[2025] UKUT 312 (LC)

In their joint judgment Lord Sales and Lord Hamblen, (with whom Lord Kitchin, Lord Leggatt and Lady Rose agreed)identified six principal issues at [55], the first of which was whether taking account of CAAD applications or decisions was precluded by the cancellation assumption.

Quintain’s case before the Supreme Court, recorded at [59], was that the cancellation assumption required the existence of CAADs or applications for CAADs to be entirely disregarded, because they were a direct consequence of the HS2 scheme so would not have existed if the scheme had been cancelled. The Court rejected that argument, for the reasons it gave at [60]-[65]:

“60.

The question to be addressed under section 14(4) is whether at the valuation date planning permission could reasonably have been expected to be granted. That question is to be determined making the assumptions required in subsection (5) but otherwise “in the circumstances known to the market at the relevant valuation date”. In answering that question no restriction is placed on the evidence which can or cannot be used other than that it must be circumstances known to the market. If it is, then any relevant real world evidence may be relied upon.

61.

For example, in the real world a CAAD application or decision may have been made in relation to land other than the land in issue prior to the valuation date and this might be known to the market. If the making of that application was relevant to whether planning permission could reasonably have been expected to be granted in respect of the land in issue (which is a different question), then it could properly be taken into account. There is nothing in section 14 which precludes consideration of relevant, real world evidence which is known to the market as at the relevant valuation date for the land in issue.

62.

The statutory question has to be answered on the assumptions set out in section 14(5) but no further assumptions, including consequential assumptions, are required to be made. As the Upper Tribunal stated at para 46: “It is true that all four CAAD applications were a consequence of the scheme, and that, but for the scheme they would not have been made. But in the absence of a statutory direction that is not a good enough reason to assume them away or disregard them.”

63.

As Lord Hope of Craighead stated in Fletcher Estates (Harlescott) Ltd v Secretary of State for the Environment [2000] 2 AC 307 (“Fletcher Estates”), at p 324, CAAD applications should be determined by “applying ordinary planning principles to the existing circumstances” at the relevant date. Provided they are known to the market, there is no reason to exclude from consideration any relevant existing circumstances.

64.

This is consistent with the reality principle, a fundamental principle of valuation. As Lord Neuberger stated in Spirerose at para 50:

“…if a statute directs that property is to be valued on an open market basis as at a certain date, one would not expect any counterfactual assumptions to be made other than those which are inherent in the valuation exercise (such as the assumption that the property has been on the market and is the subject of a sale agreement on the valuation date) or those which are directed by the statute”.

65.

In addition, it would be odd to say that evidence which happens to exist in the real world which is capable of providing relevant assistance in answering the questions to be addressed in constructing the cancelled scheme world under the LCA regime should be ignored. It would require clear statutory language to produce such an effect, and there is none in the LCA. So if CAAD applications or decisions are capable of being a source of relevant evidence, the LCA does not preclude reference being made to them.”

At this stage of the Supreme Court’s analysis, it was concerned only with the admissibility of evidence, as is clear in particular from [60] and [65]. The answer to the admissibility question was that no restriction was placed by section 14(4)-(5) on the evidence which could be relied on in a CAAD application other than that it must be of circumstances known to the market at the relevant valuation date. The questions which followed were concerned with the use which could be made of evidence which shed light on circumstances known to the market about the Appeal Site or about the adjoining sites, where that evidence was of, or was contained in, an application for a CAAD or a granted certificate.

The Supreme Court recorded, at [67], that there was substantial agreement between the parties regarding the ways in which, where an application is made for planning permission to develop land in a particular way, the possibility of development of other land, or the existence of applications for planning permission to develop other land, or the existence of planning permission already granted to develop other land, may be material considerations affecting whether planning permission should be granted for development of the land at issue. In particular:

Having described how in principle the prospect of development on other land may be a material planning consideration in the real world, the Supreme Court went on to consider the circumstances in which CAAD applications and decisions relating to land other than the land in issue may be relevant and could be taken into account in a determination under section 17.

