used as a pick up and drop off point without causing any issue for buses. If occurrence was more regular, then red route enforcement would have to be brought in. So far as taxis were concerned, GLIYRL negotiated with a neighbouring landowner for an unrestricted right of way leading to a dedicated drop off/pick up point at the rear of the proposed hotel. A preferred taxi service provider would be chosen which would instruct its drivers always to use this dedicated area for the purpose. References to this service would be incorporated into the hotel’s central booking system. TfL was satisfied with these arrangements. GLIYRL used them as the basis for the strategy which it put forward to Lambeth for its approval in accordance with Schedule 8. On 11^th February 2010 Lambeth wrote to GLIYRL’s agents to say that it was satisfied with these arrangements and considered that they did fulfil Schedule 8 of the s.106 undertakings.

These developments have led the Claimants to apply to seek to add a supplementary ground of challenge or perhaps, supplementary grounds in the plural. So far as I can determine, these are as follows:

The Claimants need permission to expand their grounds of challenge and (so far as additional points (ii) and (iii) were concerned) effectively to attack an additional decision. I consider that the Defendant and GLIYRL had adequate notice of the Claimants’ wish to do so and it was desirable that the Court should deal on one occasion with the totality of the arguments which the Claimants wished to raise. It is right, therefore, that the Claimants should have permission to advance these additional grounds.

In my judgment, the necessary first step in considering these aspects of the Claimants’ challenges is to consider the true nature of the obligation which GLIYRL undertook in Schedule 8. In particular, was it the case that GLIYRL could only fulfil the terms of the Schedule by presenting Lambeth with arrangements that involved the use of 1 Westminster Bridge Road, or, was it open to them to put forward some alternative scheme? The Claimants’ original challenge has as its premise that Schedule 8 was inflexible. Likewise, each of the ways of putting the Supplementary Grounds shares the same foundation. If it was open to Lambeth and GLIYRL to agree alternative arrangements then each of the Supplementary Grounds must fail.

Mr Harris QC on behalf of GLIYRL submitted that my task is not to determine what Schedule 8 actually means or requires, but whether it was open to Lambeth to interpret the Schedule as giving it the latitude to agree some alternative scheme. I reject this submission. At this point of the argument, I am not concerned with questions of planning judgment, but the meaning of the term of a contract. In the event of a dispute, that must be a matter for the Court to determine. A contract can, of course, give one party a choice or a degree of latitude, but the extent of that latitude and the nature of any correlative obligation which the other party assumes, raises issues of law which are for the Court. Moreover, this contract is expressed to impose ‘planning obligations’ on GLIYRL under s.106. Apart from contract, those obligations can be enforced by the means that the 1990 Act allows. Consequently both private and public law lead to the conclusion that the obligations must be capable of objective determination.

Unsurprisingly, Ms Sheikh, for the Claimants, relies on the way in which the Defendant put its case in its summary and detailed grounds of opposition to the present application. Both, she rightly says, show that Lambeth did see the obligations as inflexible so that without the agreement of the owners of 1 Westminster Bridge Road to the use of their property, GLIYRL could not present arrangements to Lambeth which satisfied Schedule 8. While this submission must enjoy a certain forensic appeal, it cannot be decisive. Once again, it is elementary that the meaning of a contract cannot be determined by what one party says, after the agreement was made, that it thought that the contract meant.

Mr Harris and Mr Atkinson, on behalf of the Defendant, submit that Schedule 8 is not inflexible. Paragraph 4 of the Schedule expressly contemplates that there may be revisions to the Strategy and Paragraph 6 expressly envisages that the Strategy will be amended. Ms Sheikh observes that, at least initially, the arrangement that is put forward by GLIYRL must include the three elements spelt out in paragraph 3. The Defendant can only approve a Strategy which has these elements. The revisions of which paragraph 4 speaks and the amendments referred to in paragraph 6 both assume an extant approved Strategy which must necessarily have had the mandatory elements in paragraph 3. Furthermore, she observes, the Defendant is obliged to consult with TfL before submitting the initial proposal for approval (see paragraph 1) and the Defendant is required to consult with TfL before approving it (see paragraph 2). There is no equivalent duty to consult TfL before the Strategy is revised or amended.

