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Sainsbury's Supermarkets Ltd v Wolverhampton City Council and Tesco Stores Limited [2009] EWCA Civ 734

DATE: 11 Aug 2009

Court of Appeal considers exercise of compulsory purchase powers under section 226 of the Town and Country Planning Act 1990

Court of Appeal rejects challenge by J Sainsbury to Wolverhampton City Councils decision to exercise compulsory purchase powers under section 226 of the Town and Country Planning Act, in favour of a scheme promoted by Tesco Stores Limited.

J Sainsbury and Tesco had advanced competing proposals for the redevelopment of a site at Raglan Street, Wolverhampton. The Council decided to grant planning permission for both schemes. Neither could be implemented without the use of compulsory purchase powers so the Council held a competition to decide which developer to support. It found that the decisive advantage of the Tesco proposals was an offer to use the development of the Raglan Street site to cross-subsidise the regeneration of the Royal Hospital Site elsewhere in the city.

J Sainsbury argued that this offer of cross-subsidy could not lawfully be taken into account by the Council when considering the exercise of its relevant compulsory purchase powers under section 226 of the Town and Country Planning Act 1990, as amended, on the grounds that it was unrelated to the development of the Raglan Street site and that the resulting well-being benefits would flow from the development of the Royal Hospital Site and not the CPO site at Raglan Street as the proper interpretation of section 226 required.

The Council and Tesco argued that the decision to support the Tesco proposals was lawful, because the Tesco proposals for the Raglan Street site would be likely to contribute to the achievement of the promotion or improvement of economic, social or environmental well-being in the area and would therefore fall within subsection 226(1A) of the 1990 Act. Alternatively, they argued that the Council was required to have regard to all material considerations when deciding whether to make a CPO under section 226, and was therefore entitled to have regard to all of the benefits which would flow from facilitating the carrying out of a proposed redevelopment scheme when deciding which of two rival redevelopment schemes it should support by the making of a CPO.

Elias J rejected the first argument advanced by the Council and Tesco, but accepted the second. J Sainsbury appealed. The Council and Tesco argued on appeal that the first argument relating to section 226(1A) should not have been rejected.

The Court of Appeal held that subsection 226(1A) is concerned with all of the consequences that are likely to flow from the process of the carrying out of  redevelopment on the CPO site; and that the potential financial implications of redeveloping the CPO site, including the possibility of cross-subsidy as a result of facilitating its redevelopment, were material for the purposes of any consideration of the extent to which the carrying out of the redevelopment would be likely to contribute to wider, well-being benefits. Although it was unnecessary to deal with the alternative argument of the Council and Tesco, it was added that subsection 226(1A) does not purport to cut down the considerations that are capable of being material under subsection 226(1)(a).

Christopher Lockhart-Mummery QC and David Forsdick acted for J Sainsbury

Neil King QC and Guy Williams acted for Wolverhampton City Council

Christopher Katkowski QC and Scott Lyness acted for Tesco Stores Limited