Monthly Archives: December 2014

Local plan had failed to make prior objective assessment of housing needs

On housing, the National Planning Policy Framework (“the NPPF”) differed from the earlier national guidance in two major respects:

1. Consistent with the Localism Act 2011, the NPPF substituted localism for the regional, “top down”, approach to housing strategy, with planning authorities now being required to cooperate with neighbouring authorities to develop housing strategy themselves.

2. The NPPF emphasised the need to significantly increase the supply of housing. Paragraph 47 of the NPPF requires a two-step approach: first, an objective assessment of full needs for market and affordable housing (“OAN”), and then secondly a distinct assessment as to whether (and, if so, to what extent) other NPPF policies – including those designed to protect the environment – dictate or justify constraint in planned housing provision.

It is not enough:

– for all material considerations (including need, demand and other relevant policies) simply to be weighed together; or

– simply to determine the maximum housing supply available, and constrain housing provision targets to that figure.

In the Court of Appeal case of Solihull Metropolitan Borough Council v Gallagher Estates Ltd & Anor [2014] the respondents had applied to the High Court under s.113(3) of the Planning and Compulsory Purchase Act 2004 (“2004 Act”) to challenge, the planning inspector’s approval of, and the appellant’s adoption of, the Solihull Local Plan (“the SLP”).

Neither the SLP nor the inspector had provided any OAN. On the contrary the appellant said it was not necessary for a plan to identify such a figure.

The inspector had concluded: “Taking account of all the evidence and having examined all the elements that go into making an objective assessment of housing requirements, a total level of 11,000 dwellings or 500 dwellings/year represents an effective, justified and soundly based figure which would meet the current identified housing needs of the district over the plan period and, with the agreed amendments, is consistent with the overall requirements of national policy in the NPPF.”

The Council had not for its part proposed an OAN. The Court of Appeal said it was apparent from the inspector’s use of the words “consistent with the overall requirements of national policy in the NPPF” that the 11,000 was very plainly a “policy-on” figure, not an OAN within the meaning of NPPF paragraph 47.

The court attached weight to the judge at first instance’s findings that:

“When the [inspector’s] report is read as a whole, far from full objectively assessed housing need being a driver in terms of the housing requirement target – as the NPPF requires – it is at best a back-seat passenger. Nowhere is the full housing need in fact objectively assessed…..”

Neither the appellant council proposing the SLP nor the inspector recommending its adoption undertook an OAN as a separate exercise to prior to considering how other policies impacted on the housing need.

So the process by which the inspector came to recommend the adoption of the SLP did not meet the requirements of the NPPF. Neither the appellant council nor the inspector had undertaken or proposed the “two-step approach” which NPPF required and so the process and the recommendation were flawed by error of law.

The court had wide powers under s.113(7) of the 2004 Act. It could:

– quash the SLP;
– remit the case for re-examination by another inspector; or
– remit it to the appellant council for reconsideration by them in light of the Court of Appeal’s judgment.

The court did not consider that the legal flaws in the SLP could be cured simply by a further examination before a different inspector. The appellant council needed to “think again”. But it was not necessary to quash the SLP.

The court ordered the parts of the SLP tabulated in the schedule to the previous judge’s order to be remitted to the council requiring it to reconsider the proposed SLP in light of the court’s judgment and to fix the illegalities in their earlier preparatory work.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Pointe Gourde Rule: Value to Owner not Acquirer what matters

The “value” of rights over land (or land) being acquired by compulsory purchase is their value to the claimant as owner, and not their value to the acquiring authority (“the Council”).

So when assessing the claimant’s compensation there must be disregarded:

– any premium value, or value increase, which is entirely due to the scheme for which the Council are acquiring the rights over land (or land); or

– any key or ransom value of the rights over land (or land) attributable to the scheme.

The fact that rights over land (or land) are being acquired for a particular purpose might have evidential value showing that alternative development schemes for the same purpose are not fanciful but might have a degree of probability.

If such premium value or value increase existed prior to the acquisition it must be taken into account. If it were to be disregarded the Council would be expropriating that pre-existent value without compensation.

Being based on the price rights over land (or land) might reasonably be expected to fetch on the open market at the valuation date. The claimant’s compensation, would be expected to reflect that pre-existent value.

What is required is to identify what proportion of the current value of the land (or the land over which rights are exercised):

– relies solely on, and is wholly attributable to, the Council’s scheme? That proportion must be disregarded in assessing any compensation; or,

– is attributable to events which would have increased value anyway independently, and regardless, of the scheme? That proportion will count towards the compensation.

In the Upper Tribunal (Lands Chamber) case of Hanbury -Tenison v Monmouthshire County Council [2014] a retail scheme required the relocation of a livestock market.

The scheme required the extinguishment of the claimant’s shooting rights to the extent they affected the new livestock market site the Council had identified.

The Tribunal accepted that:

– there might be factors apart from the existence of the Council’s scheme that added to the value of the rights (or land) even if

– that additional value was purely a ransom value that the rights (or land) might have in relation to a similar scheme (other than the Council’s).

In valuing any rights over land (or land) the development potential of that land for some alternative use was clearly relevant.

If the land (or land over which rights are exercised) was more valuable due to the land’s “potential” for some alternative more lucrative use which was:

– not attributable solely to the Council’s scheme, but

– would have existed even in the absence of the scheme,

then that “potential” need not be left out of account when that land is valued.

So in this case the principle mentioned in my opening paragraph did not necessarily require the compensation value of the rights to be “restricted to their intrinsic value as shooting rights”.

Any additional value in the rights must depend on their capacity to inhibit, or ransom, the use of the land over which the rights were exercisable for some more profitable purpose.

The land over which the rights were exercisable was suitable for development as a market and the prospect that it would be likely to be developed as a market was a matter which might enhance its value and therefore any ransom value of the rights.

The purpose the Council was going apply to the land should not be taken into account i.e. the specific scheme should be disregarded.

However where there was potential for the land, that the rights were exercised over, to be used by a scheme, other than the Council’s, as a livestock market, the owner of the rights should be paid higher compensation by the Council to take that potential into account.