The Supreme Court restated an important principle at [74] to [76], where it confirmed that “no process of speculation about the notional period between the cancellation date and the valuation date is authorised” by section 14. Because such speculation was not authorised by the statute, it was precluded by the reality principle. It could not therefore be assumed that notional applications for planning permission had been made or granted or that other imaginary events had occurred during that period. That was consistent with Fletcher Estates and with Parliament’s intention with regard to the operation of the CAAD regime, as Lord Sales and Lord Hamblen explained at [76]:

“It is not plausible to infer that Parliament intended the section 14 regime to operate on the basis of such an uncertain and speculative methodology. On the contrary, section 14 is drafted so as to specify a reasonably certain process of assessment of the value of the land in issue, focusing on circumstances as they actually exist (subject to the cancellation assumption) at the valuation date and based on an objective set of circumstances as known to the market at that date. Parliament intended that there should be reasonable certainty in the approach to be adopted, having regard to the body which could be called on under section 17 to apply it (the local planning authority).”

After noting, at [85], that there could be no objection to reliance on information submitted in support of a CAAD application for another plot of land if that information reveals something relevant about the circumstances known to the market at the valuation date for the land in issue, the Supreme Court focused on the issues of alternative sites and cumulative impacts. At [87] it identified two situations in which those issues might arise:

“In principle, the local planning authority may be required to assess whether “in the circumstances known to the market” at the valuation date it could reasonably have been expected that other sites would be brought forward for development in a manner which might engage the alternative sites, cumulative impacts and incompatibility points in the same way as they could be engaged in relation to an application for planning permission for the land in issue in the real world. Clearly, to the extent that planning permission already existed at that date for development of other land, those points would potentially arise with reference to such planning permission: see section 14(2)(a) and para 70 above. There is no reason in principle why the same should not be true in relation to other land where planning permission had not yet been granted but, in the circumstances known to the market at the valuation date, it was reasonable to expect that an application for such permission would be brought forward within a reasonable time such as potentially to engage those points.In any event section 14(2)(b) provides that account may be taken of the prospect as at the valuation date of planning permission being granted for development on other land. Section 17(5) supports the view that the local planning authority is required to perform what is essentially the same assessment exercise for the grant of planning permission in relation to the land in issue as would have been required in the real world, including by specifying relevant conditions, but painting with a broad brush on the basis of the general information known to the market at the valuation date.”

The Supreme Court therefore considered that both existing planning permissions, and applications which had not yet been made but which, in the circumstances known to the market at the valuation date, it was “reasonable to expect […] would be brought forward within a reasonable time”, could trigger consideration of alternative sites and cumulative impacts. That was both a consequence of taking account of matters known to the market on the valuation date, and separately (“in any event”) a consequence of section 14(2)(b) which expressly permits taking account of “the prospect of planning permission being granted on or after that date for development, whether on the relevant land or other land”.

Quintain had submitted to the Supreme Court that it would not be right to assume that any application for planning permission would be made by the owner of other land in the vicinity of the Appeal Site; nor would it be right to assess the notional application for planning permission in respect of the Appeal Site in the light of notional applications for planning permission which might be made in respect of other sites, by reference to the alternative sites, cumulative impacts or incompatible development points. But the Supreme Court rejected that submission, for reasons explained at [89]-[94]. Those points would be relevant “where on a reasonable assessment it can be seen that they would have had a significant part to play in a real world planning assessment” (at [89]). The Court described what it had in mind, at [91], as follows:

“In order to know whether the alternative sites, cumulative effects or incompatibility points could reasonably have been expected to affect the planning permission to be granted for the development of the land in issue it may be necessary for the local planning authority to make an assessment of what applications for development of other land in the vicinity would reasonably have been expected as at the valuation date to be made and granted (such an assessment is not required insofar as planning permission has already been granted in relation to the other land, since the precise nature of that permission is already known: section 14(2)(a) and para 70 above). The local planning authority has to make that assessment as best it can on the same broad brush basis as it has to apply under section 14(4)(b) in relation to other aspects of the facts in light of the circumstances known to the market.”

That assessment is to be conducted purely by reference to objective circumstances known to the market, which will have the effect of excluding consideration of private motives. Those objective circumstances will include “an appreciation that a landowner holding land for development may be expected to seek to maximise the value of its investment by bringing that land forward for development”, especially where the land has been cleared for development and has no productive use unless it is developed ([90]). Other relevant objective circumstances may be gleaned from CAAD applications, as the Court explained at [92]:

“92.

