Sainsbury's Supermarkets Ltd, R (on the application of) v Wolverhampton City Council & Anor

Factual and Procedural Background

The Council resolved to grant outline planning permission to two competing companies, Company A and Company B, each owning land on the same site known as the Raglan Street site (RSS). The Council needed to determine which development should be permitted to proceed through the exercise of compulsory purchase order (CPO) powers under section 226 of the Town and Country Planning Act 1990.

Company A owned approximately 86% of the RSS site, while Company B owned or controlled most of the remaining 14%, with the Council owning the subsoil under roads. Initially, Company A applied for planning permission, which was approved following a public inquiry, and the Council agreed to sell its land to Company A to facilitate development.

Company A later indicated it no longer wished to develop the site and negotiated to sell its interest to Company B. The Council then entered into a conditional sale agreement with Company B and committed in principle to using CPO powers to support Company B's development if necessary. Subsequently, Company A reversed its position and sought to develop the site itself. Both companies applied for outline planning permission, and the Council granted permission to both. The Council then considered which development to support via CPO powers.

The Council adopted a detailed process to assess both proposals against specified objectives. Officers produced a report weighing the merits of each scheme, concluding both would bring planning benefits. However, the Company B scheme was considered to have a "decisive advantage" because it would enable the development of a separate site, the Royal Hospital site (RHS), owned by Company B, consistent with the Council's planning objectives.

The RHS site was unrelated to RSS but linked by Company B and the Council. Development of RHS was considered financially unviable unless cross-subsidised by profits from the RSS development. The Council resolved in principle to approve the making of a CPO in favour of Company B, subject to conditions including evidence of commitment to develop the RHS site and indemnification of the Council's costs by Company B.

Legal Issues Presented

1. What considerations can the Council lawfully take into account when determining in whose favour to exercise their CPO powers under section 226 of the Town and Country Planning Act 1990?
2. Whether the Council lawfully took into account benefits arising from development of the RHS site, which is separate from the RSS site subject to the CPO.
3. Whether the Council's decision was affected by predetermination or bias due to prior agreements and resolutions favouring Company B.
4. Whether the judicial review application was premature given the decision was only in principle and the CPO may never be exercised.

Arguments of the Parties

Appellant's Arguments

• The Council erred in law by considering benefits from the RHS development when deciding to make a CPO for the RSS site, as section 226(1A) limits consideration to benefits arising solely from the development of the land subject to the CPO.
• It is unlawful to acquire land at one site to promote development at a separate, unrelated site.
• The Council took into account an immaterial and legally irrelevant consideration, rendering the decision unlawful.
• The Council's prior conditional sale agreement and earlier resolution indicated predetermination in favour of Company B, undermining the independence of the decision-making process.

Respondents' (Council and Company B) Arguments

• Both developments are separate but interlinked, with the RSS development conditioned on completion of the RHS development, forming a legitimate basis for considering RHS benefits.
• Section 226(1)(a) requires facilitation of development on or in relation to the land, which applies here due to the interdependency of the two developments.
• When choosing between two lawful developments, the Council can consider all benefits, including off-site benefits resulting from obligations such as section 106 agreements.
• The conditional sale agreement was entered into in the Council’s capacity as landowner and did not fetter the Council’s statutory planning powers; members were advised accordingly.
• The Council conducted a proper and detailed evaluation of both schemes, negating any suggestion of predetermination or bias.
• The judicial review application was not premature as the matter involves significant public interest and the Council and Company B agreed on the need for early resolution.

Table of Precedents Cited

Court's Reasoning and Analysis

The court acknowledged that the Council has the power under section 226 to make a CPO to facilitate development on or in relation to the land subject to the order. It emphasized that the benefits justifying a CPO must arise from the development of the land subject to the CPO, not from a separate unrelated development.

The court accepted that the RHS site and RSS site are separate developments and that benefits from RHS do not fall within the scope of section 226(1A) in relation to the RSS development. It is unlawful to acquire land at one site to facilitate development at a wholly different site.

However, the court distinguished between two stages: first, whether a CPO can lawfully be made for a particular development (which requires focusing solely on that development’s benefits), and second, if more than one lawful development exists, deciding in whose favour to exercise the CPO power. At the latter stage, the Council may consider the wider benefits of each development, including off-site benefits achieved through lawful agreements such as section 106 agreements.

The court rejected the argument that the Council unlawfully took into account immaterial considerations in substance, concluding that the Council lawfully considered the overall benefits when choosing between the competing developments.

Regarding predetermination, the court found no real risk that the Cabinet members had a closed mind. They were advised that prior agreements did not fetter their discretion, and the detailed evaluation process demonstrated a genuine reconsideration.

Although the Council’s resolution referred to facilitating both developments, which was a legal mischaracterization, this was not material to the legality of the decision. The resolution did not need quashing but could be reformulated to clarify the lawful purpose.

The judicial review was not premature because the resolution had significant practical effects and all parties agreed to an early determination.

Holding and Implications

The court DISMISSED the application for judicial review.

The court held that while the Council erred in formally treating benefits from the RHS site as part of the RSS development for the purpose of section 226(1A), this did not render the substantive decision unlawful. The Council lawfully considered the wider benefits when deciding in whose favour to exercise the CPO power. There was no evidence of predetermination or bias. The resolution to approve the making of a CPO in favour of Company B stands, subject to proper clarification of its terms.

This decision directly affects the parties by allowing the Council to proceed with the CPO in favour of Company B but does not establish new precedent beyond clarifying the lawful scope of considerations at different stages of CPO decision-making.