Many a frustrated participant in the planning system has asked from time to time: is there any financial redress for mistreatment allegedly received at the hands of a local planning authority? (To be fair, sometimes a frustrated local planning authority may indeed also wonder what redress it has against mistreatment received at the hands of applicants or objectors).
Beyond the possibility of an award of costs on appeal (inadequate in that it will only cover professional costs in relation to the appeal stage rather than application stage, although still sometimes high, viz the figure of £2.1m reportedly agreed this week by Uttlesford District Council to be payable to Stansted Airport) or the possibility of obtaining a voluntary payment of compensation by way of a ruling by the Local Government Ombudsman, in what circumstances might the authority be sued in negligence?
The negligence route has now, expensively, been tested in Primavera Associates Limited v Hertsmere Borough Council (Leech J, 25 October 2022). Four days in what used to be known as the Chancery Division of the High Court, with various expert witnesses on both sides. It’s a horror story of a situation – what should have been a small and straightforward development project in Radlett, Hertfordshire promoted by Shandler Homes on behalf of Primavera Associates Limited. As is often the case in these situations, in the cold light of day neither party, neither applicant not local planning authority, could be said to have been entirely blameless.
As described from paragraph 36 onwards of the judgment, planning permission was granted on 3 September 2012 for the demolition of a house and the erection of seven self-contained apartments, following an application submitted on 13 January 2012. The planning permission was then challenged by the owner of the neighbouring property who had previously sought to redevelop it together with the Shandler Homes property and the council consented to judgment on the basis that a planning condition referred to a plan showing an incorrectly drawn visibility splay.
The application was then redetermined, with the council resisting submissions from the objector’s solicitors (supported by an opinion by Rupert Warren KC) that the application should now be assessed against the current development plan. Oh dear, another judicial review ensued and again the council consented to judgment.
A fresh application for permission was then submitted on 2 April 2014, for a very similar scheme. Delays ensued whilst financial viability appraisal work was undertaken to check whether the applicant’s proposed commuted sum towards affordable housing was sufficient.
By 14 November 2014 Shandler Homes and Primavera were threatening to bring proceedings in negligence against the council. Delays continued (I’m at paragraph 85 now – it really is a sorry tale) and by 14 October 2015 another letter was sent threatening proceedings in negligence. During this period CIL liability increased and then the council started to insist upon a clawback mechanism to secure 60% of any surplus that arose on a subsequent viability review to be carried out.
The application was resolved to be approved on 21 April 2016 and following fractious negotiations over the section 106 agreement, planning permission was issued on 28 September 2016.
A third application for planning permission was submitted on 30 September 2016, increasing the number of flats proposed from seven to ten, which was approved on 15 March 2017.
Primera sued Hertsmere Council for around £1.7m, which it claimed to be the losses suffered due to what it considered to be negligent conduct on the part of the council.
To turn briefly to the law. As I’m sure you know, in order to succeed in a claim in negligence it is necessary for the following factors to have been established:
- The defendant owed a duty to the claimant
- The defendant breached the duty owed to the claimant
- The defendant’s breach of duty caused the claimant to suffer loss
- The loss caused by the defendant’s breach of duty is recoverable
Duty of care
From paragraph 179 Leech J sets out the case law in detail as to when a duty of care arises, and does not arise. This includes, at paragraphs 203 to 215, the case law in relation to planning matters.
His findings start at paragraph 221. First of all no duty of care arose as a result of the statutory nature of the functions being undertaken by the council. The council did not give “any assurance to Shandler Homes that it would decide either application in a particular way or within a particular time. In either case, the remedy was to appeal.” The fact that an application fee was paid did not change the analysis, or indeed lead to a contractual relationship between the parties. In any event, any duty of care would not have stretched beyond Shandler Homes to Primavera and other entities related to the promotion of the development. No could any assumption of liability be inferred from the manner in which the council had behaved towards Primavera:
“(1) I have found that the Council’s officers and the Committee’s members did not give any commercial or legal advice to Primavera or to Fusion (on its behalf) upon which Primavera (or Fusion) relied in relation to the First Application either when it was originally submitted or when it was submitted in a revised form.