It follows that in arriving at the value to the owner it was necessary to distinguish between:

– any enhancement in value attributable solely to the presence of the Council in the market as a purchaser of the land for the Council’s scheme in exercise of its statutory powers; and

– the value which already existed and would therefore have continued to exist but for the Council’s scheme.

It was only the latter value which is relevant for the assessment of compensation.

Here the test was: whether there existed in the rights, or the land they were exercised over, an enhanced value which existed independently of the Council’s need to find an alternative site for the livestock market?

In fact two factors demonstrated that there was nothing outstanding about the relevant land:

1. There had been a number of alternative sites which attracted more immediate attention and obtained favourable planning treatment. The land had not originally featured in the list of fourteen such sites identified.

2. There was no competition for the land from supermarket operators or other developers seeing it as providing a potential foothold on the town centre site. When it did come on to the market it was sold as part of a larger site at an agricultural value.

In conclusion the Tribunal said any significant increase in the value of the rights, above their intrinsic value as shooting rights, was to be disregarded because that increase was solely attributable to the Council’s scheme for the redevelopment of the existing livestock market site for retail purposes and for the construction of the replacement livestock market on the land over which the shooting rights had been exercised.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Notice of Adjudication could not exclude consideration of defences and counter claims

In adjudicated construction disputes, the view has been expressed that the Notice of Adjudication defines the dispute and the adjudicator takes his or her jurisdiction from the content of that Notice.

This is usually a good guide but its not always the case. For example something may be referred, which the Notice of Adjudication mentions as being a dispute, when it has never previously been disputed. An entirely new claim which has never been put to the other party cannot become a dispute:

– unless and until it has been notified to the other party and
– it does not become a dispute simply because it is set out in the Notice of Adjudication.

The “disputed claim” set out in the Notice of Adjudication must be seen in its context. That context will can only be ascertained by looking at what the parties have said and done over a period of time.

An adjudicator must take into account and adjudicate on defences raised by someone defending an adjudication even if the particular defence is being raised for the first time.

What happens if one party to an adjudication seeks to limit an adjudicator’s jurisdiction by referring to a disputed claim but defining the dispute in the Notice of Adjudication in such a way as to attempt jurisdictionally to prevent a defending party from raising any defence to the adjudication?

In the High Court case of Kitt & Anor v The Laundry Building Ltd & Anor [2014] ETC’s Notice of Adjudication required:

1. all claims to be determined and decisions as to their payment but
2. sought to qualify the reference by excluding issues which might give TLB:

2.1 cross and counter claims and/or
2.2 defences as to the correct quantum of individual claim items

thereby denying TLB available defences it could otherwise use in adjudication in relation to those items.

For instance ETC’s Notice of Adjudication had said that the adjudicator was required to decide whether its second application for an extension of time was justified but that did “not give the adjudicator jurisdiction in this adjudication to open up the [previous] extension of time award or the agreed weekly value for loss and expense”.

The adjudicator could not, and was not prepared to, work within these constraints in making the award.

In the High Court ETC’s defence was that the adjudicator’s decision was not binding and enforceable since:

1. it dealt with issues which its Notice of Adjudication had sought to exclude, and
2. the adjudicator had thereby:
2.1 acted in breach of the rules of natural justice and
2.2 exceeded his jurisdiction and
2.3 breached an implied term of his appointment that he would decide the dispute:
2.3.1 in accordance with the jurisdiction the parties granted him,
2.3.2 in accordance with the rules of natural justice and
2.3.3 by producing a decision that was binding on the parties.

The court said a Notice of Adjudication could not circumscribe and delineate the dispute, set out or defined in it, in such a way as to exclude particular defences.

It would be illogical and untenable, if not ludicrous, if it were otherwise.

This case alone illustrated that it could not be logical or fair. So:

1. a Responding party has an unfettered ability to elect how to defend itself in response to a Notice of Adjudication and

2. ETC “telling” the adjudicator that he must not consider legitimate defences was of no legal effect.

If that had been attempted in court proceedings, it would have been treated as completely wrong and unjustified. The Court would never be constrained by artificial attempts to limit its jurisdiction, though it would usually only address arguments actually raised by a defendant in defence.

That was not to say that potential evidential weakness in a defence could not be highlighted in the Notice of Adjudication. For example a money claim may be based on exactly what the defending party’s own architect has certified or approved such that this constitutes strong evidence in the referring party’s favour.

However, to refer a payment claim and, at the same time, for the referring party to exclude from reference parts of the claim which might be challenged by the defending party was “illogical, unmeritorious and wrong. It [was] a device which cannot and should not work.”

This blog has been posted out of general interest. It does not remove the need to get bespoke legal advice in individual cases.

Did Allocations DPD comply with Community Involvement Statement and SEA Regulations?

When a local planning authority prepares a development plan document under the plan-making provisions of the Planning and Compulsory Purchase Act 2004 (“the 2004 Act”) the public consultation must be undertaken lawfully.

The council will have adopted its statement of community involvement under the Town and Country Planning (Local Development) (England) Regulations 2004 (“the 2004 Regulations), as part of its local development framework.

Development plan documents are independently examined by Planning Inspectors and Section 20(5) of the 2004 Act says this is to determine:

1. whether the plan complies with sections 19 and 24(1) of the 2004 Act, regulations made under section 17(7) and any relevant regulations under section 36.

Section 19(3) provides that “[in] preparing the local development documents (other than their Statement of Community Involvement) the authority must also comply with their Statement of Community Involvement”;

2. whether it is sound; and

3. whether the local planning authority has complied with its duty to co-operate under section 33A.

The Town and Country Planning (Local Planning) (England) Regulations 2012 (“the 2012 regulations”) were made under statutory powers, including under sections 17(7) and 36 of the 2004 Act. Regulation 18 relates to the preparation of a local plan.

Paragraph (1) of regulation 18 requires a local planning authority to notify each of the bodies or persons, specified in paragraph (2), of the subject of a local plan it proposes to prepare, and to invite each of them to make representations about what a local plan on that subject should contain.

