Legal Viewpoint - Costs mount up in permission errors

Two cases involving councils granting planning permission in error have highlighted the difficulties these mistakes create for public authorities and developers.

Alex Ground
Alex Ground

Ryedale District Council is going through the courts after it granted consent to 260 homes when a councillor opposed to the scheme inadvertently pressed the wrong button and voted in favour. Meanwhile, West Devon Borough Council is counting the cost after planners mistakenly allowed unrestricted development at a retail park.

Public authorities have the power to revoke permissions under section 97 of the Town and Country Planning Act 1990. However, this power can only be exercised before an authorised development is completed and revocation has no effect against any operations already carried out. Under section 107, if permission is revoked, authorities must compensate the person benefitting from the consent for any loss or incurred expenditure. Compensation may be payable for abortive expenditure on preparation for and work done in reliance on the permission, or for any other loss or damage directly attributable to the revocation, including depreciation in the value of the applicant's interest in the land.

Loss or damage in particular can make compensation very significant. Ryedale District Council would have to pay Gladman Developments an estimated £3 million for abortive expenditure and £5 million on other losses if it were to revoke the permission. A further complication is that public authorities are legally obliged to consider the cost to the public purse before paying compensation, following the Supreme Court ruling in Health and Safety Executive v Wolverhampton City Council (2012). They may, therefore, be unable to revoke errors due to the expense.

An alternative option is to seek judicial review of the erroneous decision, but councils are barred from judicially reviewing their own decisions. In the West Devon case, the council leader therefore brought a judicial review in a personal capacity, but was held to have been out of time in doing so. If a judicial review were successful and the permission quashed, there would be no compensation for the developer.

The waters have been further muddied by a recent case involving a site in Malmesbury, Wiltshire. The Planning Inspectorate (PINS) mistakenly sent out a letter granting permission on appeal, only to inform the developer the very next day that the letter had been sent in error. The developer applied for judicial review of the revocation. Its claim for compensation was dismissed on the grounds that PINS should not be bound by a simple administrative mistake. It was also held that the decision had no legal effect as the appeal had been recovered by the secretary of state. PINS' prompt action to rectify the mistake was key, because the developer incurred no extra costs in reliance on the permission.

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