Planning in Court: Class E, NHS Service Funding & Enforcement Notices in the Judicial spotlight
With Parliament taking a well-earned summer break, I thought it might be a good moment to soujourn to the relative calm of the Royal Courts of Justice.
This post is a brief recap of three recent cases from the planning court. Chosen for no other reason than I found them mildly interesting.
I first discussed Worcestershire Acute Hospitals NHS Trust a few weeks ago. On 31 July, less than two weeks after the hearing, Mr Justice Holgate handed down his Judgment.
The case centres on a simple question: was a local council acting unlawfully by refusing to secure s.106 contributions to fund the provision of NHS Services, when it was uncertain that a funding gap actually existed?
It also has an interesting procedural history. The claimant had originally put forward six grounds of challenge, which are summarised in the judgment as follows:
"Ground 1
The defendants failed to take into account or investigate an obviously material consideration, namely the effects on the provision of other infrastructure and facilities under s.106 if the Trust's request were to be met.
Ground 2
In breach of s.100D of the Local Government Act 1972 MHDC failed to make open to inspection by members of the public the viability assessment referred to in the officers' reports, thereby denying the Trust the opportunity of engaging with the principal reason given by the defendants for rejecting its request, namely that it would affect the viability of the scheme and so result in a reduction in the provision of other infrastructure judged by the defendants to be critical.
Ground 3
The defendants failed to give lawfully adequate reasons as to why the contribution requested by the Trust did not comply with reg.122(2) of the CIL Regulations 2010.
Ground 4
The defendants took into account an irrelevant consideration as a determinative factor when applying reg.122(2) of the CIL Regulations 2010, namely that there would no funding gap if the Trust were to switch to a payment by results method.
Ground 5
The defendant failed to give adequate reasons for departing from certain planning appeal decisions.
Ground 6
There was no evidential basis for the suggestion in the officers' report for the committee meeting held on 3 November 2021 that some new health infrastructure would be secured."
They failed to get permission on the papers on all six grounds and then applied to renew on five of them. Ground five was not renewed.
Mr Justice Holgate dealt with the remaining grounds at a rolled up hearing that took place on 18 and 19 July 2023. He dismissed the claim on all grounds. Finding each of them to be unarguable.
Taking them in the order that they were dealt with in the judgment:
Grounds 3 and 4
These grounds failed for very similar reasons to the Harborough claim, namely that the Trust had failed to establish a) that a funding gap existed and b) how large it was.
This led Mr Justice Holgate to state:
"It follows that the defendants were entitled to conclude that they were not satisfied that the Trust's request was "necessary" for the purposes of reg.122(2) of the CIL Regulations. On that basis, the defendants could not lawfully have required the developer to pay the contribution requested in order to make the proposed development acceptable in planning terms. Irrespective of the sequence in which the committee's resolutions were set out, compliance with regulation 122(2) was a legal test which had to be satisfied before the defendants would even need to consider whether the s.106 requirements already approved by the defendants had a higher priority than the Trust's request, or what the effect of revisiting viability appraisals might be."
Ground 6
This ground also failed. Mr Justice Holgate found that the Officer's Report was neither wrong nor misleading. Instead, he found that:
"the claimant's criticism is overly forensic and does not accord the usual benevolence which the courts give to the reading of an officer's report. The second and last sentences are not misleading. The second sentence stated that the s.106 agreement would secure a serviced plot, subject to an option agreement. That did not imply that the land would be "free". The last sentence needs to be read in context. It was common ground between the parties that NHS Property Services did not suggest that the contribution was inadequate or that it lacked the funds to pay for the "four GP" site. It did not raise any concern as to whether that facility could be secured or delivered. Indeed, the email from NHS Property Services clearly stated that the figure of £1.72m was the sum it had requested."
Ground 1
Ground 1 was also roundly rejected for a variety of reasons. Including the following
"First, the Trust's representations to the defendants failed to persuade them that the contribution requested satisfied regulation 122(2)(a) of the CIL regulations. The Trust failed to address that fundamental issue, for example, in its response dated 28 October 2021 and after the meeting of 3 November 2021. The upshot is that there could not be any legal obligation on the defendants to make further inquiries about the viability appraisals and other s.106 requirements in order to provide funding for a request which would breach reg.122(2)(a) and render the grant of any planning permission unlawful and open to legal challenge. Indeed, to impose such a requirement would itself be irrational. Ground 1 must therefore fail for this reason alone. Furthermore, it follows that the disclosure sought by the Trust is irrelevant, and not merely unnecessary or disproportionate.