Paragraph (2) provides that the bodies or persons referred to in paragraph (1) are:

“(a) such of the specific consultation bodies as the local planning authority consider may have an interest in the subject of the proposed local plan;

(b) such of the general consultation bodies as the local planning authority consider appropriate; and

(c) such residents or other persons carrying on business in the local planning authority’s area from which the local planning authority consider it appropriate to invite representations.”

Paragraph (3) of regulation 18 requires the local planning authority, in preparing the local plan, to take into account any representation made to it in response to its invitations to make representations under paragraph (1).

Under article 5(1) of Directive 2001/42/EC “on the assessment of the effects of certain plans and programmes on the environment” (“the SEA directive”), when an environmental assessment is required under article 3(1), an environmental report must be prepared, “in which the likely significant effects on the environment of implementing the plan or programme, and reasonable alternatives taking into account the objectives and the geographical scope of the plan or programme, are identified, described and evaluated”.

Article 6, “Consultations”, says in paragraph 1 that a draft plan or programme and the environmental report prepared under article 5 “shall be made available to the authorities referred to in paragraph 3 … and the public”.

Paragraph 2 says:

“The authorities referred to in paragraph 3 and the public referred to in paragraph 4 shall be given an early and effective opportunity within appropriate time frames to express their opinion on the draft plan or programme and the accompanying environmental report before the adoption of the plan or programme or its submission to the legislative procedure.”

Paragraph 3 makes member states designate the authorities to be consulted “which, by reason of their specific environmental responsibilities, are likely to be concerned by the environmental effects of implementing plans and programmes”.

Paragraph 4 says:

“Member States shall identify the public for the purposes of paragraph 2, including the public affected or likely to be affected by, or having an interest in, the decision-making subject to this Directive, including relevant non-governmental organisations, such as those promoting environmental protection and other organisations concerned.”

Paragraph 5 says that the detailed arrangements for the information and consultation of the authorities and the public are to be decided by the member states. Article 8 requires that the environmental report prepared under article 5 and the opinions expressed under article 6 be borne in mind during the preparation of the plan or programme and in advance of its adoption or submission to the legal process.

Those provisions of the SEA directive are carried into domestic legislation by the Environmental Assessment of Plans and Programmes Regulations 2004 (“the SEA regulations”).

Paragraph (1) of regulation 13, “Consultation procedures”, requires that every draft plan or programme for which an environmental report has been prepared, under regulation 12, and its accompanying environmental report (“the relevant documents”) are to be made available for consultation in accordance with the provisions that follow.

Paragraph (2) says:

“As soon as reasonably practicable after the preparation of the relevant documents, the responsible authority shall:–

(a) send a copy of those documents to each consultation body [as defined in regulation 4];

(b) take such steps as it considers appropriate to bring the preparation of the relevant documents to the attention of the persons who, in the authority’s opinion, are affected or likely to be affected by, or have an interest in the decisions involved in the assessment and adoption of the plan or programme concerned, required under [the SEA Directive] (“the public consultees”);

(c) inform the public consultees of the address (which may include a website) at which a copy of the relevant documents may be viewed, or from which a copy may be obtained; and

(d) invite the consultation bodies and the public consultees to express their opinion on the relevant documents, specifying the address to which, and the period within which, opinions must be sent.”

Paragraph (3) says that the period mentioned in paragraph (2)(d) “must be of such length as will ensure that the consultation bodies and the public consultees are given an effective opportunity to express their opinion on the relevant documents.”

In the Planning Court case of Kendall v Rochford District Council & Anor [2014] the claimant objected to the Rochford District Allocations Plan during its preparation, and, took part in the examination held by the inspector. She challenged the council’s adoption of the Allocations Plan under section 113 of the 2004 Act. This raised two main issues for the court:

1. Whether the inspector was irrational to conclude that the council had complied with its statement of community involvement (“Ground 1”); and

2. whether, the council’s preparation of its Allocations Plan failed to comply with article 6 of the SEA directive and with regulation 13 of the SEA regulations (“Ground 2”).

In 2009 the claimant wrote to the council raising the possibility of her land being developed for housing. The council responded that she should not expect a proposal for housing development to be approved. However, the core strategy process it was considering might allocate land to the south of London Road for employment development and she was told she had been added to its “consultation database”.

As to Ground 1, the submission draft core strategy for the Allocations Plan was submitted to the Secretary of State for examination in January 2010. Examination hearings were held in May and September 2010, and in February 2011. The council later consulted on proposed changes to the submission draft and said it wrote to the claimant about it.

The council’s consultation letter was sent out by e-mail. It recommended visiting the council’s website “to view the documents, access background information and, if required, obtain help on using the online consultation system” and said that comments on the soundness and legal compliance of plans and documents should be submitted by a deadline ideally by using the council’s “online system”. Though the documents could also be viewed at local libraries, and the council’s offices and a telephone alternative was offered.

In accordance with regulation 22(c) of the 2012 regulations the council produced a consultation statement to accompany the draft Allocations Plan.

The claimant took part in the examination hearing when issues relating to the proposed allocations in her locality were discussed. The inspector concluded that the Allocations Plan met all relevant legal requirements including the 2004 Act and the 2012 regulations. The council adopted the Allocations Plan in February 2014.

The examination inspector had found that “the broad expectations” of the statement of community involvement and the 2012 regulations had been complied with. The claimant said this was perverse.

However the court said it was not for the court to decide whether the inspector’s finding was right but whether his conclusion was within the range of reasonable judgment.

So any claim based on irrationality faced a daunting and difficult task. It had to show it was impossible for the inspector to have concluded rationally that the council had applied the approach to community involvement in plan-making described in a document, which it had itself prepared and adopted under the relevant statutory procedure.

Section 19(3) merely imposed on a local planning authority a duty to act in accordance with its own statement of community involvement and nothing more. It does not require the authority to satisfy either itself or the inspector conducting the examination of its draft plan that:

1. all the residents of its area, or
2. all the residents of a particular part of its area, or
3. a minimum number or proportion of those residents

were in fact aware of the draft plan at any particular stage in its preparation.

