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Court of Appeal upholds rejection of CAAD appeal but rules Upper Tribunal did not have power to make costs order

The Upper Tribunal did not have the power to make a costs order in a dispute over a certificate of appropriate alternative development (CAAD), the Court of Appeal has found.

Northumberland County Council compulsorily purchased land from Leech Homes for construction of the Morpeth Northern by-pass.

Leech Homes applied for a CAAD on the grounds that a hypothetical application for planning permission for 135 homes would have been granted, so increasing the land’s value.

Northumberland decided that no planning permission would have been granted for development and Leech Homes unsuccessfully challenged that decision at the Upper Tribunal (UT).

In Leech Homes Ltd v Northumberland County Council [2021] EWCA Civ 198 Lord Justice Lewison said introducing the case that the appeal concerned whether the site was land to which green belt policies applied as the tribunal had found, and whether the UT had power to order Leech to pay Northumberland’s costs, which the tribunal had decided it did.

Lewison LJ, with whom Lord Justice Peter Jackson and Lord Justice Nugee agreed, said: “The crux of the decision was that the land in question was land to which Green Belt policies applied.

“It is now common ground that if the council and the UT were correct in that conclusion, then its decision on the application for a CAAD was correct; but that if they were wrong in that conclusion, then planning permission would have been granted for residential development because the council could not demonstrate a five-year supply of housing.”

He said Northumberland’s plan left the precise boundaries of the proposed extension to the Green Belt undefined.

Previous decisions suggested the council had not considered the site as Green Belt but the Upper Tribunal had held that Leech’s reliance on such previous decisions was misplaced, “because those decisions did not correctly determine the legal effect of Policy S5”, which covered Green Belt extensions.

Lewison LJ said: “I do not consider that it can be plausibly asserted that a decision based upon a legal premise which has been held to be erroneous is a material consideration in the context of planning decision-making.

“As the UT put it, a decision maker is not required or permitted to repeat the mistakes of his predecessor.”

Lord Justice Lewison added that Leech’s reliance on these past decisions “seemed to me to be little more than an attack on the UT's planning judgment, which is not permissible in the absence of a public law error”.

When Leech lost the appeal the UT decided it should pay Northumberland’s costs on the standard basis.

Lewison LJ said: “The argument that the UT accepted is that a challenge to a CAAD is part of the statutory code for the assessment of compensation on compulsory acquisition; and that it is artificial to try to divide up that code into discrete parts.

“The sort of issues that arise on an appeal against a CAAD may arise in the context of any dispute about compensation. The kinds of development that would be permitted in a ‘no scheme’ world are always relevant to value, whether the landowner has applied for a CAAD or not.

“The UT's jurisdiction to award costs cannot depend upon such procedural niceties.”

Leech argued that an appeal against a CAAD is a separate, and often preliminary, step towards the ultimate goal of the assessment and payment of compensation.

It was subject to its own statutory code, designed to replicate the outcome of an application for planning permission in the context of which costs are not usually awarded.

Lewison LJ said the Civil Procedure Rules 10 (6) (a) “cannot have been intended to capture CAAD appeals” because at the time these were not within the jurisdiction of the UT.

He said: “It would, in my judgment, have been surprising if the mere fact that the route of appeal against a CAAD had been changed was intended to effect a silent but radical change in the long-established practice of awarding costs in CAAD appeals.”

The judge concluded the power of the UT to make a costs order was not enlarged when CAAD appeals were transferred to it; and that in consequence the UT did not have the power to make the costs order that it did.

“It is a matter for the Tribunal Procedure Rules Committee to consider whether any change in the procedure rules is desirable,” he concluded.

Mark Smulian

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