R (on the application of Sainsbury’s Supermarkets Ltd) v Wolverhampton City Council and another

A local authority exercising compulsory purchase powers for development purposes may consider off-site benefits only where they have a real connection with the proposed development. The connection must be more than a developer’s promise to undertake an unrelated project if selected.

Because compulsory acquisition seriously invades property rights, the statutory power requires strict application. Section 226(1A) of the Town and Country Planning Act 1990 limits the section 226(1)(a) power; it does not enlarge the considerations relevant to its exercise. Nor may an authority rely on its anticipated power to dispose of the acquired land to introduce an extraneous benefit into the prior acquisition decision.

Sainsbury’s controlled 86% of a site at Raglan Street, Wolverhampton, and Tesco controlled most of the remainder. Each proposed an acceptable redevelopment, but neither would sell to the other. The Council therefore proposed to acquire Sainsbury’s interests compulsorily and transfer the assembled site to Tesco.

Tesco also controlled the separate Royal Hospital site. It promised to undertake the Council’s desired, commercially unattractive redevelopment of that site if permitted to develop Raglan Street. The Council treated that commitment as the decisive advantage of Tesco’s scheme.

Elias J dismissed Sainsbury’s judicial review claim. The Court of Appeal, Sullivan LJ giving judgment with Ward and Mummery LJJ, dismissed its appeal: [2009] EWCA Civ 835. The Supreme Court considered whether the unrelated Royal Hospital benefit was lawfully relevant under sections 226(1)(a) or 226(1A) of the Town and Country Planning Act 1990.

1. By a majority, the appeal was allowed. Lord Collins gave the principal judgment. Lord Walker, Lady Hale and Lord Mance agreed and supplied further reasons. Lord Phillips, Lord Hope and Lord Brown dissented as to the result.

2. Section 226(1A) of the Town and Country Planning Act 1990 imposes an additional limitation upon the power in section 226(1)(a). The acquisition must first fall within section 226(1)(a). Only then must the authority consider whether the development on or in relation to the acquired land is likely to contribute to the area’s economic, social or environmental well-being. Section 226(1A) does not enlarge the matters relevant under section 226(1)(a).

3. Off-site benefits may be relevant to compulsory acquisition, but there must be a real rather than fanciful or remote connection between those benefits and the development for which the land is acquired. A stricter approach applies than in an ordinary planning decision because compulsory acquisition seriously invades proprietary rights. A developer’s contractual promise to undertake an unrelated development if selected does not supply the required connection.

4. The Royal Hospital redevelopment was physically and functionally unconnected with the Raglan Street development. Its only links were Tesco’s promise and contractual commitment to undertake it if Tesco obtained Raglan Street. The description of that arrangement as a cross-subsidy did not make it relevant. The Raglan Street development would not, in any legally relevant sense, produce the well-being benefits of the Royal Hospital development.

5. The anticipated disposal of the acquired land under section 233 could not validate the acquisition. The Council could not separate the compulsory purchase of Sainsbury’s property from the prearranged transfer to Tesco and use an extraneous disposal benefit to justify taking the property. Competition between the two developers did not alter the considerations admissible under section 226.

6. The Court declared that the opportunity to redevelop the Royal Hospital site was not a lawful consideration when deciding whether to make a compulsory purchase order for the Raglan Street site.

1. United Kingdom Supreme Court: By a majority of 4–3, allowed Sainsbury’s appeal and declared the Royal Hospital redevelopment an unlawful consideration in deciding whether to make the compulsory purchase order: [2010] UKSC 20 .

2. Court of Appeal: Sullivan LJ, with Ward and Mummery LJJ, dismissed the appeal and held that the off-site well-being benefits fell within section 226(1A) of the Town and Country Planning Act 1990: [2009] EWCA Civ 835 .

3. High Court: Elias J dismissed the judicial review claim. He held that the off-site benefits fell outside section 226(1A), but could be considered when choosing between developments which each independently justified compulsory acquisition: [2009] EWHC 134 (Admin) .