Nor did it require, or authorise, the inspector examining the draft Allocations Plan to apply objectives or obligations exceeding those in the statement of community involvement. Under section 20(5)(a) the issue being: had the authority complied with the statement of community involvement as it is, and not as it might have been?

The essential purpose of the council’s statement of community involvement, was providing a workable strategy for consultation, in plan-making and in development control. As such it is framed in deliberately broad terms.

It recognises the need for flexibility and does not impose a uniform approach for every plan-making process.

It allows the council to decide how it should go about preparing a development plan document or dealing with an application for planning permission.

In plan-making it accommodates an exercise involving a hierarchy of development plan documents and preparing successive drafts of each.

The council can consult differently on different plans.

The requirements of Regulation 18 of the 2012 regulations were specific to an authority’s deployment of its statement of community involvement.

It gave the authority latitude to exercise its own judgment in deciding whom it is going to consult on a draft plan, and how.

Paragraph (2)(c) meant the authority can decide which residents and businesses should be invited to make representations on a draft plan.

The authority is only required to seek representations from whoever it considers “appropriate” to ask. That was for the authority to judge in the particular circumstances of the relevant process taking into account how far it had got.

The claimant’s case was not that:

1. the council failed to provide those whom it did consult with adequate information about its proposals in the draft Allocations Plan, or

2. it allowed too little time for them to respond, or

3. what they had to say about the draft plan was not taken into account in the plan-making process.

It was as to the effectiveness of the council’s consultation in bringing the content of the draft plan to the claimant’s and others’ attention.

The claimant was directly consulted on the Allocations Plan. She lodged her objection to it, and pursued that objection at the examination. Many other residents of the district supported her. The council had publicised and consulted upon the draft Allocations Plan consistently with the objectives of the statement of community involvement and exercised its discretion properly in each of the three respects referred to in regulation 18(2). The inspector’s conclusions to that effect were not only reasonable; they were also, right.

The council had appropriately and at the right times published notices in the local press, consulted local community groups and voluntary organisations, and used its website.

As to Ground 2, the essential aim of the SEA directive, expressed in article 1, “Objectives” – is “to provide a high level of protection of the environment and to contribute to the integration of environmental considerations into the preparation and adoption of plans and programmes with a view to promoting sustainable development, by ensuring that … an environmental assessment is carried out …”.

The council’s Allocations SA/SEA Adoption Statement, in this case, had explained how sustainability considerations had been “integrated into” the plan. It described how the options considered and the consultation responses on the plan and the sustainability appraisal had been taken into account, and gave the council’s “reasons for choosing the [plan] in light of other reasonable alternatives”.

It was not suggested that:

1. there was no environmental assessment within the definition in article 2(b) of the SEA directive;

2. there was any deficiency in the content of the environmental report prepared for the draft Allocations Plan, or in the form of the sustainability appraisal;

3. any of “the likely significant effects on the environment” was missed or inadequately described and evaluated, or that the selection and treatment of “reasonable alternatives” were insufficient or unclear.

The court said again the claim concerned only the procedural integrity of the plan-making process i.e. whether in its formal consultation on the draft Allocations Plan and the sustainability appraisal the council failed to comply with regulation 13 of the SEA regulations, and whether that entailed a breach of Article 6 of the SEA directive.

The claimant did not suggest the council omitted to send copies of the draft Allocations Plan and the sustainability appraisal to the “consultation bodies” or that it failed to invite any of them to express its opinion on those documents.

The contentious issue concerned only the effectiveness of the council’s consultation of the “public consultees,” the general public. Whether there was a breach of regulation 13(2) and (3) because the “affected public” were not given the required opportunity to express their opinions on the draft Allocations Plan and “the accompanying environmental report” before the plan was adopted. The claimant was saying either:

1. the council took a perversely narrow view of who the “public consultees” were, leaving out people who were obviously going to be affected by the decisions involved in the assessment and adoption of the Allocations Plan, or

2. it recognised that those people were going to be affected by those decisions but nevertheless failed to consult them as it should have done.

The court said the planning authority is permitted – indeed, required – to decide who should be consulted, and how. The authority decides which “persons” are affected or likely to be affected by, or to have an interest in, the decisions involved in the assessment and adoption of its plan. An authority’s duty in regulation 13(2)(b) relates to the “public consultees”, not to the general public or every individual member of the public resident in the authority’s area. It decides what steps it should take to bring the plan and environmental report to the attention of the “public consultees”. No particular steps are indicated or ruled out. Paragraph 2(c) allows it to decide where the plan and its environmental report may be seen, and specifically permits the use of a website. Paragraph (2)(d) allows the authority to specify the address to, and period within, which the “public consultees” must respond.

However if an authority resorts to the internet alone when consulting the public under its duty in Article 6 of the SEA directive, those who were not consulted directly, i.e. the overwhelming majority, were left to find the consultation for themselves on the internet, either once they had been prompted by someone else to do so or acting on their own initiative. Unless you knew that the sustainability appraisal for the draft allocations plan was being prepared and unless you were resourceful or inquisitive enough to be regularly checking the council’s website to find out if formal consultation on those two documents had begun, you would not have known of their existence or that consultation on them had started. You would not have known where to go to look at the documents or to get hold of copies, or that the chance to formally comment on them had arrived, or the timescale for doing so. That was not good enough.

It was explicit in article 6(2) and implicit in regulation 13(2)(d) and (3), that the public had to be given an “early” and “effective” opportunity to express:

1. their opinions on the documents, including,
2. their opinions on the assessment of alternative allocations in the sustainability appraisal.

For individual members of the public, not being “consultation bodies” or “public consultees” whom the council consulted with proactively, it would have been early enough if they were aware of it. So the crucial question was whether it was an “effective opportunity”, for them, in that particular respect. It was not. It relied on them discovering it for themselves on the council website or in some other way, and there still being time to submit comments before the deadline.

The council could not properly consult the general public under the SEA regulations in that way. Its failure effectively to notify the public that it was using its website to consult them, under the SEA regulations, on the draft Allocations Plan and the sustainability appraisal and its failure to use an extra means of consultation, which would have extended the consultation to people who, for whatever reason, were unable to use the internet, amounted, in this case, to a breach of Article 6 and regulation 13.