I see the force of these submissions. It may well be that they, or something similar, influenced the stance which the Defendant took in its Summary and Detailed Grounds. However, I have in the end been persuaded by the arguments of the Defendant and GLIYRL that they should not prevail. Although at first sight it may appear as though the three elements in paragraph 3 are intended as an irreducible core of the Strategy (‘the Coach and Taxi Drop Off Strategy shall include…’), that is not so. The amendments, which paragraph 6 contemplates, include amendments to paragraph 3. No limit is placed on the amendments which may be made. Likewise paragraph 4 speaks of ‘any revisions to the said Strategy’. So no limit is envisaged there on the changes which may be made to the Strategy, even if they are to the elements set out in paragraph 3. If this is so, Mr Harris then asks, could the parties to the agreement really have intended to oblige GLIYRL and Lambeth to go through the charade of agreeing a Strategy which did include the elements in paragraph 3, only to permit them to revise or amend it immediately afterwards and thereby exclude one or more of those elements?

The background against which a contract is made is a legitimate aid to its construction. Here the context is first the planning report of the officers to the Committee, second the discussion in the committee and thirdly the resolution of the Committee. It is clear from the last that a Coach and Taxi Drop Off Strategy was to be mandatory. That was achieved by paragraph 2 of Schedule 8: the development was not to proceed unless or until the Strategy was approved by Lambeth. The Officers’ Report canvassed various forms that the Strategy or elements of it might take, but there is nothing in this background which indicates that any of these were ways in which the Strategy had to be achieved. On the contrary, the officers report ended by saying that “A coach and taxi drop off strategy is to be agreed with TfL via s106 obligation.” Similarly, the Committee resolved to approve the officers’ recommendation but added, “That a coach and taxi drop-off strategy be submitted and approved prior to the commencement of construction.” The use of the indefinite article on each occasion supports the argument of Mr Harris and Mr Atkinson that the Council’s concern was to have a satisfactory coach and taxi drop off scheme, rather than insisting on one which took a particular form.

Indeed, the Claimants’ first ground of challenge rather supports this case. If Schedule 8 was inflexible as the Claimants submit, the effect of the Agreement would have been to give them an effective veto over the development. Yet there is nothing in the events leading up to the Agreement to suggest that this was Lambeth’s (still less GLIYRL’s) intention. Despite the Claimants’ declared position that they would not co-operate, Lambeth and GLIYRL may have hoped that some means of accommodation could have been found, but there is nothing to show that these two expected the development to be frustrated if the Claimants remained intransigent yet some alternative Strategy acceptable to the parties to the agreement and to TfL could be found. Here TfL was consulted and did approve the Strategy. The revision or amendment of the elements in paragraph 3 has not been used as a device to circumvent their involvement.

For all of these reasons I conclude that Schedule 8 did not have the inflexibility for which the Claimants contend. The revisions of which paragraph 4 speaks and the amendments referred to in paragraph 6 could be included in the initial scheme put forward to Lambeth by GLIYRL in consultation with TfL and approved by Lambeth (again in consultation with TfL).

That conclusion means that the Claimants cannot succeed on any of the ways that they frame their challenge by reference to the Coach and Taxi Drop Off Strategy.

So far as it was a separate and distinct argument, I also reject Ms Sheikh’s submission that the matter should have been referred back to the Committee and/or to the Mayor of London. It is right that in June TfL had disagreed with the assessment from GLIYRL that the development would generate minimal coach activity. TfL’s view had been incorporated into, and was the sole basis of, the positions taken by the Mayor on this issue when he had been consulted over the proposal and by the officers in their report to Lambeth’s Planning Committee (see above). Critically, however, the views of TfL subsequently changed as I have shown. I do not accept that the change came about because in some way TfL was forced into a corner. The data provided by the Claimants gave a powerful reason for an alteration of stance. If other Premier Inns in the centre of London really did only attract no more than 6 coaches in 2 years (i.e. about one every 4 months), the loading and unloading of their passengers could understandably be viewed as being of no great significance. TfL were also satisfied with the other elements of the Coach and Taxi Drop Off Strategy. Given these factors and given the approach of Committee and the Mayor which I have previously described, there was in my view no need to refer the matter back to either of them.

