Riverside Park Ltd, R (on the application of) v Secretary of State for Levelling Up, Housing and Communities

EU regulations governing structural-fund durability exhaustively determine the conditions for clawback arising from substantial modification. National authorities cannot impose stricter durability requirements through legislation, policy, contractual terms or undertakings. Once the prescribed five-year period has passed without the specified disqualifying conduct, the funding must be retained as regards durable impact and substantial modification.

A judicial review challenge to an attempted later clawback is not necessarily out of time merely because the claimant knew of the contractual provision when funding was granted. A public authority must take account of an earlier policy decision that is obviously relevant, even where that decision is not a prescriptive policy engaging the stricter duty of adherence. A method of calculating discretionary partial clawback is ordinarily an evaluative matter for the primary decision-maker.

Riverside received European Regional Development Fund grants in 2005 and 2007 for office development. The funding arrangements contained contractual clawback provisions applying during a 20-year economic life. Riverside proposed changing the site from offices to housing after the relevant five-year periods but before 20 years had elapsed.

The Department decided that clawback was appropriate because housing was outside the Programme Eligibility Rules. It calculated the sum using a straight-line method. Riverside sought judicial review, challenging the compatibility of the contractual clawback power with the EU regulations, the timeliness of the claim, the refusal of relief, and the calculation method.

1. EU legality. The claim succeeded on the principal issue. Article 30(4) of Council Regulation (EC) No 1260/1999 and Article 57(1) of Council Regulation (EC) No 1083/2006 exclusively determined the conditions governing durability and substantial modification. The provisions required retention of funding where the specified disqualifying conduct had not occurred within five years. National authorities could not impose stricter requirements concerning the type of change, the starting date or the duration of the relevant period.
2. The restriction applied to national rules in substance, not merely to legislation. A policy or practice requiring contractual terms or undertakings could not lawfully achieve what legislation could not. The CJEU authorities, including Comune di Ancona, Järvelaev and Achilleion, supported that conclusion.
3. Delay. The challenge was not out of time. Legal validity may appropriately be raised when a provision is applied to the person affected, including by way of defence to enforcement. The EU provisions had an ongoing temporal focus, and an attempted clawback in years six to 20 was a proper subject of challenge.
4. Relief and policy. The court rejected the inconsistency and fettering grounds. However, the Department had failed to have regard to the May 2011 Policy Decision, which was obviously relevant. That decision was not a prescriptive instrument engaging the full Lumba duty of adherence, but disregarding it was an elementary public law error. The court would alternatively have treated the policy-adherence duty as applicable.
5. The straight-line calculation challenge failed. Once a lawful and reasonable power of partial clawback was assumed, selecting the calculation method was an evaluative judgment for the Department and the challenge was a merits disagreement.
6. The 2022 decisions were quashed. A declaration was made that the Defendant was not entitled to require clawback on the proposed post-five-year change of use. The Department was ordered to pay £30,000 costs. Permission to appeal was refused on Grounds 1 and 2 and not granted on Ground 3 because it was immaterial to the outcome.