Where the council went wrong was not in what it did, but in what it failed to do. In addition to using the website as it did, it ought to have announced and carried out its consultation on the draft plan and the sustainability appraisal by some other means, not excluding those without internet access. It was the council’s omission to do those two things that put it in breach of regulation 13 and Article 6.

However, the remedies available under section 113 of the 2004 Act are discretionary and it would not be a reasonable and proportionate exercise of the court’s discretion to make a draconian order quashing an adopted Allocations Plan here.

The plan-making process as a whole gave the public a sufficient opportunity to reflect upon and respond to the policies and allocations proposed in the draft plan in the context of the sustainability appraisal. During the plan-making process, they could consider the options assessed in the sustainability appraisal, to:

1. prepare their objections to the draft plan in the light of those options, and
2. urge the council to reconsider its preference for the sites it had chosen to allocate in the plan, or
3. consider any other alternatives, and
4. argue the case for any of those alternatives or any other options they sought to promote

both when the draft plan was discussed at an examination held by an independent inspector and when modifications to it were produced and consulted upon. So that any harm done by any breach of the SEA directive was fully repaired within the plan-making process itself and well before the plan’s eventual adoption.

The breach, such as it was, did not:

1. result in the claimant or anyone else being substantially denied any European legal right; and

2. frustrate the essential aim of the SEA directive.

There was no substantial prejudice to the sole claimant in the proceedings – or to any other individual member of public. She took part in the plan-making process and there was no evidence she was significantly prejudiced by the defects in the council’s formal consultation under SEA regulation 13 in preparing and pursuing her objections to the draft Allocations Plan. She objected to some proposals in the draft plan and tabled alternatives to them, which the inspector considered.

The outcome of the plan-making process would have been no different if the breach had not occurred.

The harm to the public interest in quashing part of the Allocations Plan would be the delay and expense entailed in repeating part of the plan-making process, and the repercussions for development control while that was going on. The balance of prejudice in this case was firmly tipped against a quashing order being granted.

So the claimant’s application was dismissed.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

VAT: the supply of student accommodation was exempt and not standard rated

The First-tier Tribunal (Tax) case of The Principal & Fellows of Lady Margaret Hall v Revenue & Customs [2014] related to the VAT treatment of supplies of term-time accommodation made to students of Lady Margaret Hall, Oxford University (“the College”) and whether those supplies were standard rated, as the College’s Principal & Fellows (the appellant) argued, or exempt as HMRC argued.

The appellant had a subsidiary, LMH Hospitality Services Limited (“LMHHS”) and entered into an agreement with LMHHS whereby LMHHS was to supply accommodation to College students.

How might this help the College?

The College will have a much reduced capacity to recover input VAT on costs as it makes mainly VAT exempt supplies.

The introduction to it’s supply chain of a “subsidiary” capable of, and tasked with, making taxable supplies to the students would facilitate the recovery of input VAT. Costs bearing VAT could be channeled to be incurred by that subsidiary.

But would anything like that work here?

The case is important as other educational institutions have tried this, and variants of the principle. The recent case of HMRC -v- University of Huddersfield [2014] (q.v.) being a case in point.

The issues were:

1. Who supplied the accommodation to the students? Was it LMHHS as the appellant argued or the College as HMRC argued?

2. If (as the appellant had contended) LMHHS made the supply to the students, was it exempt under Schedule 9 Group 1 Schedule 1 of the Value Added Tax Act 1994 (“VATA”) as a licence to occupy land?

Under s31(1) VATA a supply of services is an exempt supply if is of a description specified in Schedule 9 including:

2.1 Schedule 9 Group 1

d) “The grant of any interest in or right over land or of any licence to occupy land….” and

2.2 Schedule 9 Group 6

Item 1

“1. The provision by an eligible body of:

(a) education …

4. The supply of any goods or services (other than examination services) which are closely related to a supply of a description falling within item 1 (the principal supply) by or to the eligible body making the principal supply provided —

(a) the goods or services are for the direct use of the pupil, student or trainee (as the case may be) receiving the principal supply; and

(b) where the supply is to the eligible body making the principal supply, it is made by another eligible body.”

The appellant said that a supply by LMHHS could not be exempt under the education exemption (Schedule 9 Group 6 VATA 1994) because LMHHS was not “an eligible body” even if the College was.

Schedule 9 Group 1, Item 1 provides an exception to the VAT exemption at Schedule 9 Group 1 (see 2.1 above) for:

“(d) the provision in an hotel, inn, boarding house or similar establishment of sleeping accommodation or of accommodation in rooms which are provided in conjunction with sleeping accommodation or for the purpose of a supply of catering;”

A Note 9 to the Schedule provides:

“Similar establishment” includes premises in which there is provided furnished sleeping accommodation, whether with or without the provision of board or facilities for the provision of food, which are used by or held out as being suitable for use by visitors, or travellers.”

If the supply was prima facie exempt within Schedule 9 Group 1, was the appellant correct to say it was nevertheless standard rated because it fell out of exemption under the exception in Item 1(d) of the Schedule covering the provision of accommodation which is provided in an establishment similar to a hotel?

The Tribunal said “no”. Access to academia and library facilities were not found in hotels or similar establishments. Hotels do not have shared eating arrangements but allow guests to be seated at separate tables.

The students were not “visitors” paying visits to the College from home. It cannot necessarily be assumed that students will return to where they came from. They may have left home. Students needed advance permission for parties. Visitors do not normally throw parties for others at the place they are visiting. During term time the College was their home.

3. If the supply was to be taxable under the exception to the exemption at 2.1 above was it necessary for the students to have exclusive possession to fall within Schedule 1 Group 9?

The appellant argued it was not.

The Tribunal disagreed. It was necessary. But the concept of exclusive possession in European case law might differ from “exclusive possession” as English law considered to be a fundamental characteristic of leases. What was fundamental was the ability to exclude others from occupying “as owner”.

Only the student could occupy a room that was subject to the agreement. Though not explicitly, the agreement effectively conferred on the student “the right to occupy property as if that person were the owner and to exclude any other person from enjoyment of such a right”.

