Supreme Court judgement on revocation of planning permissions

Scotland
A planning authority has the power to revoke or modify a planning permission which it has previously granted. Section 65 of the Town and Country Planning (Scotland) Act 1997 (the 1997 Act) provides that an order may be made if it appears to the planning authority “that it is expedient to revoke or modify any permission”. In exercising this function the planning authority “shall have regard to the development plan and to any other material considerations”. In The Health and Safety Executive v Wolverhampton City Council the Supreme Court decided that among the material considerations which a planning authority has to take into account is the compensation that may be payable to the party whose permission is to be revoked or modified. While this was an English case the relevant statutory provisions are identical and the reasoning will be applicable in Scotland.

The case

Wolverhampton City Council (the Council) granted planning permission for four blocks of student accommodation within 100 meters of a liquefied petroleum gas facility and contrary to the advice of The Health and Safety Executive (HSE). By the time the HSE discovered this, construction of three blocks was well-advanced. HSE asked the Council to revoke or modify the permission, as a minimum to prevent construction of the fourth block. The Council refused. In doing so the Council took into account that compensation would be payable to the developer. HSE sought judicial review of the Council’s decision and the Court of Appeal quashed the decision, but on different grounds. However, the Court of Appeal was divided on whether compensation is a material consideration. On appeal by HSE the Supreme Court was asked to determine the point.

The judgment

The HSE argued that compensation was not a material consideration and put forward four arguments:
(i)
the term “material consideration” must be read consistently throughout the planning legislation. It is well established that financial considerations are not a material consideration, except where they have planning consequences;
(ii)
if a planning authority can take financial impacts into account these could override compelling planning reasons for revocation. The planning authority could “trade” other demands on its limited finances against its planning functions;
(iii)
the planning authority may be tempted to deviate from the best planning decision due to its financial self-interest, so undermining the integrity of the planning system; and
(iv) if financial interests are material then the role of the development plan in the decision-making process is devalued.
The Supreme Court rejected these arguments and dismissed the appeal. Lord Carnwath began by endorsing a “simple view” that as a custodian of public funds the discretionary decisions of a public authority may, and usually must, have regard to the public purse. There was no reason why revocation or modification of a planning permission should require a different approach.
Rather it was a matter of the relative weight to be ascribed to matters of cost. Where, for example, there was an imminent risk to public safety it would be less likely that a Council could justify a refusal to revoke on the ground of cost, although cost may still be relevant where there was a choice between effective alternatives.

Turning to HSE’s arguments, Lord Carnwath rejected the “consistency” argument. The term “material consideration” should be treated as elsewhere in administrative law. It means a consideration material, or relevant, to the exercise of a particular power, in its statutory context, and for the purpose for which it was granted. When making a discretionary decision whether or not to “buy back” a planning permission the cost to the Council will be relevant. It was entirely consistent that for a decision taken in a different statutory context, such as the decision whether or not to grant planning permission, financial considerations would not ordinarily be material. As regards arguments (ii) and (iii) above the decision whether to revoke or modify is subject to judicial supervision. Although the decision is discretionary, a Council faced with a serious threat to public safety would find it difficult to defend the rationality of refusing to act based solely on financial grounds. The Court also noted that if the Council fails to act, the Secretary of State (or in Scotland, the Scottish Ministers) also has powers to make a revocation order. Nor does financial consideration undermine the development plan. The plan remains primary, although in practice it may have little to say on matters of revocation. However, the plan may have to give way to other considerations; and in deciding whether to act, or whether to achieve the planning objective by some other means, there is no good reason to exclude cost.

Comment

Revocation and modification orders are not widely used, no doubt in part because of the attendant liability to pay compensation. The Supreme Court judgment provides a sensible approach to the question of what is a material consideration in a particular statutory context. The Court naturally noted that planning permission cannot be “bought and sold”; the decision whether to grant permission must be based on planning considerations and should not be influenced by financial considerations. However, the decision whether to exercise a discretionary power to “buy back” an existing planning permission, at a financial cost to the public purse, can be distinguished. There is no reason why cost should not be one of the matters to be taken into account.