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R (on the application of Peel Land and Property Investment Plc) v Hyndburn BC [2013] EWCA Civ 1680

DATE: 19 Dec 2013

This case raised important issues about the construction and effect of planning permissions, as well as the proper interpretation of s.75 of the Town and Country Planning Act 1990 (TCPA 1990) which provides that the grant of planning permission may specify the purposes for which a building may be used and “if no purpose is so specified the permission shall be construed as including permission to use the building for the purpose for which it is designed”.

The Claimant (Peel) was the owner of a large retail park in Rishton, Lancashire. The retail park contained a number of retail units that were subject to planning obligations restricting the type of goods that could be sold. However, each s.106 agreement contained a proviso that:

“nothing in this Agreement shall prohibit or limit the right to develop any part of the Site in accordance with any planning permission… granted (whether or not on appeal) after the date of this Agreement”

Peel applied for and obtained a series of planning permissions to alter and subdivide the retail units (the later permissions) and it sought a declaration contending that either: (a) the buildings created a new chapter in the planning history such that the restrictions in the s.106 agreements no longer applied; or (b) by operation of s.75 TCPA 1990 the altered retail units could be used for the purpose for which they were designed viz unrestricted A1 retail purposes.

Peel’s claim was opposed by the local planning authority (Hyndburn Borough Council) and also by Blackburn with Darwen Borough Council which was concerned to protect Blackburn’s town centre.

At first instance ([2012] EWHC 2959), HHJ Waksman QC dismissed Peel’s claim and held that the planning permissions granted did not involve the creation of new retail units, a new planning chapter, or a material change of use. In addition, he accepted that s.75 TCPA 1990 was not engaged in circumstances where the application for planning permission did not involve any material change of use and therefore s.75 could not avail Peel because the use of the retail units before and after the alterations remained the same.

In the Court of Appeal, Peel put advanced a ‘four step analysis’ of the issues and contended that each of the four steps ought to have been resolved in its favour. The four steps were summarized by Sir John Mummery (giving the judgment of the Court) as follows:

“The Four Steps Analysis
36. The Four Steps are as follows.
Step 1: the Later Permissions
37. Did any of the individual Later Permissions permit external and internal works on the Units resulting in the creation of one or more new retail Units? This step turns on the construction of the Later Permissions: what did the Council permit Peel to do? Did it give Peel permission to change the use of the altered Units as well as to make physical adjustments?
Step 2: application of s.75 of the 1990 Act
38. May the new retail Units resulting from Step 1 be used for unrestricted A1 retail purposes in the light of the application of s. 75(2) or (3) of the 1990 Act? Step 2 turns on the potential application of s.75 ("Effect of a planning permission") where planning permission is granted for "the erection of a building." It provides that:-

"(2) Where planning permission is granted for the erection of a building, the grant of permission may specify the purposes for which the building may be used.
(3) If no purpose is so specified, the permission shall be construed as including permission to use the building for the purpose for which it is designed."

39. Peel's case on s.75(2) with regard to specified purpose for use is that the Later Permissions, or some of them, were granted for "the erection of a building", having regard to extended definitions in the 1990 Act. Unrestricted retail use was the specified purpose for which the altered Units may be used.
40. Peel's case on s.75(3) with regard to deemed purpose for use, if no purpose is specified, is that the altered Unit may be used for the purpose for which the building was designed and that, in this case, that purpose is unrestricted A1 retail use.
Step 2A: the new planning chapter
41. Alternatively to Step 2, would development of the Units in accordance with any of the Later Permissions open "a new planning chapter" in the planning history of the Units resulting in "the right to develop" the Units, which would engage the Provisos and remove the use restrictions of retail sale of various kinds of goods? That Step involves an overall assessment of the planning history of the Units in order to determine the nature and extent of the departure from the Later Permissions signified by the previous planning history.
Step 3: construction and application of Provisos
42. Did Steps 1 and 2 result in "the right to develop" the Units within the meaning of the Provisos, so that the accepted restrictions on the range of goods that could be sold retail would not apply to the altered Units? Step 3 turns on (a) the true construction of the Provisos and (b) their proper application to the particular circumstances of each Unit in the light of the Later Permissions.”

As to step 1, the Court of Appeal held that the later permissions were for operational development work only and they neither were for, nor did they involve, a material change of use in the retail units from the existing restricted use. In terms of step 2, the Court held that section 75 TCPA 1990 did not avail Peel. Section 75(2) TCPA 1990 did not apply because the later permissions did not specify the purposes for which the relevant Unit may be used. The later permissions did not relate to the use of the Units or to specified purposes; they related to “building works”. Section 73(3) TCPA 1990 did not apply because the later permissions were not granted for a material change of use of the units, but only to physical works of alteration or adjustment to them.

Peel also failed at step 2A because the Court of Appeal held that as a matter of fact and degree the later permissions did not open a new planning chapter in the history of the units. They were only for physical alteration for their improvement without involving any material change from the existing restricted use to an unrestricted A1 retail use. That was not the sort of radical or substantial departure from the existing planning history required to open a new chapter.

Finally, in terms of step 3, the Court of Appeal held that the later permissions did not trigger the provisos so as to release the retail units from the restrictions in the s.106 agreements. The restrictions would only cease if Peel had a “right to develop” the units for a use prohibited or limited by the s.106 agreements. Since the goods restrictions related to the use of the units, absent permission for a material change of use there was no right to develop limited by the s.106 agreements.

As the Court of Appeal recognized, the case is highly significant for retailers across the country and “the outcome of the appeal will have wider repercussions for other local planning authorities and other developers of out-of-town retail shopping parks as well as for town centres, for other kinds of retail outlets and the public generally” (at [7]).

Christopher Katkowski QC and Simon Pickles acted for Peel
Neil Cameron QC and Richard Moules acted for Blackburn with Darwen Borough Council