The question arises whether the fact that a CAAD application has been made in respect of such other land can potentially be taken into account as suggesting that, in the cancelled scheme world, it could reasonably be expected that the owner of that other land would have made a planning application for the same development as specified in the CAAD application or any other development. We consider that CAAD applications in respect of other land, along with the material submitted in support of them, may have some relevance in showing how the market would expect landowners holding land ripe for development to seek to develop their land. Such landowners would be expected to act to maximise their returns by focusing development proposals for their land on the most profitable forms of development likely to be appropriate for the area in question. Similarly, landowners who make CAAD applications are likely for ordinary reasons of self-interest to press for a CAAD for patterns of development which would reflect the highest contribution to the value of their land. Accordingly, if the CAAD applications in relation to plots of land in the same general area revealed a pattern in terms of the development sought to be reflected in the CAADs, that could provide some evidence to show how market actors would have been likely to respond to known market circumstances at the valuation date for the land in issue in the cancelled scheme world. It might furnish a practical illustration of the way in which the market would expect owners of land suitable for development to be likely to have sought maximum profit from their land and hence provide some evidence bearing on the question of what planning applications could reasonably have been expected to be made, assessed at the valuation date, by owners of development land other than the land in issue. Such evidence might supplement general expert economic evidence directed to the same point. It might also supplement information about such matters derived from general experience of the pattern of planning applications in the past in the real world in respect of the area.”

The relevance of CAAD applications is therefore twofold: they may provide evidence about known market circumstances at the valuation date; and they may “furnish a practical illustration”, or provide “analogies”, ([93]), of the way the market, possessed of that knowledge, would have expected sites to be developed. But the relevance and utility of those illustrations and analogies is a matter of assessment:

“[93] … The extent to which information in a CAAD application or information from planning applications in the real world provide material capable of providing analogies relevant to an assessment of such matters for the purposes of the construction of the counterfactual world in section 14(4)(b) will depend on how closely the circumstances in each case are comparable. This would be a matter for the assessment of the local planning authority (or the Upper Tribunal, as the case may be), subject to the usual constraints imposed by general public law.”

A number of points emerge clearly from these passages about the exercise required by section 14(4) of determining, on the basis of the cancellation assumption but otherwise in the circumstances known to the market, what planning permission could reasonably have been expected to have been granted at or after the valuation date for development on the Appeal Site. First, there is no room for speculation about events which might have occurred in the notional period between the cancellation date and the valuation date. Secondly, it is permissible to take into account applications for planning permission which it was reasonable to expect at the valuation date would be brought forward within a reasonable time. Thirdly, any such expectation that applications for planning permission may come forward must be based solely on circumstances known to the market. Fourthly, CAAD applications may provide analogies or illustrations ofhow the market would have been likely to respond to known circumstances at the valuation date. And finally, having constructed the circumstances in which the assessment falls to be made, the assessment itself is to be made applying ordinary planning principles.

Before us the main issue of principle between the parties concerned the correct approach to the assessment of cumulative impacts in light of the Supreme Court’s decision. The issue arose in the context of agreed facts concerning the planning history and status of sites 2, 3 and 4 and a broad consensus between the experts on market circumstances at the valuation date. As the rival approaches permeated the evidence on matters of planning judgment it is convenient to consider them at this stage, before looking in detail at those matters.

We were referred to additional authorities, and although, as Mr Williams KC pointed out, none of them was concerned with a CAAD application, it was not disputed that they established relevant principles.

In R (Littlewood) v Bassetlaw District Council [2009] Env. L.R. 407 a planning permission granted for phase 1 of what was hoped would be a wider regeneration project was challenged on the grounds that there had been no consideration of the cumulative effect of phase 1 together with the future proposals for the wider area. That challenge was rejected, and it was found that the planning authority had been entitled to treat the application as a stand-alone development because there was no way of knowing what development was proposed or was reasonably foreseeable on the rest of the site, and no adequate information on which a cumulative assessment could be based.

Littlewood was distinguished in Pearce v Secretary of State for Business Energy and Industrial Strategy [2021] EWHC 326 (Admin) where a failure to assess the cumulative effects of two adjacent offshore windfarms which were closely related and would share on shore infrastructure was quashed. Unlike Littlewood, where the wider development was “inchoate” and no proposals had yet been formulated, in Pearce the proposals for the second project were known and the promoter of the first project had put forward information on the second to enable cumulative impacts to be evaluated.

Although Littlewood and Pearce both concerned the need for environmental impact assessments, which are the subject of specific statutory provisions requiring consideration of the cumulative effects of existing or approved projects, it was not suggested that the approach they illustrated was of limited application. It was common ground that the cumulative effects of development on the Appeal Site and adjoining sites were material considerations, at least because of the existence of a number of real-world planning permissions at the valuation date.

