You have probably heard about an important judgment handed down by the Supreme Court that has significant implications for the sequential test for main town centre type development, like retail, offices, and leisure. It is so important to what you do, that we wanted to remind people about it and clarify its main points.
In short, it means that a sequentially preferably site must be suitable to accommodate the development as proposed (with due regard to flexibility), rather than being suitable for the development for which there is an acknowledged ‘need’. The result is that a local planning authority cannot refuse an application for an out-of-centre development on the basis that a smaller development is all that is needed, and which might be accommodated on a site in or on the edge of the town centre.
We have summarised the Judgment below - please get in touch with us if you would like to discuss how this could affect your development proposals.
In Tesco Stores Ltd v Dundee City Council  UKSC 13, on the 21st March 2012 the Supreme Court rejected Tesco’s challenge to Dundee City Council’s decision to grant planning permission to an Asda store. The case hinged on whether, in making its decision, Dundee City Council had misunderstood one of its policies relating to the sequential test. The judgment established two important principles relating to interpretation of planning policy generally, and the sequential test specifically.
Firstly, it established that, contrary to popular belief, decision makers cannot interpret planning policy in any way they choose, subject only to the limits of rationality. Rather, the interpretation of planning policy is a matter of law.
The second principle follows on from the first, in that it established the objective interpretation of the sequential test within planning policy. The key question was, when assessing whether a ‘suitable’ town centre site was available, whether ‘suitable’ meant suitable for the proposed development, or suitable to meet identified deficiencies in retail provision in the area. It was concluded that the natural reading of the policy is that the word ‘suitable’ refers to the suitability of sites for the development specifically proposed.
The Dundee Judgment reinforced the views expressed by Lord Glennie in Lidl UK GmbH v The Scottish Ministers  CSOH 165. Lord Glennie said a site would be suitable in terms of policy only if it was suitable for, or could accommodate, the development as proposed by the developer. The question was whether the alternative town centre site was suitable for the proposed development, not whether the proposed development could be altered or reduced so that it could fit into it.
Whilst the Dundee Judgment related to the application of Scottish planning policy, the judgment and statements hold true for planning policy in England. A natural reading of paragraph 24 of the National Planning Policy Framework is that ‘suitable’ refers to suitability for the proposed development. To say that ‘suitable’ refers to suitability to meeting an identified need would be to attribute a meaning to the policy which is not contained within the policy wording.
Dundee in Action
In granting outline permission at appeal for an out-of-centre foodstore in Newport, Shropshire, the Appeal Inspector’s comments on the sequential test support the Dundee Judgment that the suitability of sites should be assessed against the proposed development rather than ‘need’. The Inspector noted that, in a previous appeal case, two sites near the town centre were found by an Inspector to be suitable, but that this was in the context of a proposal for a smaller retail unit. The Inspector stated “even allowing for some flexibility it is difficult to see how either site would be suitable in terms of its configuration and size for the type of foodstore being proposed in the present appeal”.
The Dundee Judgment also made important statements upon the need for applicants to demonstrate flexibility. The emphasis is on both flexibility and realism. Lord Reed referred to R v Teesside Development Corporation, ex parte William Morrison Supermarkets plc and Redcar and Cleveland BC  JPL 23, 43, and stated that
“to refuse an out-of-centre planning consent on the ground that an admittedly smaller site is available within the town centre may be to take an entirely inappropriate business decision on behalf of the developer”.
Lord Hope emphasised the need for the sequential assessment to function in the real world, stating
“developments of this kind are generated by the developer’s assessment of the market that he seeks to serve. If they do not meet the sequential approach criteria, bearing in mind the need for flexibility and realism to which Lord Reed refers in paragraph 28, above, they will be rejected. But these criteria are designed for use in the real world in which developers wish to operate, not some artificial world in which they have no interest doing so”.
The Dundee Judgment confirmed ,that a flexible approach must be adopted towards development proposals. Asda did not confine its assessment to sites which could accommodate the development in the precise form in which it had been designed, but examined sites which could accommodate a smaller development and a more restricted range of retailing.
Our Advice to You: Whilst you will need to demonstrate a degree of flexibility, this does not mean you have to compromise on the form and scale of development you consider to be necessary, based on your assessment of the market.