4. If exclusive possession was necessary HMRC said LMHHS was not able to grant this to the students because LMHHS had not itself been granted the necessary and adequate land interest under the agreement between the College and LMHHS.

The Tribunal agreed with the appellant that what LMHHS had been granted by the College made no difference. What counted was the nature of the agreement between LMHSS and the students. If that agreement said that the students would get exclusive possession that was an agreement capable of falling within the land exemption (Schedule 9 Group 1) whether or not LMHSS had the necessary legal status to deliver that benefit.

5. If the answer to issue 1. was that the College made the supply, was the supply exempt because it is a supply by an eligible body of something which is “closely related” to the supply of education?

Fatally to the appellant’s overall case, the Tribunal agreed with HMRC that:

– the College supplied the accommodation to the students with LMHHS merely acting as the College’s agent.

The College:

– advertised the rooms;
– received payment;
– through it’s own staff dealt with accommodation issues and complaints;
– effectively created the demand for the supply of accommodation to the College’s students. Under College regulations students were required to get permission if they wanted to live away from College (the “residency requirement”);
– set the terms of the accommodation agreement; and
– effectively controlled the price of the accommodation.

There was no evidence of LMHHS marketing or promoting in respect of a supply being offered by LMHHS as might be expected if LMHHS was the principal.

Applying also the “economic reality test” the factors were more consistent with the College being the person who, in economic reality, made the supply to the students and pointed away from the economic reality being that LMHHS made that supply; and

– that the supply of student accommodation by the College in term-time was “closely-related” to the College supplying education to the students. The residency requirement imposed by the College was a factor strongly indicating this.

In conclusion the supply of student accommodation was by the College and was VAT exempt and not standard rated.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Neighbourhood plan could allocate housing even if there was no strategic development plan

The Localism Act 2011 amended planning legislation to introduce parish councils or neighbourhood forums initiating neighbourhood development plans. Neighbourhood development plans must be independently examined, and if recommended, with or without modification, are submitted to a referendum. If more than half of the votes favour the plan, the local planning authority must put the neighbourhood development plan in place.

Is it permissible for a neighbourhood plan to include policies relating to a settlement boundary or the allocation of sites for housing if the local planning authority has yet to adopt a development plan document containing strategic policies for meeting the objectively assessed housing needs of the district?

Condition 8(2)(d) of Schedule 4B to the Town and Country Planning Act 1990 (“the 1990 Act”) requires that the making of the neighbourhood development plan “will contribute to the achievement of sustainable development”.

In the Planning Court case of Gladman Developments Ltd, R (on the application of) v Aylesbury Vale District Council & Anor [2014] Aylesbury Vale District Council (“the Council”) had made the Winslow Neighbourhood Plan (“the Neighbourhood Plan”). Policy 2 of the Neighbourhood Plan established a settlement boundary and provided that development outside the settlement boundary would only be allowed in exceptional circumstances. Within the settlement boundary, Policy 3 allocated land for sites for an indicative number of 455 new dwellings.

The claimant wished to develop three sites in the Winslow neighbourhood area outside the settlement boundary and sought judicial review of the Neighbourhood Plan.

The Council as yet had no adopted development plan document in place dealing with strategic housing issues because its draft Vale of Aylesbury Plan (“the Vale Plan”) had been rejected by the planning examiner and resolved to be withdrawn because the Council needed to better co-operate with other relevant authorities to fix the level of housing provision needing to be identified in the document. For Winslow it had only identified 400 houses.

The Planning Court ruled that a neighbourhood development plan may include policies for housing land, and direct where any proposed number of new dwellings are to be located, even where there was at present no development plan document setting out strategic polices for housing.

The examiner was therefore entitled in the present case to conclude that the Neighbourhood Plan satisfied basic condition 8(2)(e) of Schedule 4B to the 1990 Act as it conformed to such strategic policies as were contained in development plan documents even though the local planning authority had yet to adopt a development plan document containing strategic polices for housing.

The condition 8(2)(d) of Schedule 4B to the 1990 Act was satisfied. The examiner was entitled to conclude that a neighbourhood plan that provided for an additional 455 dwellings, in appropriate locations contributed to sustainable development even if:

– others wanted more growth and

– development plan documents in future might provide for additional growth.

Even if there might, in future, be a need for further growth, the examiner was entitled to think that it was appropriate to make the Neighbourhood Plan in the light of national guidance and advice, including the National Planning Policy Framework.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Unprotected Non Refunded Pre Regulation Tenancy Deposit invalidated repossession notice

Statutory regulation of tenancy deposits was introduced from 6 April 2007 by sections 212 to 215 of the Housing Act 2004. They were designed to end complaints that residential tenants’ deposits had been unreasonably withheld or purloined by landlords at the end of tenancies.

The sections have been amended by the Localism Act 2011.

In the Court of Appeal case of Charalambous & Anor v Maureen Rosairie NG & Anor [2014] Mr Charalambous and Ms Karali took a succession of short tenancies of 14 Sapphire Court in Spitalfields starting on 20 August 2002.

They paid a deposit of £1,560. On each renewal the same deposit was required to be paid. No further deposit was paid or money actually changed hands. Instead the original deposit was carried over and credited against each renewed tenancy.

The contractual term of the last of the written tenancies expired in 2005 and so by the time when the tenancy deposit protection provisions became effective, the tenancy had already become a statutory periodic tenancy.

The landlord continued to hold the deposit.

On 17 October 2012 the landlord served notice under section 21 of the Housing Act 1988 requiring possession of the property to be given after 17 December 2012.

The deposit paid by Mr Charalambous and Ms Karali was never held under a statutory scheme. Was the section 21 notice valid?

The Court of Appeal said Section 215 (1) (a) itself is unclear but the terms of Article 16 of the Commencement No. 4 and Transitional, Transitory and Saving Provisions) Order 2012 (“the Order”) plainly envisaged that as from the coming into force of the amendments made by section 184 of the Localism Act 2011 the code would apply to existing tenancies.

What was relevant was not the date at which the deposit was received, but the date on which the tenancy was in effect.

Article 16 (1) of the Order was clear that the 2011 Act amendments would apply to tenancies in existence on 6 April 2012.