Mr Williams KC submitted that what was proposed on sites 2, 3 and 4, and the cumulative effects of the development proposals across all four sites, were material planning considerations for the purpose of determining Quintain’s application in respect of the Appeal Site. As a minimum, the development plan (to which we will come later) was said to require a coordinated approach to the development of sites and the delivery of its objectives for Eastside which made it necessary to have regard to development which would be expected to come forward on adjacent sites. More controversially, Mr Williams KC submitted that the decision of the Supreme Court supported reliance on the CAAD applications on sites 2, 3 and 4 as an indication of the development proposals which could reasonably have been expected to come forward and which a reasonable planning authority would have taken into account when determining an application for development on the Appeal Site.

On behalf of Quintain, Mr Elvin KC disputed these propositions. He maintained that the only planning permissions or applications which could properly be taken into account were those which existed or had been made and were known to the market at the valuation date. CAAD applications were not applications for planning permission and certificates were not permissions and neither were relevant planning considerations. In any event, the CAAD application for all four sites had been made after the valuation date and could not have been known to the market at the relevant time.

The Supreme Court has indicated how the cumulative effects of the schemes of development on sites 2, 3 and 4 described in CAAD applications for those sites may be legally relevant to the determination of Quintain’s CAAD application for the Appeal Site. There is no question of taking into account the fact that the applications themselves were made; they had not been made at the valuation date and even if they had, they would not have been material planning considerations. But that does not mean the schemes of development described in the CAAD applications must be ignored. They have been prepared by large professional teams with all the expertise which the owners of large development sites would be expected to assemble and with the same motivation to maximise the value of the sites as would have motivated the site owners in the assumed cancellation world at the valuation date. They can therefore be taken to reflect the sort of schemes which the market at the valuation date would have expected to be brought forward by their experienced owners, and which the Council, as planning authority, would reasonably have expected would soon be the subject of applications for planning permission. They each propose substantial mixed-use developments including tall buildings and a significant provision of PBSA. Had an objective observer in the market been asked to describe the sort of development they expected to emerge, they would have been likely to describe, in general terms, development on a similar scale and for similar uses to those described in the CAAD applications. Had they been asked at the valuation date when they expected it to emerge, they would have been likely to have said that it was imminent. No applications for planning permission for the other sites had yet been made but to any objective observer the four sites would have appeared equally ready to be developed with substantial proposals long overdue. Making the cancellation assumption, there was no known obstacle to early development in a market which, as the experts agreed, was in very good health and featured significant demand for residential, office, retail and PBSA uses.

Both parties appear to us to have adopted extreme positions on the use which can be made of the CAAD applications. We accept the proposition advanced on behalf of the Secretary of State that in July 2018 the decision maker determining an application for development on the Appeal Site would have anticipated that each of sites 2, 3 and 4 would be the subject of large-scale, mixed-use development applications in the near future. But we do not accept that the planning authority, or the market, would have had knowledge of, or could have anticipated, the specific form of development which would be proposed. The exercise undertaken by Mr King, the Secretary of State’s expert in urban design, of reviewing the development proposals in all four CAAD applications as if they had been comprised in a single application (and performing the same exercise for all of the Secretary of State’s alternative proposals) assumed knowledge of the size, location and function of every building proposed on each site. That information would not have been known to the market and could not have been anticipated by the market, or by the planning authority. It goes far beyond the general expectation of large-scale development which would have been anticipated, and which can therefore legitimately be assumed as part of the objective context in which an application for planning permission for the Appeal Site would be determined. It follows that a detailed cumulative assessment of the impact of all four schemes on townscape, the skyline, or views from key locations, as undertaken by Mr King, is not a relevant exercise. Any such assessment (which we agree is important) should have regard to the schemes for which consent already existed at the valuation date.

We therefore accept Quintain’s criticism of the level of detail on which parts of the Secretary of State’s case depends, which would not have been known to, or anticipated by, the market at the valuation date. But we reject Quintain’s submission that, when the Supreme Court described the role of CAAD applications as indicators or illustrations of how the market would expect adjoining sites to be developed, it had in mind only CAAD applications made before the valuation date. That submission is not reflected in the Supreme Court’s judgment which did not impose a blanket exclusion of applications made after the valuation date (as each of the applications before it had been). Instead, the Supreme Court left it to the decision maker to consider “how closely the circumstances in each case are comparable” when determining how useful a CAAD application may be in providing an analogy or illustration of how the market might have been expected to respond in the circumstances existing at the valuation date. The whole of the Court’s discussion of the use which can be made of CAAD applications would have been redundant and the declaration it made would surely have been different if it considered that none of the applications which were the subject of the appeal were capable of being of any relevance in the determination of the others.

