Supreme Court rules on the timing of nutrient neutrality assessments

What is the Supreme Court’s decision in C G Fry & Son Limited v SoS for HCLG & Anor (UKSC / 2024 / 0108) and why does it matter?

This is an important decision for developers who may have struggled to implement planning permissions obtained before the Habitat Regulations came into force in June 2020 due to environmental issues such as nutrient neutrality.

It is also important as, despite its logic “in law”, it represents a derogation from the rational, now accepted, stance of taking positive action against the potential long-term environmental harms caused by development.

The Supreme Court has determined that, where outline planning permission reserves matters for the subsequent approval of the Council, the extent to which the Council can withhold its approval is restricted to the matters contained in the Reserved Matters. The Council is not permitted to go back on points of principle which it accepted when it granted the outline permission and the legal right was ‘crystallised’.

This has been a long battle and so it is worth going back to the beginning to fully understand its ramifications.

CG Fry’s development

It all started nearly a decade ago, in December 2015, when outline planning permission was granted to C G Fry & Son Limited (“Fry”) for a mixed use development including up to 650 new dwellings (“the Development”).  At that time, the Conservation of Habitats and Species Regulations 2017 (“the Habitats Regulations”) were not in force and so, naturally, no assessment was undertaken of the impact of the Development on habitats.

Some time into the build, and after the coming into force of the Habitats Regulations, in June 2020 Fry obtained Reserved Matters Approval for phase 3 of the Development. Regulation 63 of the Habitats Regulations requires that a competent authority, before deciding to undertake, or give any consent, permission or other authorisation for a plan or project which (a) is likely to have a significant effect on a European site or a European offshore marine site (either alone or in combination with other plans or projects), and (b) is not directly connected with or necessary to the management of that site, must make an appropriate assessment of the implications of the plan or project for that site in view of that site’s conservation objectives.

No appropriate assessment was undertaken at the Reserved Matters stage in June 2020.

Two months later, in August 2020, Natural England issued an advice note to Somerset West and Taunton Council which identified potential adverse effects on the Somerset Levels and Moors (a Ramsar Site, protected under the Ramsar Convention, and also a Special Protection Area under the Habitats Regulations) as a result of new housing and other forms of development. The Development sits in the catchment area for the River Tone, which feeds into the Levels, and it had been noted in Natural England’s advice that new developments in the river’s catchment area pose a risk to the nutrient neutrality of the river in that they have the potential to create an over-abundance of phosphates in the wastewater and surface water which enters the river and subsequently the Levels.

In the same advice note (after the Reserved Matters Approval had been given for phase 3 of the Development), Natural England also advised Somerset West and Taunton Council, as the competent authority, that “before determining a planning application that may give rise to additional phosphates within the catchment, competent authorities should undertake a Habitats Regulations Assessment proceeding to an appropriate assessment where a likely significant effect cannot be ruled out, even where the development contains pollution mitigation provisions”.

In June 2021, Fry applied to Somerset Council for the discharge of various pre-commencement conditions attached to the Reserved Matters Approval, for which consent must be given by the Local Planning Authority. Somerset Council withheld approval of the application to discharge the conditions on the basis that, as per Natural England’s advice of August 2020, an appropriate assessment was required before the conditions could be discharged.

Fry appealed to the Secretary of State (the Planning Inspectorate) against the Council’s decision to withhold consent, but the appeal was dismissed.  Fry then challenged that decision in the High Court and further in the Court of Appeal, both of which appeals were dismissed. The Supreme Court’s judgment is the UK courts’ final say on the matter.

The Rt Hon Lords Reed, Sales, Hamblen, Stephens and Lady Simler heard the case before them on 17/18 February earlier this year. Recordings of those sessions can be found here: https://www.supremecourt.uk/cases/uksc-2024-0108

A short 10 minute video of the reading out of the Supreme Court’s judgment by the Rt Hon Lord Sales is also published.

The Supreme Court appeal raised two issues: Firstly, it was argued by Fry that the Habitats Regulations do not require or authorise an “appropriate assessment” to be undertaken before a Council discharges conditions requiring the approval of Reserved Matters. Secondly, it was argued that, since the Habitats Regulations do not apply to Ramsar sites, there is no requirement in law or planning policy that an appropriate assessment be carried out at Reserved Matters or at the discharge of sub-conditions attached to that approval.

Judgment

The Court unanimously dismissed the appeal in the first issue but unanimously allowed the appeal on the second issue.