Since the amendments made by section 184 included amendments to section 215 (1) itself, it must have been envisaged that section 215 in its amended form would apply to all such tenancies.

That on its own was enough to lead to the conclusion that the section 21 notice was invalid.

The case contained a number of interesting side views in the lead judgement.

Under the original version of section 215, the landlord could comply with the requirement to have the deposit held in accordance with an authorised scheme, even if this was not done within the 14 days then stipulated.

That may no longer apply given the amendment to section 215(1)(b) made in 2012. As regards failure to provide the necessary information, under section 213(6), the sanction preventing service of a section 21 notice applies until the prescribed deposit information notice is given to the tenant, even if that is done late (section 215(2)) and it’s saying: “until such time as section 213(6)(a) is complied with” was also significant, though the time stipulation is in section 213(6)(b). So, a distinction had been made, the landlord can retrieve the position, as regards the failure to serve the prescribed information notice, by complying late.

The same did not appear to apply to a failure to protect the deposit by an authorised scheme at all. Though the court made no decision on the point it may be that the only way in which the landlord can now escape from the provisions of section 215(1) is by returning the deposit to the tenant.

So the landlord here and any landlord in a similar position may well be precluded from serving a section 21 notice unless she repaid the deposit to the tenants.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

#HS2 Safeguarding Directions did not trigger SEA Assessment

The Court of Appeal case of HS2 Action Alliance & Anor, R (On the Application Of) v The Secretary Of State For Transport [2014] was a claim for judicial review by HS2 Action Alliance and the London Borough of Hillingdon Council, who said that the respondent, the Secretary of State for Transport (“SST”), acted unlawfully when he used statutory powers to make safeguarding directions (“the Directions”) under the Town and Country Planning (Development Management Procedure) (England) Order 2010 protecting the route for Phase 1 of HS2.

Amongst other things the Directions required High Speed Two (HS2) Limited (“HS2 Ltd.”) to be consulted on planning proposals affecting the route.

The issue was whether the Directions “set the framework for future development consent of projects”, including projects for “EIA development” within the Town and Country Planning (Environmental Impact Assessment) (England and Wales) Regulations 1999, within the safeguarded zone?

If the answer to that question was “Yes”, the Directions should have been assessed under the regime for strategic environmental assessment (“SEA”) in Directive 2001/42/EC (“the SEA Directive”). They had not been.

Accordingly the appellants said that the Directions were unlawful and should be quashed.

The appellants said that the Directions were a plan or programme within article 2(a) of the SEA Directive. They had been prepared for transport, town and country planning and land use, and so came within the ambit of article 3(2)(a).

The appellants said the Directions:

– set the framework for future development consent of projects;

– operated as a legal constraint on development consent being granted by local planning authorities for various projects;

– set criteria by which that legal constraint could affect decisions on applications for planning permission – that future development is proposed within the safeguarded area and does not fall within the specified categories of exempted development; and

– operated to constrain the Secretary of State for Communities and Local Government (SSCLG)’s discretion as to whether and how to restrict the grant of planning permission in cases passed on to him, because the requirement for the HS2 land would be a material consideration for him to take into account.

At first instance the Planning Court said that to qualify as a “framework” subject to SEA assessment, the Directions would have to be more than merely persuasive but guiding and telling because they had a stated role in the hierarchy of considerations to be taken into account by decision makers.

Similar previous litigation based on the failure to subject HS2’s 2012 Command Paper to SEA assessment failed in the Supreme Court because the 2012 Command Paper did not seek to place any further constraint on Parliament’s consideration of the environmental impacts of the project as a whole, under the hybrid Bill procedure. Also the Supreme Court had concluded that to qualify as a policy “framework” that needed prior SEA assessment the item:

“must operate as a constraint on the discretion of the authority charged with making the subsequent decision about development consent”. It “must at least limit the range of discretionary factors which can be taken into account in making that decision, or affect the weight to be attached to them”.

Here the Directions were a consequence of the decision to promote the HS2 project.

They were foreseen by the 2012 Command Paper and were part of the process by which the HS2 project decision was proposed to be put into effect.

They were not a framework of policy or criteria constraining the discretion of the decision-maker in the making of the decision. It would be the HS2 project itself, as it was at the relevant time, which would inform:

– the response of HS2 Ltd. to consultation; and

– the intervention of the SST in the process, if he did intervene.

and it would not be the Directions that exerted a substantive influence on the decision, but the HS2 project itself.

So the Directions were not a plan or programme which set the framework for development consent, such as themselves to be subject to SEA assessment, but merely the servant of the HS2 Project which would itself have to pass environmental impact assessment (“EIA”).

The EIA for the HS2 project is having to comply with the requirements for an assessment prepared under the Annexes I and II to Directive 85/337/EEC and Article 1(4) of the EIA Directive (2011/92/EU).

In that assessment consideration would have to be given to the likely significant effects of the railway on the environment, including the use of the sites for use in its construction, and as to alternatives.

The authorities hosting the construction and operation of the railway, the owners of land affected by the project and also the public would have had the opportunity to participate in that process.

The Court of Appeal upheld the Planning Court’s decision that the Directions did not set the framework for development consent for projects, including EIA development projects, within the safeguarded zone, and its reasoning.

The practical effect of the Directions was that if there was an application for planning permission within the safeguarded zone and the local planning authority was not minded to refuse planning permission or to impose conditions, as recommended by HS2 Ltd’s advice, it had to notify the SST who could issue a direction restricting the grant of permission in respect of that application.

The planning applicant could then appeal to the SSCLG against the local planning authority restricting the grant of planning permission as directed by the SST, or the local planning authority’s failure to decide the planning application due to its disagreement with the restriction on the proposed planning permission directed by the SST.

While:

– the Directions constrained the manner in which the local planning authority may determine a planning application; and

– the three objectives, set out in the Guidance Notes and the Directions themselves, would be weighty planning considerations in any determination by the SSCLG because of the national importance which the Government attaches to the implementation of the HS2 project

they did not place any constraint upon the SSCLG when he determined an appeal under section 78 of the Town & Country Planning Act 1990.