It is not suggested by the Secretary of State that the fact that applications were made is relevant in itself, nor does she rely on information contained in the applications about matters which occurred after the valuation date (if they contain any). She legitimately relies on the applications as providing evidence, admittedly compiled some months after the valuation date, of what sort of development the market, and the planning authority, would have anticipated being brought forward on the adjoining sites to supplement or replace historically consented schemes which had not progressed. There is no reason in principle why relevant inferences cannot be drawn from post-valuation date applications about the expectations of the market at the valuation date concerning what permissions for development were likely to be sought in future, and nothing in the Supreme Court’s decision precludes such inferences.

When considering “how closely the circumstances in each case are comparable” (see [54] above) one relevant consideration is obviously that the CAAD applications were made some time after the valuation date for the Appeal Site. That makes it necessary to scrutinise the applications to exclude from consideration any information which they may contain about events which occurred after the valuation date, and to be on guard against the possibility that the proposals and judgments they contain may have been influenced by such events. Importantly, of course, the proposals described in the CAAD applications were consciously designed to take account only of circumstances known to the market at the valuation date. Nor is the relevant lapse of time so great, as the CAAD applications for the adjoining sites were all made within six to ten months after the valuation date. Quintain has not suggested there is anything specific in the applications for the other sites which should be excluded; its case has been simply that the applications are inadmissible or irrelevant because they were made after the valuation date. We reject that case, and we will assume when making our determination that, in the cancellation world, the market would have expected each of the sites to be the subject of applications for development on the scale and for the sort of uses illustrated by the respective CAAD applications. The decision maker would have anticipated a strong prospect that whatever development was consented on the Appeal Site would be followed by broadly comparable development on sites 2, 3 and 4. But the market would not have known or anticipated the detailed design and form of the development proposed in the applications, and the decision maker would not have had material sufficient to enable any assessment of the cumulative effects of the anticipated schemes in terms of height, massing, scale or connectivity.

There was much less dispute about the materiality of alternative sites which could meet the same need as the development proposed for the Appeal Site. The issue arose only because it was an important part of the Secretary of State’s case that harm which it is suggested would be caused to heritage assets by Quintain’s proposal could be avoided by implementing the Secretary of State’s proposal, which is said to secure the same benefits.

The Supreme Court referred in its decision to London Historic Parks and Gardens Trust v Minister of State for Housing [2022] EWHC 829 (Admin), at [130], in which Thornton J described as “well established” the following principle:

“Where there are clear planning objections to development then it may well be relevant and indeed necessary to consider whether there is a more appropriate alternative site elsewhere. This is particularly so when the development is bound to have significant adverse effects and where the major argument advanced in support of the application is that the need for the development outweighs the planning disadvantages inherent in it […].”

We were also referred to Trusthouse Forte Hotels Ltd v Secretary of State for the Environment (1986) 53 P&CR 293, at 299-300, and to Mount Cook Land Ltd v Westminster City Council [2003] EWCA Civ 1346; [2004] JPL 470, at [30]. The relevant legal principles were not contentious. In the absence of a conflict with planning policy or other planning harm, the relative advantages of alternative uses on the application site or of the same use on alternative sites are normally irrelevant. Even in exceptional circumstances where alternative proposals might be relevant, inchoate or vague schemes or those that are unlikely or have no real possibility of coming about would not be relevant or should be given little or no weight.

Mr Elvin KC placed reliance on the general principle that alternative sites or alternative forms of development are normally irrelevant. Mr Williams KC focussed on the exception that alternative uses of the application site may be material where a proposed development conflicts with planning policy or gives rise to planning harm. But it is clear from R (Langley Park School for Girls) v Bromley LBC [2020] 1 P&CR 10, at [52], that whether, in an exceptional case, there is any need to consider avoiding or reducing harm by adopting an alternative scheme, depends on the extent of the harm that would be caused by the application. There is no legal principle that permission must be refused if a different scheme could achieve similar benefits while causing fewer harmful effects (First Secretary of State v Sainsbury’s Supermarkets Ltd [2008] JPL 973, at [38]). But the existence of an alternative can be relevant in the balance finally struck between harm and benefit (East Quayside 12 LLP v Newcastle City Council [2023] EWCA Civ 359, at [39]).