The Supreme Court held that the Court of Appeal interpreted the Habitats Regulations correctly. The purpose of the Habitats Regulations is to implement and follow the Habitats Directive, the object of which is to ensure that vulnerable sites are accorded a high degree of protection. Therefore, where there is potential impact on a site which is protected by the Habitats Regulations, the need for a Habitats Regulations Assessment would apply to a decision to give Reserved Matters Approval or to give approval under conditions attached to that approval where it would result in an authorisation for the project (i.e. the Development) to proceed.

In relation to the second point (that the Habitats Regulations do not apply to Ramsar Sites), the Supreme Court held that, “the grant of planning permission creates rights under the planning legislation to develop land in accordance with the permission”, and that, “The rights conferred by a grant of planning permission are defined by that grant and cannot be overridden or diluted by government policy”. It also held that the High Court judge and the Court of Appeal failed to take into account the nature of these rights.

Where approval for Reserved Matters in an outline planning permission is given subject to further conditions (sub-conditions), those sub-conditions have to fall within the ambit of the Reserved Matters as defined by the conditions set out in the outline permission.

Consequently, where outline planning permission reserves matters for the subsequent approval of the Council, the extent to which the Council can withhold its approval is restricted to the matters contained in the Reserved Matters. The Council is not permitted to go back on points of principle which it accepted when it granted the outline permission.

In this case, the Council and the appeal inspector revisited matters which had been approved at outline, relying upon national planning policy and the new scientific advice given by Natural England in August 2020 and did so in a way which could potentially rule out the possibility of any development. The conditions set out in the outline permission did not include any reference to the protection of the Ramsar site. It was therefore not open to the Council (or the appeal inspector) to refuse to discharge the sub-conditions in the Reserved Matters Approval on the basis that additional measures were required to protect the Ramsar site.

Why does this judgment matter?

This is a key turnaround by the Supreme Court following a bold move by a developer to take on a situation which just didn’t appear to sit comfortably within the protections offered by both policy and legislation.

Lord Charles Banner KC (one of the barristers who acted for the Appellant) said:

“Over 3 years after the inquiry, and following 4 rounds of litigation, they have been vindicated. The Supreme Court agreed with their submission (under Appeal Ground 2) that the effect of the development on the Ramsar site was a legally immaterial consideration in the context of the conditions in question, and NPPF para. 194 could not make material that which was legally immaterial.

“The effect of this is that the thousands of consented homes that were long held up across Somerset due to the stance taken by central and local government were unlawfully held up. When and where nutrient neutrality solutions in Somerset were finally identified, those developers making s.106 contributions for them to unlock sites which had permission but could not get pre-commencement conditions discharged, will have parted with huge sums which in light of the judgment should not have been demanded as a pre-requisite of discharging these conditions.”

The situation may change as a result of the imminent assent of the Planning and Infrastructure Bill, which currently proposes to afford the same protection to Ramsar Sites as they would have under the Habitats Regulations. And not before time.  However, final take-up of this proposal is somewhat in doubt as it goes against the current political direction of “Build, baby, build!”

Thoughts

This case is a double-edged sword for the “builders” and the “blockers”. It demonstrates the force of law in that, once a right is crystallised, the recipient of that right can rely on it wholeheartedly because the ability to revoke or place further requirements or restrictions on that right (regardless of the impact it may have on a wider scale) is not without repercussions of its own. The ability to take advantage of “loopholes” in existing (some might say flawed) legislation and policy which denies the ability to properly impose protections which serve to prevent harm occurring to important, globally recognised, habitats and species as a result of development, is stopped in its tracks. Whilst I entirely appreciate that legal rights must be upheld, it nevertheless feels a shame that the appellant in this case went to such enormous efforts in order to avoid the need to assess the environmental impact of this Development on the Levels (something which the government’s appointed advisor on nature had recommended), particularly now that we are facing a change in the law which would have enabled the Council to withhold consent in the absence of an appropriate assessment if such a site were to come forward in today’s world.

Significant financial implications resulted from this court case. Not just the cost to Fry of taking this ‘all the way’ (compared with the costs that might have been incurred in accepting the need for an assessment and providing the necessary mitigation), but also to the smaller developers whose proposals were stalled as a result and who have not managed to recoup their losses.

And when it comes to assessing the long-term financial burden faced by developers (big and small) as a result of the ‘unlawful’ hold up of development in Somerset, it would be interesting to see (although I doubt we will be privy to such information) how those burdens are going to be absorbed (either into existing or future projects) or passed on to the consumer.

And finally, what will be the real effect of all of this? Will it be the developers or the house-buyers who pay the price? Or will it be the protected habitats and the creatures which live within them? Can there be a ‘win-win’ in this situation? Only time will tell.

If you have any questions about the topics raised in this article, please get in touch.