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Retailer commitment required under valid planning condition

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16/02/2016


In late January 2016, the High Court dismissed a judicial review application launched by the Skelmersdale Limited Partnership (SLP), challenging the validity of a planning condition. The condition requires that retailers wishing to take and develop space in a new mixed-use, retail-led development must correspondingly commit to retaining their presence in an existing shopping centre.

Background

SLP currently owns the Concourse Shopping Centre in Skelmersdale, West Lancashire (the Concourse Centre). The Concourse Centre has been in existence since the 1960s, known locally as ‘The Conny’. In early 2015, property company, St Modwen, applied to West Lancashire Borough Council (the Council) for planning permission. St Modwen proposed to build a new mixed-use, retail-led development on a 5-hectare site within the town centre (the Modwen Development). Permission for the Modwen Development was granted by the Council in June 2015.  However, Condition 5 of the permission stated:

“(i) Otherwise than in the circumstances set out at (ii) below, for a period of five years from the date on which the development is first occupied, no retail floorspace hereby approved shall be occupied by any retailer who at the date of the grant of this permission, or within a period of 12 months immediately prior to the occupation of the development hereby approved, occupies retail floorspace which exceeds 250 sqm [Gross External Area] within [the Concourse Centre]

(ii) Such Occupation shall only be permitted where such retailer as identified in (i) above submits a scheme which commits to retaining their presence as a retailer within [the Concourse Centre] for a minimum period of 5 years following the date of their proposed occupation of any retail floorspace hereby approved, and such scheme has been approved in writing by the [Council].

In effect, Condition 5 required retailers occupying over 250sqm Gross External Area in the Modwen Development, to also occupy space in the Concourse Centre, having submitted “a scheme which commits to retaining their presence” in the Concourse Centre for a minimum of five years.

The decision to include Condition 5 seemingly arose following two reports the Council had commissioned vis-a-vis the St Modwen application. In considering St Modwen’s proposals, the reports had:

  • concluded there was a realistic prospect of existing retailers leaving the Concourse Centre for the Modwen Development; and
  • advised the Council that proper controls were necessary to ensure key retailers would remain in the Concourse Centre and not relocate.

Legal Challenge

Having queried the merits and lawfulness of Condition 5 with the Council, SLP applied for judicial review.

SLP argued Condition 5:

  1. was unenforceable due to the lack of an implementation clause;
  2. was unenforceable due to the vague nature of its terms, particularly with owners and occupiers of the Modwen Development anyway not having any control over the Concourse Centre;
  3. would not achieve its stated purpose – hence the Council had also ignored material considerations in not having regard to this;
  4. was manifestly unreasonable as it discriminated against the companies involved; and
  5. could not be enforced as it represented a disproportionate interference with human rights.

Decision

The Court dismissed SLP’s application for judicial review. It stated that the Council’s intentions had been “crystal clear”, in aiming to safeguard the Concourse Centre by constraining larger retailers’ ability to relocate to the Modwen Development. The key matter for the Court was to establish whether Condition 5 had been a lawful and effective way to achieve this.

Ground 1

It is well-established that a condition which cannot be reasonably enforced will not be found to be a reasonable condition (Newbury District Council v Secretary of State for the Environment [2981] AC 578). Further, a condition will not be enforceable if it requires submission of a scheme or approval of details, but there is no implementation clause dictating the development must then be undertaken in accordance with the scheme / approved details.

In response to SLP’s first ground, the High Court found the commitment required from retailers under Condition 5 was not simply a non-binding promise or a statement of intention. A legally-binding commitment would be needed, such as a Section 106 Agreement. Anything short of this – such as a gentleman’s agreement – would not adequately:

  • ensure anchor tenants remained in the Concourse Centre; or
  • maintain the Concourse Centre’s long-term viability and vitality.

Correspondingly, no implementation clause was required, as under Condition 5 retailers would need to offer legally-binding commitments. While the Court noted that terms can be implied into planning permissions and conditions (following Trump International Golf Club Scotland Limited and another v Scottish Ministers [2015] UKSC 74), it was not necessary here.

Ground 2

The High Court felt this ground had little merit. Various elements of the condition were robust enough to ensure it was enforceable. Terms such as ‘retain’ and ‘presence’ were sufficiently certain and not too vague. They represented an appropriate mechanism via which the Council looked to ensure it could make and adjudicate on reasonable planning judgments. For instance, matters such as a retailer’s business, the nature and extent of occupation, possible economic projections, and likely business trends would all contribute to whether a retailer’s submitted scheme would be deemed ‘reasonable’. These were features on which a planning officer or inspector would exercise a planning judgment, but which could not be prescribed in advance.

Ground 3

Condition 5’s efficacy could only be challenged if it was deemed ‘Wednesbury unreasonable’ – that is, so unreasonable or irrational that no reasonable person acting reasonably could have made it.

Ultimately, the Court accepted that the condition attempted to safeguard the Concourse Centre’s viability and vitality, albeit some consumers would chose to shop at the Modwen Development nonetheless. Condition 5 did the best it reasonably could to alleviate the impact of the possible change in consumer behaviour.

The ability to enforce a condition, and its capacity to achieve the stated objective, are material considerations. However, only if a planning committee are significantly misled about material matters by a planning officer’s report, will a judicial review proceed. In the present case, there was nothing to suggest planning committee members had been so misled.

Grounds 4 and 5

The High Court confirmed that the condition did not breach any European human rights’ legislation, nor was it in any way discriminatory against the 18 named retailers who occupied in excess of 250sqm retail floorspace. The Council had sought to achieve a legitimate planning purpose by imposing the condition, even though it could restrain competition and lead to uneven retail distribution. The larger retailers were not being singled-out due to who they were, but because of the likely impact if they left the Concourse Centre. The discriminatory operation of Condition 5 could be justified – even though a less intrusive method might arguably have achieved the same outcome.

Key Points and Comment

The decision will interest all involved in negotiating and interpreting planning conditions. In particular, it:

  • provides a helpful overview on implied terms in planning conditions and recent developments in this area – most notably following Trump International;
  • clarifies that there is no absolute bar against implying terms into planning permissions;
  • confirms that ‘commit’ will likely be interpreted as meaning a legally-binding commitment; and
  • showed ‘retains’ and ‘presence’ as terms that were not too vague to be enforceable, which may assist when analysing similar planning conditions.

However, it is developers and owners of retail undertakings that should be most alert to the ramifications of this decision. Tying trading at a new development to trading from an existing development will clearly be accepted as a legitimate planning purpose. The tie-in here was intended to minimise the risk of retailers relocating, thus protect existing businesses within the town centre and particularly at the Concourse Centre. Even if such a planning condition restrains competition, leads to uneven retail distribution, and is arguably discriminatory, it is likely to be acceptable.

One comfort that may be taken, is that the requirement in Condition 5 was distinguished from an obligation on retailers to trade from a particular site or unit. Arguably, this might have been found as discriminatory due to its more dictatorial approach. With retail development and town centre initiatives heightening in a number of areas across the country, it will be interesting to see how many local authorities now seek to include similar conditions in planning permissions going forward.

For further information or advice on the impact of this decision and other recent legislative developments in this area, contact the Planning & Environment team at Walker Morris.

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