Second, the Trust has never challenged the assessment by the defendants that the s.106 requirements they approved and the provision of affordable housing were necessary to make the proposed development acceptable and were, in any event, a higher priority than the Trust's request. Likewise the Trust does not bring any challenge to the defendants' decision that the s.106 contributions for essential infrastructure and the 20% level of affordable housing should not be reduced in order to accommodate the Trust's request. These unchallenged, unassailable conclusions could not give rise to any legal obligation on the part of the defendants to re-open the viability appraisals or to seek further information."
Ground 2
Finally, Ground 2 was found to be "unarguable on three independent bases: (a) the relevant material contained exempt information and therefore no breach of s.100D(1) occurred (b) even if there was such a breach, the Trust suffered no material prejudice and so the grant of planning permission was not unlawful or invalid and (c) in any event, leave must be refused under s.31(3D) of the 1981 Act."
In short, the Harborough decision remains good law, and s.106 contributions towards the funding of general NHS services remain extremely difficult to justify.
Lazari Properties is a fascinating decision about planning conditions. In particular about whether a planning condition can exclude the operation of Class E of the Use Classes Order.
The condition in question read as follows:
"Up to a maximum of 40% of the retail floorspace equating to 3386m2 (excluding the supermarket and eye-catcher) is permitted to be used within Use Classes A2 and A3 of the Town and Country Planning (Use Classes) Order, 1987, or in any provision equivalent to that Class in any statutory instrument revoking and re-enacting that Order."
The reason for Condition 3 was stated to be:
"To safeguard the retail function and character of the Brunswick Centre in accordance with policies SHI, SH2, of the London Borough of Camden Unitary Development Plan 2000."
It had been imposed on a shopping centre - namely the Brunswick Centre in Camden. Following the introduction of Class E in 2020, the claimant applied for a certificate of lawfulness seeking open class E use of property. The application was refused by Camden Council and appealed. The Planning Inspector hearing the appeal determined that Condition 3 (set out above) had successfully excluded the operation of the use classes order - so that open Class E use of the centre was not permitted. The claimant then challenged that decision in the High Court.
On 4 August 2023, Mr Justice Waksman handed down his judgment, upholding the Planning Inspector's interpretation of the condition. There were a number of reasons for this, but the part of the judgment that is of most general applicability is set out below :
- I turn first to the language of Condition 3 itself. It does not expressly exclude the operation of the UCO but as the case-law makes clear, this is not necessary. On the other hand there is a very precise limitation by reference to a particular percentage of a defined floorspace area, which is in fact further explained by Informative 13. This acts as a clear qualification to that part of the Permission which allows for A1 to A3 use.
- I accept that Condition 3 is perhaps not as emphatic as the condition in Dunnett which stated that the express consent of the Council was required for any change of use. On the other hand, this is not a simple restriction to particular uses; rather it is a restriction on the extent of such uses, so the language was bound to be different. Here one notes the use of the phrase "up to a maximum" which is emphatic, in my view as to the applicable limit. The expression "is permitted" has to be read in that context which is part of the same sentence. Taken in that context, this is more than simply a permission for a particular use without more (cf paragraph 38(1) above). In truth, this was a clear negative condition.
- Next, the reference at the end of Condition 3 to "equivalent provisions" does in my judgement stress the particular use concerned i.e. A2 and A3 as then described or the same use as described in any later provision. In other words, one can simply "translate" A2 and A3 use into "financial and professional services", and "restaurants and cafés". It is upon these activities that the 40% limit is imposed. Once one does that exercise, the import of Condition 3 becomes even clearer and in my view, by itself, points to an exclusionary effect.
- However, one should go further and consider the full context. The most immediate contextual matter is the stated reason for having Condition 3, set out at paragraph 5 above. In my view, that is a very significant pointer towards an exclusionary effect. The only way to "safeguard" the retail function and character of the Brunswick Centre was to have a condition that was of permanent, and not merely temporary effect. Otherwise the intended "safeguarding" is meaningless. When one puts that in the context of the historic significance of the Brunswick Centre and its character, since it was designated and built with a strong neighbourhood retail element, the force of the stated purpose becomes yet stronger.
......
- For those reasons, and having regard to the language of Condition 3 and the reason for it, without more, in my view it clearly has the exclusionary effect. It evinced an intention to have that effect and would be futile without it. The Inspector correctly summarised the law and came to the same conclusion for largely the same reasons in paragraphs 49-57 of the DL.