However, even if I was wrong as to the interpretation of Schedule 8 and it did require at least the initial Strategy to include the elements in paragraph 3, in my judgment this part of the Claim still could not succeed.

On this hypothesis, GLIRLY would not have been in a position to put forward a Strategy, Lambeth could not have approved it and the development could not have taken place if the Claimants did not give their consent to the use of 1WBR. On that basis, Lambeth cannot have failed to take into account the need for the Claimants to agree. Ms Sheikh argues in the alternative that they did not take into account the fact that the Claimants would not agree. That argument fails for two reasons. First the ‘fact’ which it takes as its premise is not really a fact at all. The Claimants stated their present position at the time the planning application was being considered by Lambeth, but it did not necessarily follow that this would remain their position once the s.106 agreement was in place and planning permission had been granted. Even if the Claimants had resolved to adhere to their view, they would need to show that Lambeth knew this or that any other alternative assessment of the Claimants’ intentions was unreasonable. There is not the evidence on which I could reach either conclusion As Mr Harris argued, it is a common feature of negotiations that in the course of bargaining a way is found to make fixed red lines in the sand bend. But even if the premise could be established, it would not demonstrate that the grant of planning permission was unlawful. In British Railways Board v Secretary of State for the Environment [1993] 3 PLR 125 the House of Lords held that a planning permission could not be attacked as Wednesbury unreasonable because it was made subject to a condition which appeared to have no reasonable prospect of being implemented. That case concerned a condition in a planning permission itself, but Ms Sheikh did not suggest that there was (for these purposes) any material difference to an undertaking secured by a s.106 obligation.

As I have said, Ms Sheikh seeks to use the events of February 2010 to bolster her attack on the decision to grant planning permission the previous June. However, this argument is, with respect, misconceived. Subsequent events cannot retrospectively invalidate the grant of planning permission. She may say that they demonstrate that the Claimants were right when they said in June that they would not give their consent to the use of 1WBR. But this does not assist her to overcome the obstacles to her original ground of challenge and which I have set out in the previous paragraph.

She also argues that the Defendant has been forced to accept a sub-standard solution to the Coach and Taxi Drop Off dilemma which the development poses and this shows the disadvantage of initially granting permission subject to a condition which could not be fulfilled. However, she eschews any attack on the February approval of the Strategy as irrational. That being so, it does not help the Claimant’s case to characterise the Strategy as ‘substandard’. Whether to approve it or not was a matter for Lambeth’s planning judgment. Whether to approve a planning permission which could lead to these consequences was likewise a matter of planning judgment.

There is a yet further reason why this part of the Claimants’ challenge does not succeed. Even if, contrary to what I have held, the Coach and Taxi Drop Off Strategy agreed in February 2010 was not consistent with Schedule 8, I would not in my discretion have granted the Claimants a quashing order or other relief. Section 106 obligations can be modified. One means of doing this is by agreement between the “appropriate authority” and the “person against whom the obligation is enforceable” – see Town and Country Planning Act 1990 s.106A(1)(a). The “appropriate authority” is defined in s.106A(11) and, in this case, is Lambeth. The “person against whom the obligation is enforceable” is GLIYRL.

It is quite plain that Lambeth and GLIYRL have agreed the Strategy and, I have no doubt, if this had been necessary, they would have agreed a modification to the s.106 obligation. I have rejected Ms Sheikh’s arguments that the matter would have had to be referred back to the Planning Committee and/or the Mayor.

Ms Sheikh also submits that the Strategy did not accord with Local Planning policies 9 and 14. Neither the Claim Form, Supplementary Grounds nor her oral submissions expanded on this argument in any detail. In broad terms Policy 9 counsels against development which would increase levels of traffic congestion or impinge on highway safety. Developments should also have adequate access and servicing. Policy 14 requires developments which are likely to attract significant coach traffic also to have adequate stopping and parking facilities. In my judgment it is unrealistic to say that the Strategy failed to take these matters into account. It was directed at the very same issues. It was for Lambeth to decide whether they were dealt with adequately.

