Supreme Ct issues key ruling on revocation of planning permissions and costs

Local authorities can when deciding under the Town and Country Planning Act whether or not to revoke or modify a planning permission, take into account the compensation they could have to pay, the Supreme Court has ruled.

The case of The Health and Safety Executive v Wolverhampton City Council [2012] UKSC 34 centred on the grant by Wolverhampton, in its capacity as local planning authority, of planning permission for four blocks of student accommodation close to a site used for storing liquefied petroleum gas.

Three blocks had been completed, but work had yet to begin on the fourth (block D).

The HSE was concerned about the location of the fourth block and so applied for an order to revoke or modify the planning permission under s. 97 of the TCPA.

Wolverhampton refused the application. In doing so, it took into account its liability to pay compensation under s. 107 of the Act. The authority did not consider whether the application should be granted only in respect of the fourth block.

The HSE launched judicial review proceedings, including a challenge to Wolverhampton’s decision not to revoke or modify the planning permission. That part of the claim was rejected by the High Court.

The Court of Appeal upheld the HSE’s appeal, concluding that it was irrational for Wolverhampton not to consider whether to exercise its s. 97 powers to prevent the construction of the fourth block. It ordered the council to reconsider the matter.

A majority of the Court of Appeal also ruled that a decision under s. 97 of the Act must not be taken in isolation but within the statutory framework of the Act, which imposed a liability to pay compensation.

Wolverhampton could therefore take its liability to pay compensation into account when reconsidering the matter.

It was this part of the decision that the HSE took to the Supreme Court.

The Supreme Court unanimously dismissed the regulator’s appeal.

Lord Cornwath said: “In simple terms, the question is whether a public authority, when deciding whether to exercise a discretionary power to achieve a public objective, is entitled to take into account the cost to the public of so doing.”

The judge added: “As custodian of public funds, the authority not only may, but generally must, have regard to the cost to the public of its actions, at least to the extent of considering in any case whether the cost is proportionate to the aim to be achieved, and taking account of any more economic ways of achieving the same objective.”

Lord Cornwath said the weight attributable to cost considerations would vary with the context. “Where, for example, the authority is faced with an imminent threat to public security within its sphere of responsibility, cost could rarely be a valid reason for doing nothing, but could well be relevant to the choice between effective alternatives.”

The judge suggested that this was not only sound administrative practice, but common sense.

Lord Cornwath concluded that s. 97 did not – on an ordinary reading – require a different approach.

He said: “The section requires the authority to satisfy itself that revocation is ‘expedient’, and in so doing to have regard to the development plan and other ‘material considerations’.”

It was not suggested in this case that the development plan threw any light on this issue.

Lord Cornwath added that the word ‘expedient’ implied no more than that the action should be appropriate in all the circumstances.

“Where one of those circumstances is a potential liability for compensation, it is hard to see why it should be excluded,” he said.

“Similarly, at least at first sight, there is nothing in the expression ‘material considerations’ to exclude cost. ‘Material’ in ordinary language is the same as ‘relevant’. Where the exercise of the power, in the manner envisaged by the statute, will have both planning and financial consequences, there is no obvious reason to treat either as irrelevant.”

Lord Cornwath said the practical sense of this approach was illustrated by the facts of the Wolverhampton case.

“The safety concerns highlighted by the HSE would have made it hard for the council to justify doing nothing, at least once there was a risk of block D being built,” he said.

“But, assuming the need for compulsion, it appears that they had a choice of at least three statutory routes: an order under section 97 of the 1990 Act to prevent the building of block D, an order under section 14 of the PHSA to limit the hazardous substances which could be stored at the LPG site, or a compulsory purchase order to remove the Carvers installation altogether.”

The judge said action under any of these powers would result in a claim for compensation, but not necessarily of the same order. “The choice between the options would no doubt involve a range of planning and other issues, but it would be curious if comparative cost could not be at least one factor in the overall balance,” he said.

Lord Cornwath pointed out that under s. 97, a local planning authority has a discretion to act, and if so, how. This is in contrast to s. 70 where the authority is under a duty and has limited choice.

The judge added that if an authority does decide to act under s. 97, it must bear the financial consequences, in the form of compensation.

“No doubt under section 70, planning permission cannot be ‘bought or sold’. But section 97 creates a specific statutory power to buy back a permission previously granted. Cost, or value for money, is naturally relevant to the purchaser’s consideration.”

Lord Cornwath suggested that sufficient consistency was given to the expression ‘material considerations’ if it was treated as it was elsewhere in administrative law.

“That is, as meaning considerations material (or relevant) to the exercise of the particular power, in its statutory context and for the purposes for which it was granted,” he said.

Read in this way, there was no inconsistency between s. 97 and other sections such as s. 70.

The judge said that in exercising its choice not to act under section 97, or in choosing between that and other means of achieving its planning objective, the authority is to be guided by what is ‘expedient’.

“No principle of consistency requires that process to be confined to planning considerations, or to exclude cost,” he added.

Lord Cornwath said he had no reason to doubt the conclusion of Richards J in Alnwick DC v Secretary of State (2000) 79 P & CR 130. On the facts and arguments as presented to the Secretary of State, it was difficult to see how his decision could have been different. However, Richards J took too narrow a view of the law.

Lord Cornwath concluded that possible difficulty in assessing precisely the likely level of compensation was no reason for not conducting the exercise, “still less for leaving cost considerations out of account altogether”.

Robert Griffiths QC and Estelle Debon of 4-5 Gray’s Inn Square were counsel for Wolverhampton.

Philip Coppel QC of 4-5 Gray’s Inn Square and Carine Patry Hoskins of Landmark Chambers were instructed by the Treasury Solicitor on behalf of the HSE.

Philip Hoult