Our last case of the day concerns enforcement notices and, in particular, whether it is possible to use an enforcement notice aimed at remedying an unlawful change of use to remove the operational development that gave rise to it.
The case centred on a property known as 'Goose House'. Goose House had been constructed as a dwelling and had had no other use. The building had been substantially completed more than four years before February 2021 and therefore was immune from enforcement, but the residential use of the site had not been subsisting for 10 years.
The Council issued an enforcement notice that not only required that residential use of the property ceased, but also the demolition and removal of the property.
The First Claimant's argument at the inquiry was that Goose House, although not its use, was immune from enforcement action. The Inspector, however, upheld the enforcement notice - concluding that:
"18. In the circumstances I consider that the operational development and the making of the material change of use should not be viewed as entirely separate developments. Mr Caldwell's evidence is that the purpose of erecting the building was, from the outset, to provide a dwelling as more suitable accommodation for one of his employees who might otherwise leave, and whose presence would ensure security of the site. The construction of the Goose House was clearly for the purposes of making a material change of use of the land to use for residential purposes, and it was integral to, and part and parcel of, that change. The operational development comprised in the erection of the dwelling, a modest single storey building, was not of a nature and scale that would take it beyond what could be considered to be integral to the material change of use.
19. I consider, in the particular circumstances of this case, that the principal form of development was the making of the material change of use of the land, and that the construction of the building can reasonably be regarded as associated works. Since the purpose of the notice is clearly to remedy the breach of planning control by returning the land to the condition it was in before the breach took place, it is not excessive to require the removal of the building."
The appellant challenged this finding in the High Court, with Mrs Justice Lievan handed down judgment on 7 August 2023 and quashing the Inspector's decision.
The key sections of her judgment are set out below - and provide a very useful guide to the limitation of a Council's enforcement powers in these circumstances.
- In my view Mr Edwards' submissions are correct. The issue is what are the limits or parameters of the power to require the restoration of the land under s.172(3). The starting point must be the statutory scheme. Section 173(3) allows the LPA to require the restoration of the land to its condition before the breach took place, but the statute in s.171B gives operational development, including the erection of dwelling houses, immunity from enforcement action four years after substantial completion.
- The caselaw, starting with Murfitt, clearly establishes that the power to require restoration can include the removal of operational development, which could not be enforced against on its own, because of s.171B. That principle has been endorsed in numerous subsequent cases, including in the Court of Appeal in Kestrel Hydro.
- However, it is also clear that the Murfitt principle is subject to limitations. Most importantly, as has been frequently stated, it cannot override or extend the statutory scheme, see Kestrel Hydro at [27].
- It is helpful to consider the factual context of the various cases where Murfitt has been applied. In all those cases, including Kestrel Hydro itself, the works have been secondary, ancillary or "associated with" the change of use. They have not been fundamental to or causative of the change of use. One can use a variety of different words to describe this relationship, and various judges have described it in different ways, but the list above, makes the point very clearly. Lindblom LJ in Kestrel Hydro comes close to describe the concept at [34] where he refers to the change of use entailing subsequent "physical works to facilitate and support it". I do not think the works have to be "subsequent", that will depend on the facts of the case, but they are facilitative only.
- I agree with Richards LJ in Welwyn Hatfield and Mr Vandermeer QC in Newbury that to go further and allow the Murfitt principle to extend to the operational development which gives rise to the change of use, is a step too far......
In my view both the statute itself and the caselaw point to a limitation on the power described in Murfitt, where the operational development is itself the source of or fundamental to the change of use. Whether that limitation is reached is a matter of fact and degree. However, the Inspector here erred in not appreciating that there was such a limitation, and that to require the removal of the dwelling house, was clearly going beyond the statutory power."
First, the Trust's representations to the defendants failed to persuade them that the contribution requested satisfied regulation 122(2)(a) of the CIL regulations. The Trust failed to address that fundamental issue.... The upshot is that there could not be any legal obligation on the defendants to make further inquiries about the viability appraisals and other s.106 requirements in order to provide funding for a request which would breach reg.122(2)(a) and render the grant of any planning permission unlawful and open to legal challenge. Indeed, to impose such a requirement would itself be irrational...
Second, the Trust has never challenged the assessment by the defendants that the s.106 requirements they approved and the provision of affordable housing were necessary to make the proposed development acceptable and were, in any event, a higher priority than the Trust's request.”
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