Binding Agreements Render Sequentially Preferable Sites Unavailable under NPPF Para 87 Sequential Test

Introduction

This commentary examines the England and Wales Court of Appeal decision in Tesco Stores Ltd, R (On the Application Of) v Lidl Great Britain Ltd ([2025] EWCA Civ 610). The dispute concerned the “sequential test” under paragraph 87 of the National Planning Policy Framework (NPPF)—specifically, whether sites under legally binding agreements with other retailers remain “available” for new out-of-centre retail proposals. Tesco challenged Stockport Metropolitan Borough Council’s grant of planning permission to Lidl for a new foodstore on an out-of-centre site, arguing that two sequentially preferable sites (Peel Centre Unit 4B and Water Street) were wrongly treated as unavailable. The Court of Appeal dismissed the appeal, clarifying that sites committed under binding agreements are not “available” for the purposes of the sequential test.

Summary of the Judgment

The Court of Appeal upheld the High Court’s dismissal of Tesco’s judicial review. It held:

The sequential test in paragraph 87 of the NPPF must be read in plain, ordinary English: “suitable” and “available” carry their everyday meaning.
A site is not “available” if it is committed to another retailer under a binding agreement, even if development has not yet completed.
The identity of the operator does not alter the test: availability refers to whether any additional similar development can realistically occur on a site.
The council lawfully exercised planning judgment in finding the two town-centre sites unavailable and proceeded to consider the out-of-centre application, assessing cumulative impact under paragraphs 90–91 of the NPPF.
No public law error arose in interpretation or application of policy; the appeal was therefore dismissed.

Analysis

Precedents Cited

The Court of Appeal drew on three leading authorities on the sequential test:

Tesco v Dundee City Council [2012] UKSC 13 Lord Reed held that “suitable” means “suitable for the development proposed by the applicant” and that a flexible approach to format and scale is required.
Warners Retail (Moreton) Ltd v Cotswold DC [2016] EWCA Civ 606 Emphasized that sites should not be rejected simply because of a single operator’s self-imposed preferences; flexibility and realism are key.
Aldergate Properties Ltd v Mansfield DC [2016] EWHC 1670 (Admin) Ouseley J clarified that “available” means available for the broad type of development, irrespective of the identity or commercial preferences of any particular retailer—however, his observations on “availability” (paragraph 42) were context-specific and not binding ratio in later cases.

Legal Reasoning

The Court’s reasoning proceeded in two stages:

Policy Interpretation:
- Paragraph 87’s language is plain—“should” indicates a preference hierarchy (town centre → edge of centre → out of centre only if no suitable/available sites exist).
- Neither “suitable” nor “available” requires technical definition beyond their ordinary meaning.
- The policy does not hinge on the identity or corporate personality of the retailer or developer.
Policy Application:
- The availability of each sequential candidate site must be judged on the facts at decision-date, allowing for reasonable predictive judgment.
- Evidence showed Peel Centre Unit 4B was under “legals” with M&S and Water Street had a binding agreement with Aldi; both sites were committed for retail use and not open to any other operator.
- The council rationally concluded those sites were not “available (or expected to become available within a reasonable period)”.
- Thereafter the council lawfully assessed cumulative impact under paragraphs 90–91 of the NPPF and found no significant harm to town-centre vitality or investment.

Impact

This judgment reinforces a clear, pragmatic approach to the sequential test across England and Wales:

It confirms that binding agreements committing town-centre sites to specific retailers render them unavailable for competing schemes, even pre-construction.
Local planning authorities can reliably take account of commercial commitments in determining site availability without fear of being accused of misreading policy.
It emphasizes policy interpretation limits: courts will not read in extra qualifications beyond the NPPF text or impose retailer-specific exceptions.
Future applicants must demonstrate availability by showing a site is genuinely uncommitted, not simply unoccupied.

Complex Concepts Simplified

Sequential Test: A tiered rule requiring retail development to locate first in town centres, then edge-of-centre, only turning to out-of-centre sites if no suitable and available options exist.
“Suitable”: Capable of accommodating the proposed development in broad terms of size, type and format, with reasonable flexibility on design and scale.
“Available”: Not under contract or otherwise committed to another user for the same broad type of development; judged on facts existing at the decision date and reasonably foreseeable near future.
Cumulative Impact (paras 90–91 NPPF): Assessment of whether the new development, alongside other committed schemes, would harm town-centre vitality, viability or investment.

Conclusion

The Court of Appeal’s decision in Tesco v Lidl crystallizes the interpretation of “available” under paragraph 87 of the NPPF: where a town-centre or edge-of-centre site is already under a binding agreement for retail use, it is no longer “available” for alternative proposals. This plain-language approach respects the policy-maker’s words and leaves room for realistic planning judgments on evolving site circumstances. Planning authorities and applicants must focus on actual site commitments when applying the sequential test, ensuring that only genuinely uncommitted sites are considered before approving out-of-centre retail developments.