(2) I have also found that Mr Down took a calculated decision not to appeal against the non-determination of the Second Application in the knowledge that the position was uncertain and changing. I am satisfied that Primavera chose to take the risk of any delay or flaw in the statutory process rather than to appeal.
(3) But even if (contrary to my finding of fact) Mr Down did not consider an appeal to be a realistic option because Mr Taylor and he did not know what they would have been appealing against, I have also held this belief was an unreasonable one and not induced by any representation or assurance made by the Council.
(4) I have found that in the period between 13 April 2013 and 27 September 2016 the Council did not assume responsibility for the progress and determination of the Second Application within a specific time frame or within a time which Mr Taylor or Mr Down considered reasonable. I have also found that Fusion and Primavera adopted a confrontational and heavy-handed approach. In my judgment, Mr Taylor’s complaints and the Letters of Claim which Lawrence Stephens sent to the Council negated any reliance by Primavera upon the competence or efficiency of the Council.”
He concludes that the claim fails because the council did not owe any duty of care to Primavera to exercise reasonable care in processing and determining the applications.
However, he goes on in any event to consider the further issues: breach of duty, causation and assessment of damages (if his finding on duty of care were to be overturned on appeal).
Breach of duty:
“If the Council owed a duty of care (contrary to my finding above), then I find that it committed a breach of that duty and failed to exercise reasonable skill and care by determining the revised First Application by reference to the planning policy at the date on which the First Application was submitted and not by reference to the emerging planning policy at the date of the Second Decision. For the avoidance of any doubt, I add that I do not find that the Council failed to exercise reasonable care in relation to any other aspect of the First Application or the First and Second Decisions.”
“If the Council owed a duty of care (contrary to my finding above), then … I also find that the Council was negligent and responsible for a six-month delay in the progress of the Second Application between January and July 2015. I dismiss all of the other allegations of negligence and lack of reasonable care against the Council.”
“I also find on a balance of probabilities that if the Council had acted with reasonable care throughout the period between the submission of the Second Application on 2 April 2014 and 27 September 2016 when the Second S106 Agreement took effect, it would have taken six months less to progress and determine the Second Application and the Council would have issued the Third Decision by 21 October 2015. However, I would also have found that the conduct of Shandler Homes broke the chain of causation because (as I have found) Mr Down took a calculated decision not to appeal against the non-determination of the Second Application at any time between 3 June 2014 and 3 December 2014 (or to negotiate an extension of time for an appeal).”
Assessment of damages:
“If I had found that the Council owed such a duty of care, I would also have found that the Council had committed two breaches of duty and that if it had not committed the first of those breaches of duty, it would have granted planning permission for the Second Application on 28 January 2014. I would, however, have dismissed all of the heads of loss claimed by Primavera apart from the claim relating to the Affordable Housing Contribution and the Additional Housing Contribution. Primavera adduced no evidence to prove these losses at trial and even this is wrong I would not have awarded any more than £134,724.80 in damages.”
The case certainly brings with it some salutary lessons – about trying to avoid the sort of breakdown of trust between the parties which led to so many flashpoints and mistakes on both sides. The applicant’s team, seeing life from its perspective, increasingly concerned about the cost, expense and uncertainties arising from what should have been a straightforward planning application process, was no doubt furious at the clangers on the part of the council’s officers and the timescales to which they were working. It’s easy to say perhaps from a distance, but a more consensual approach, providing good objective advice for the benefit of all parties where necessary, might have been more fruitful for the applicant than resorting to what the judge described as a “confrontational and heavy-handed approach”. And litigation, ultimately, was not the answer.
In other news, has Elon Musk found any Clangers on Mars yet? Plenty of surprises left for the rest of 2022 I’m sure.
Simon Ricketts, 29 October 2022
Personal views, et cetera