The safeguarded zone did not determine the extent of the HS2 project. The safeguarded zone took its shape from the HS2 project. The Directions did not “set the framework for development consent” because Parliament was the decision taker that gave development consent to the project through specific legislation, and not pursuant to any “plan or programme” for the purposes of the SEA Directive, and Parliament was not bound by statements of Government policy.

The Directions could hardly be described as a “plan or programme” in their own right for the purposes of the SEA Directive given:

– the fact the HS2 project was being pursued through a hybrid bill and the lack of any plan or programme for it in the Directions; and

– the fact that sole purpose of the Directions was to ensure that the implementation of that project was not prejudiced by other developments.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Value added services precluded VAT exemption of property based supplies

Supplies may be exempt from VAT being chargeable on them under Value Added Tax Act 1994 (“VATA”), Sch 9, Group 1, Item 1, as being “the grant of an interest in or right over land or of any licence to occupy land.”

That exemption implements Article 135(1)(l) of the Principal VAT Directive (2006/112/EC) which exempts the leasing or letting of immoveable property.

The CJEU in Belgium v Temco Europe SA [2005] said that the leasing and letting of immoveable property was a “relatively passive activity linked simply to the passage of time and not generating any significant added value,” in contrast to “something which is best understood as the provision of a service.”

In the First Tier Tribunal case of Willant Trust Ltd v Revenue & Customs [2014] Willant Trust Limited (“WTL”) owned Ramster Hall (“the Hall”), a stately home in Surrey. The Hall was licensed for civil weddings, and receptions were also held there following weddings in local churches and elsewhere.

The Wedding Brochure stated that the client would have “exclusive use of the halls and courtyard which are yours for the wedding day”

The catering was provided not by WTL but by WTL’s nominee caterer Jacaranda. Other services including alcohol, photography and overnight accommodation were provided by third parties.

Clause 9 of the terms and conditions (“T&C”) stated that the Hirer was responsible for “the effective supervision of the Premises” including “the orderly and safe admission and departure of persons to and from the Premises” and the “orderly and safe evacuation of the Premises in case of emergency”, ensuring that no obstacles were placed by any corridors or exits, the safety of the Premises and “the preservation of good order and decency in the Premises.”

The T&C stated that the Hirer was not allowed to use the Premises for any purpose other than that described in the Hiring Agreement, sublet the Premises, move or alter any electrical, light or power appliance or fitting which was in the Premises or assign the agreement.

The WTL argued that the payment they got was not linked to the passage of time, because if there was no booking on the previous day, WTL allowed clients access to the rooms on that earlier day.

However, the tribunal said:

– this was at the discretion of WTL and not a term of the contract – early access depended entirely on whether there was another booking; and

– one of the key issues to be decided was the quality and quantity of contact between the clients and WTL before the wedding took place and at the wedding i.e. what was promised and what was delivered.

The tribunal found that the nature and extent of the services supplied by WTL meant that WTL were not undertaking “a relatively passive activity.”

WTL’s representative and her PA actively co-ordinated and planned the weddings with clients, and did not simply hand out a list of approved suppliers. Also they were routinely present at the weddings to greet the guests and make sure it all went according to plan. They were not simply there for 20-30 minutes to satisfy the legal requirement for an approved person to attend the civil ceremonies. WTL also allowed access to the gardens for photographs, provided a list of third party suppliers and arranged for the meetings with those suppliers to take place at the Hall.

Far from WTL being engaged in “a relatively passive activity” there was “significant added value,” with the result that what was being supplied was the provision of a service.

The tribunal found that there was a single supply which did not consist of “the grant of an interest in or right over land or of any licence to occupy land.”

As a result, the supply, by WTL, was standard rated and WTL’s appeal was dismissed.

This blog has been posted out of general interest. It does not remove the need to get bespoke legal advice in individual cases.

Planning authority’s multiple roles did not mean application was predetermined

Local planning authorities deciding a planning application may have more than one statutory role meaning that they are actually engaged in the project themselves in one or more different capacities.

Given the inevitability of this the courts are at ease with that multiple engagement so long as the local authority in its capacity as local planning authority (“LPA”) exercises its discretion genuinely and impartially.

In the High Court case of R (on the application of Khan) v London Borough of Sutton (2014), recently mentioned on this blog in another context, the LPA was also the waste disposal authority for the district.

In that latter capacity it had contracted with the “interested party” of the litigation for the interested party to provide a waste incinerator. In its capacity as the LPA, for the district, it then granted the interested party planning permission for it.

The claimant argued that the planning decision was not the result of planning considerations but was led by commercial considerations instead. These included the need to meet the targets set within the waste disposal contract which had meant that the LPA had not assessed the planning application “with an open mind”.

However the court said:

1. The council’s dual role as local planning authority and as waste disposal authority was authorised and required by Parliament under section 1(2) of the Town and Country Planning Act 1990.

2. The claimant had been merely inferring that the council’s discretion was inevitably fettered because permission was granted after the waste contract had been procured. Actually the claimant had failed to demonstrate a single act showing that the council’s discretion to decide the planning application had been fettered. In fact the council had throughout been sensitive to the potential for challenge on that ground and had taken all measures needed to make sure that their decision could not be challenged on that ground.

Additionally the court found evidence that:

1. The council were aware of the need to demonstrate openness and accountability in the council’s decision making process. That process was structured to ensure that it had and maintained a clear separation of its functions. The council had a differently constituted scrutiny committee which was able to hold the main committees including the development control committee to account. In this case the scrutiny committee had reported on the waste incinerator contract and given suggestions as to the way in which the planning application ought to be dealt with.

2. The planning performance agreement (“PPA”) the council had made with the interested party included, at paragraph 1.3, the statement that:

“Nothing in this agreement shall predetermine or prejudice the proper consideration or determination of any consent or application or override or fetter the statutory powers, duties or responsibility of any party”

thereby clarifying that by entering into the PPA the council was not fettering itself in its role as the statutory planning authority for the district.

So the court eventually dismissed the claimant’s challenge on predetermination of the application by the LPA as “quite hopeless”.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.