Summary of Court Opinion

Factual and Procedural Background

Company A (the Appellant) obtained planning permission in February 2020 from The Council to demolish a motor dealership at the junction of [Number] Main Street and [Number] Main Street in The City and to construct 50 flats. A planning obligation under section 75 required Company A to provide 12 on-site affordable housing units.

In May 2022 Company A applied under section 75A to modify the section 75 obligation, seeking substitution of a commuted sum for the on-site affordable housing on the basis that post-pandemic increases in building and overall costs had materially reduced project viability. The Council's Development Management Sub-Committee refused the modification; the Chief Planning Officer had recommended grant.

Company A appealed under section 75B to the Respondents. The Respondents appointed a reporter to determine the appeal. The reporter refused the appeal, finding that the evidence did not establish that the development had become unviable. Company A appealed to the court, contending error in the reporter's interpretation and application of the concept of viability. Judge Pentland delivered the opinion of the court (Judges Wise and Clark concurring).

Legal Issues Presented

1. Whether the reporter misinterpreted the meaning of "unviable" in the Council's Affordable Housing Guidance by treating unviability as requiring evidence of an actual or likely loss.
2. Whether the reporter erred in law or in fact in concluding that the evidence before him did not demonstrate that the development had become unviable, such as to justify modification of the section 75 obligation.

Arguments of the Parties

Appellant's Arguments

• The reporter applied the wrong test by requiring evidence of a loss; unviability does not require a loss and can be shown by a development failing to work successfully or by insufficient developer return.
• The District Valuer's (DV) use of a 17.5% developer profit benchmark was a recognised industry standard and supported the Appellant's viability case; there was no evidence before the reporter challenging that benchmark.
• The Chief Planning Officer's recommendation supported grant; the reporter's conclusion amounted to an error of law in interpreting policy.

Respondents' Arguments

• The reporter correctly understood and applied the Council's Affordable Housing Guidance and relevant national guidance; a reduction in profitability does not automatically equate to non-viability.
• The DV report was dated after the section 75A application and did not assess viability; its use as evidence of non-viability was limited.
• The reporter properly exercised planning judgment on the factual question of viability; the court should not interfere with that factual assessment.

Table of Precedents Cited

Court's Reasoning and Analysis

The court recognised that interpretation of planning policy is a question of law but that the application of policy to facts (planning judgment) is for the decision-maker. The central factual question was whether an anticipated return of between 1% and 6% on GDV, given the development was substantially complete, demonstrated that the development had become "unviable" within the Council's Guidance.

The reporter had accepted the appellant's figures showing a reduction in predicted return to 1%–6%, but concluded that the appellant had not adduced sufficient evidence to show that such returns meant the project was unviable. The reporter had noted that such small positive returns could be regarded as close to a loss but did not proceed on the basis that only an anticipated loss could establish unviability. The reporter gave three reasons for placing limited weight on the DV report: it was commissioned for a different purpose, the 17.5% figure was a working assumption and not a definitive threshold of non-viability, and the DV report post-dated the application.

The court held that the reporter applied the ordinary meaning of "unviable" (not working successfully) and properly exercised planning judgment in assessing whether the evidence before him proved unviability for a substantially completed development. The court emphasised that it was not empowered to substitute its view for the reporter's factual conclusions absent material legal error.

Holding and Implications

APPEAL REFUSED

Holding: The court found no material legal error in the reporter's approach or reasoning and refused the appeal.

Implications: The reporter's decision stands and the section 75 obligation remains unmodified. The decision is the outcome of the reporter's factual judgment on viability; the court did not establish any new legal test or precedent beyond reaffirming the ordinary meaning of "unviable" and the principle that courts should not interfere with factual planning judgments.