I doubt whether the fact that Investec and Whitbread were also parties to the s.106 deed means that the obligation in clause 6 and Schedule 8 is enforceable against them. These covenants were undertaken exclusively by GILRYL. But, in any case, Ms Sheikh realistically accepted that it was not part of the Claimants’ challenge that Investec and Whitbread had not (as yet) agreed any variation to the s.106 agreement. It is true that s.106A(2) requires any modification to a s.106 agreement to be in the form of a deed, but the absence of that element of formality would not, in my judgment, be a good reason for granting discretionary relief.

Schedule 3 Part 1 of the s.106 Agreement concerned payment of contributions. By paragraph 1 GLIYRL agreed to pay to Lambeth (amongst other amounts) the ‘Libraries Contribution’. This was defined to be £32,669. The officers’ report to the Planning Committee said that there would be a number of impacts resulting from the scheme that would need to be mitigated if the members were minded to approve the proposal and that these issues could be best secured by way of a s.106 legal agreement. One of these was a contribution of £32,669 towards local libraries within the borough.

The Claimants argue that this sum is excessive. Ms Sheikh says that when the Claimants’ own formula is used, the appropriate sum is £2,669. There is no explanation as to how that sum was increased by more than ten times. The only hint is an email from one of the officers which said that two community groups in the area were very keen to be involved in the s.106 process to see that the development “provides enhancements for the local area.”

Ms Sheikh submits that a sum of this scale conflicts with the Government Circular 5/05. Among other things, this says that a s.106 contribution should be necessary to make the development acceptable in planning terms and it must be fairly related in scale and kind to the development.

She submits that a libraries contribution of this scale could not have been assessed to be necessary to make the development acceptable in planning terms. The contribution was an arbitrary figure that was not fairly related to the scale of the development in scale or kind. It was not reasonable to have sought this sum for local libraries. The real clue is in the view of the local groups. This was simply an “enhancement” for the local area. Since this contribution was not a proper contribution, the Defendant granted planning permission by reference to an immaterial consideration.

Mr Harris and Mr Atkinson dispute this argument. They rely on Tesco Stores Ltd v Secretary of State for the Environment [1995] 2 All ER 636 for the proposition that a planning authority may have regard to a s.106 agreement undertaking as long as (i) the subject matter of the undertaking is connected to the development in a way that is more than de minimis; and (ii) planning permission is not simply bought. These requirements apart, a s.106 agreement will not be unlawful. Within their parameters, it is a matter for negotiation and the local authority’s planning judgment as to whether the offered contribution does mitigate the effects of the development. They argue that the calculator to which the Claimants refer is used for different types of development and some adjustment was appropriate in the case of a hotel. While tourists staying at a hotel were unlikely to borrow library books, staff might. Staff and visitors may be attracted to some of the other services (e.g. the use of computers) which modern libraries commonly offer. It certainly could not be said that the connection between the development and libraries was only de minimis. They did not accept that this element of the contributions infringed the Circular 5/05, but, even if it did, that would not make the agreement to pay that sum an immaterial consideration or the planning permission otherwise unlawful unless the Tesco principles were also infringed. The total sum which was to be paid by way of contributions was over £400,000. The Claimants do not challenge the reasonableness or materiality of that total amount. In that context, the libraries contribution was relatively small beer. Its amount was fixed by a process of negotiation. One element of that process was that the sum originally set aside for public art was reduced and the libraries contribution was correspondingly increased. It could not be and was not said by the Claimants that GLIYRL had ‘bought’ the planning permission by reason of its agreement to make the libraries contribution.

I prefer the submissions of the Defendant and GLIYRL on this matter. The connection between the development and local libraries could not be described as de minimis. I accept that it is quite unrealistic to consider that Lambeth ‘sold’ this planning permission because of the libraries contribution. The precise amount was a matter for planning judgment on the local authority’s part and negotiation on the part of both sides. An explanation has been given as to why Lambeth’s calculator is not an appropriate calculator and there is no other measure by which I could determine that it was a wholly unreasonable amount. I do not accept that Lambeth disregarded the Circular but, in any case, the Libraries Contribution was not an immaterial consideration when tested against the Tesco principles.

I have rejected the Claimants’ grounds of challenge. Accordingly this application for judicial review is dismissed.