Tesco Stores Ltd v Secretary of State for the Environment and Others

JurisdictionUK Non-devolved
JudgeLord Keith of Kinkel,Lord Ackner,Lord Browne-Wilkenson,Lord Lloyd of Berwick,Lord Hoffmann
Judgment Date19 October 1995
Judgment citation (vLex)[1995] UKHL J1019-1
CourtHouse of Lords
Date19 October 1995
Tesco Stores Limited
Secretary of State for the Environment and Others

[1995] UKHL J1019-1

Lord Keith of Kinkel

Lord Ackner

Lord Browne-Wilkinson

Lord Lloyd of Berwick

Lord Hoffmann

House of Lords


Lord Keith of Kinkel

My Lords,

At the end of the judgments of the Court of Appeal in this case Sir Thomas Bingham M.R., said that it involved:

"a question of unusual public importance bearing on the conditions which can be imposed, and the obligations which can be accepted, on the grant of planning permission and the point at which the imposition of conditions, and the acceptance of obligations, overlaps into the buying and selling of planning permission, which are always agreed to be unacceptable."

Three companies applied to the local planning authority for planning permission to build a retail food superstore in the town of Witney in Oxfordshire, each on a different site. Tesco's site was described as the Henry Box site, and that of Tarmac (which was associated with Sainsburys) as the Mount Mills Site. The third company's site does not figure in these proceedings and can be ignored. There had previously been a Local Plan inquiry into certain proposed alterations to the development plan. One of these related to a proposed new road to the west of the town of Witney. The town straddles the River Windrush. There is only one bridge over this river, and as a result there is severe traffic congestion in the centre of the town, which is a conservation area. The proposed new road known as the West End Link (WEL for short) included a new river crossing, and the purpose of it was to relieve the traffic congestion. Another proposed alteration to the plan was to provide for a major retail food superstore in the town centre. The Inspector who conducted the inquiry issued a report approving the WEL and rejecting the proposal for a retail food superstore in the town centre. Tesco, Tarmac and other developers had taken part in the inquiry, opposing the town centre superstore and promoting the merits of their own sites for such a store, these sites being a considerable distance from the town centre. The Inspector did not make any formal recommendations about these sites, but he held that development of a retail food superstore on one only of these sites would be beneficial, and he expressed a preference for Tesco's Henry Box site. Further, he expressed the view that funding for the WEL was unlikely to come from the highway authority and he recommended a policy statement including reference to the district council's intention to negotiate with developers funding for the WEL or a major contribution to it, before a superstore went ahead.

Tarmac's application for planning permission was not determined by the local planning authority within the statutory period, and so became the subject of an appeal to the Secretary of State, who then called in Tesco's application for the Henry Box site.

In July 1992 an inquiry into Tarmac's appeal and Tesco's application and another appeal not now relevant was held by Mrs. S. E. Hesketh. At the inquiry Oxfordshire County Council contended that without the construction of the WEL there was a fundamental constraint to the development of a superstore on any site because of the traffic congestion situation, and that full private funding at a cost of £6.6 million must be provided. West Oxfordshire District Council supported this contention, as did Tesco, which offered to provide the full funding for the WEL itself.

The Inspector recommended that Tesco's application should be granted and Tarmac's appeal dismissed. She first addressed the question whether there was a fundamental constraint to the development of a food superstore in the absence of funding for the WEL and rejected that proposition. Having referred to the traffic problem in Witney, she said:

"7.2 … It is clear that a new foodstore would result in additional traffic on the local road network, and Bridge Street in particular. However, whilst a store would generate more traffic at peak times, particularly the Friday evening and Saturday morning peaks, even the worst estimates indicate the increase in traffic at Bridge Street would be well below 10% over and above that which would be generated by B1 office development, for which planning permission exists. …"

The Inspector went on to refer to the Department of the Environment Circular 16/91, dealing with planning obligations under section 106 of the Town and Country Planning Act 1990 (as substituted by section 12 of the Planning and Compensation Act 1991), and observed that such obligations could relate to land, roads etc. other than those covered by the planning permission provided there was a direct relationship between the two. She went on to say:

