Tesco Stores Limited v Dundee City Council (Scotland)

A development plan is interpreted objectively according to its language and context. Its meaning is a question of law for the court. The application of broad policy language to particular facts may instead require planning judgment, reviewable only for irrationality or perversity.

Under the sequential approach to retail development, a “suitable” alternative site means one suitable for the proposed development. The applicant must nevertheless show flexibility and realism by considering the town-centre context, different forms or scales of development, and sequentially preferable locations. Once that exercise has been undertaken, the question is whether the alternative site suits the proposal, not whether the proposal can be reduced further to fit it. An interpretive error is material only where there is a real possibility of a different determination.

Tesco Stores Limited v Dundee City Council (Scotland) concerned planning permission for an out-of-centre superstore on a derelict former industrial site. The council considered the proposal contrary to parts of the development plan but concluded that substantial economic and planning benefits justified permission under sections 25 and 37(2) of the Town and Country Planning (Scotland) Act 1997.

Tesco challenged the council’s interpretation of the requirement that no “suitable” site be available in or on the edge of designated centres. Its argument was rejected by the Lord Ordinary, [2010] CSOH 128, and by the Second Division, [2011] CSIH 9; 2011 SC 457.

The central questions were whether interpretation of the policy was a matter of law or planning judgment, whether suitability referred to the development proposed, and whether the council’s determination was vitiated by legal error.

1. Disposition. The Supreme Court unanimously dismissed the appeal and affirmed the Second Division’s interlocutor. Lord Reed delivered the principal judgment, with which Lord Brown, Lord Kerr and Lord Dyson agreed. Lord Hope agreed with Lord Reed and added reasons concerning the sequential approach.
2. Interpretation of development plans. Sections 25 and 37(2) of the Town and Country Planning (Scotland) Act 1997 require a planning authority to understand the relevant development-plan provisions properly. The meaning of a policy is determined objectively from its language and context. It is a question of law for the court, not a matter on which the authority has freedom subject only to rationality review. This followed the approach in City of Edinburgh Council v Secretary of State for Scotland 1998 SC (HL) 33.
3. Planning judgment. A development plan is not construed as though it were a statute or contract. Broad policies may conflict, and their application to facts often calls for planning judgment. Such judgment is reviewable only for irrationality or perversity. The court must therefore distinguish the legal meaning of a policy from the authority’s evaluative application of that policy.
4. The sequential approach. The natural and contextual meaning of “suitable” was suitable for the development proposed by the applicant, rather than suitable for meeting an identified deficiency in retail provision. The latter interpretation would conflate two separate policy criteria. The national guidance forming the policies’ context also focused on sites capable of accommodating the proposed development. The interpretation adopted in Lidl UK GmbH v Scottish Ministers [2006] CSOH 165 was approved.
5. Flexibility and application. The proposal’s characteristics were not necessarily definitive. The developer had to act with flexibility and realism, consider the circumstances of the town centre, examine different forms or scales of development, and assess sequentially preferable locations thoroughly. Once that had been done, however, the question remained whether the alternative site was suitable for the proposed development, not whether the proposal could be altered or reduced to fit it. The applicants had considered smaller and more restricted developments. The council was entitled to judge that the much smaller Lochee site, with inadequate parking, was unsuitable.
6. Materiality. Misinterpreting one part of a policy may distort the authority’s assessment of the nature and extent of a departure from the development plan, even where the proposal remains contrary to the plan. Nevertheless, an interpretive error is material only if there is a real possibility of a different determination. The powerful, development-specific economic and planning benefits meant that no such possibility existed here.

1. United Kingdom Supreme Court: By [2012] UKSC 13 , unanimously dismissed the appeal and affirmed the Second Division’s interlocutor.
2. Second Division of the Inner House of the Court of Session: By [2011] CSIH 9; 2011 SC 457, rejected the challenge, holding that the alleged misapplication of the sequential approach was beside the point because the proposal was already contrary to the development plan.
3. Outer House of the Court of Session: By [2010] CSOH 128, the Lord Ordinary rejected Tesco’s argument on the basis that interpretation of planning policy was primarily for the planning authority and was reviewable for unreasonableness.