"7.4 … In this case there is some relationship between the funding of the WEL and a proposed store in that a store would slightly worsen traffic conditions in the town over and above the existing planning permission. The relationship is however tenuous. Any superstore site would be a considerable distance from the WEL and Bridge Street and the development proposed would not generate a great deal more traffic than the other permitted uses of the sites. …"

Having further observed that the Circular stated that the extent of what is required should be fairly and reasonably related in scale to the proposed development, she said:

"7.5 … In the case of Witney, the WEL is necessary to ameliorate existing traffic conditions and to assist in bringing forward the development of Policy Areas 1-3, I take the view therefore that the full funding of the road is not fairly and reasonably related in scale to this proposed development. …"

The Inspector took the view that it would be unreasonable to require a developer of a previously approved development site to fully fund a major road proposal because his development would marginally increase traffic over and above that already permitted but concluded:

"7.6 However, no such requirement is being made by the Council. The Proposed Modifications of the Local Plan Alterations provide an upper case policy relating to the provision of the WEL and a lower case statement to the effect that it will be the Council's intention to negotiate funding or a major contribution to funding the WEL. The Local Plan Inspector also stated that the superstore may contribute 'all or most' of this funding. If the Council negotiations result in the offer of a full contribution to the cost of the WEL from the developer of a site preferred by the Council following a lengthy Local Plan inquiry, then it would be perverse to turn away the offer. The Council therefore finds itself in the somewhat surprising but felicitous position of the first major developer since the Local Plan inquiry responding to the Council's offer to negotiate on WEL funding by a full funding proposal. This seems to me to be a perfectly proper outcome of negotiations provided that the agreement entered into is sufficiently robust to achieve the benefits promised."

The Inspector went on to consider the merits from the planning points of view of the competing sites, upon the basis, which she found proper, that only one site should be approved. She found those merits to be finely balanced, but having regard to the informal preference for Tesco's Henry Box site expressed by the Local Plan Inspector she came down in favour of that one.

Though the matter is not directly alluded to in the Inspector's Report, it is relevant to notice that on 28 July 1992, the third last day of the inquiry, Tesco entered into an agreement with Oxfordshire County Council containing a planning obligation under section 106 of the Act of 1990. The obligation was to pay the Council the sum of £6.6 million if planning permission for the development of the Henry Box site was granted.

On 16 April 1993 the Secretary of State issued a decision letter in which he rejected the Inspector's recommendation. He allowed Tarmac's appeal regarding the Mount Mills site, and dismissed Tesco's application for the Henry Box site. I will have occasion to consider the decision letter in some detail later, but his reasons in brief were (1) that he held Tesco's offer of funding not to be a good ground either for granting planning permission to Tesco or for dismissing Tarmac's appeal, (2) that the Local Plan Inspector's informal preference for the Henry Box site should receive only limited weight, and (3) that on planning grounds the Mount Mills site was to be preferred.

Tesco took proceedings against the Secretary of State, under section 288 of the Act of 1990, to quash the decision letter. The grounds of the application were (1) that the Secretary of State had wrongly discounted the preference of the Local Plan Inspector for the Henry Box site and the local planning authority's acceptance of that, and (2) that the Secretary of State by discounting Tesco's offer of funding for the WEL had failed to take account of a material consideration. Tarmac and West Oxfordshire District Council, in addition to the Secretary of State, were called as respondents to the application, but the Council took no part in the proceedings. The matter came before Mr. Nigel Macleod, Q.C., sitting as a deputy High Court judge in the Queen's Bench Division, who on 7 July 1993 gave judgment in favour of Tesco quashing the decision letter. He rejected the first ground of application but accepted the second, holding that the Secretary of State had wrongly failed to treat Tesco's offer of funding as a material consideration. Tarmac appealed, and on 25 May 1994 the Court of Appeal (Sir Thomas Bingham M.R., Beldam and Steyn L.J) allowed the appeal and reinstated the decision of the Secretary of State (unreported); Court of Appeal (Civil Division) Transcript No. 736 of...

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