Thursday, 2 June 2011

Implied conditions - an exception to the rule?

A recent Court of Appeal decision relating to conditions - Hulme v SSCLG [2011] EWCA Civ 638 - seems to have been seen by some commentators as a case primarily concerned with wind farms. Whilst it was a planning permission for a wind farm which gave rise to this litigation, the point in issue is of wider interest and potentially applies to all types of development. In fact this case has serious implications for the interpretation of conditions generally.

The Court was concerned with two conditions, the first of which required measurements of noise attributable to ‘blade swish’ in the event of a noise complaint being received by the LPA, and the second prohibited the generation of electricity to the grid until the LPA has approved a scheme providing for the measurement of greater than expected ‘blade swish’ noise, the object of this condition being to evaluate compliance with the preceding condition. What these conditions did not do was to prohibit ‘blade swish’ noise exceeding any specified or measured levels.

In giving the leading judgment, Elias LJ reminded himself of the legal principles to be applied to the interpretation of conditions:

a) The conditions must be construed in the context of the decision letter as a whole.

b) The conditions should be interpreted benevolently and not narrowly or strictly. (See Carter Commercial Development Limited v SSE [2002] EWHC 1200 (Admin) para 49, per Sullivan J, as he was.)

c) A condition will be void for uncertainty only "if it can be given no meaning or no sensible or ascertainable meaning, and not merely because it is ambiguous or leads to absurd results" per Lord Denning in Fawcett Properties v Bucks CC [1961] AC 636, 678 (an application of the benevolent construction principle), and

d) There can be no ‘implied’ conditions (per Widgery LJ in Trustees of Walton on Thames Charities v Walton and Weybridge DC [1970] 21 PMCR 411 at 497).

For those reasons, whilst there must be a limit to the extent to which conditions should be rewritten to save them from invalidity, if they can be given a sensible and reasonable interpretation when read in context, they should nevertheless be interpreted in such a way as to make sense of them. Thus, as Elias LJ put it, the rule that there can be no ‘implied’ conditions “needs careful analysis”.

The appellant (a third party objector) sought to challenge the grant of planning permission by the Inspector on the basis that the Inspector intended to impose a mechanism to ensure that the level of ‘blade swish’ did not exceed acceptable levels, and that without these conditions, planning permission would have been refused. The appellant contended that these two conditions failed to achieve that objective. In response, the Secretary of State and the developer submitted that, properly understood in context, the conditions do envisage an effective enforcement of acceptable ‘blade swish’ noise levels. The clear intention, they said, is that the scheme adopted under the second condition would provide the necessary system of enforcement.

The appellant called in aid the decision of Sullivan J (as he then was) in Sevenoaks DC v FSS [2004] EWHC 771. That was a case in which there was a condition requiring the submission and approval of the details of all engineering works involved in the formation of a golf course, prior to the commencement of that development. However, the condition did not actually require the execution of the engineering works in accordance with those details. The engineering works subsequently carried out were not in accordance with the approved details, but Sullivan J held that this did not constitute a breach of the condition, because it could not be implied that there was an obligation to carry out the works in accordance with the approved scheme. To do so would involve implying a condition, contrary to the principle enunciated in the Trustees of Walton case. Sullivan J also put some weight on Circular 11/95, which points out that a mere statement that a scheme requires approval does not mean that the LPA will be able to require the scheme to be implemented as approved unless there is a specific condition to that effect.

Elias LJ, however, felt that the construction he was adopting here did not fall foul of the Trustees of Walton principle, which he distinguished by reference to its facts. The implied term relied on in Walton depended on reading into the planning permission an obligation which was said to arise from extrinsic circumstances. Here, in Elias LJ’s judgment, the obligation not to contravene the standards set out in the first of the two conditions in question arose as a necessary implication from the language of the express conditions when read in the context of the decision letter. He therefore thought it more accurate to describe it as a matter of construction rather than implication. But even if it could be described as an implied condition, it was very different in nature from that envisaged in the Trustees of Walton case. He accepted that it is not easy to reconcile this analysis with the Sevenoaks case, but that seems to have involved conditions in a planning permission which were not to be read against the background of a decision letter. In any event he was satisfied that it ought not to dictate the outcome in the present case.

It followed that in his judgment there is an obligation on the developers to comply with the ‘blade swish’ levels specified in the first of these two conditions and that obligation will run for the duration of the planning permission. That obligation can be enforced by the planning authority in the normal way. Accordingly, the principal ground of appeal failed, although he was prepared to accept that that the enforcement mechanism does not operate through the scheme adopted under the second condition.

Patten LJ agreed that the relevant conditions could and should have been drafted with greater precision but, read in the context of the planning permission as a whole and against the background of the objectives set out in the Inspector's report, it is clear that the intention was that the limits referred to in the first condition should be complied with. The omission of any such requirement was, he thought, inconsistent with the reference in the second condition to the purpose of the scheme being to evaluate compliance with the standards referred to in the first condition. That pre-supposed the existence of a prior duty to comply with those standards as a term of the planning permission rather than as an obligation imposed through the medium of a scheme complying with the second condition.

Patten LJ observed that there is an undoubted need for the terms of any planning conditions to be set out clearly in the permission so that the developer and the local planning authority know exactly where they stand. But that does not mean that a lack of verbal or grammatical completeness should defeat the purpose of a condition when its meaning and effect is readily comprehensible by any reasonable person reading it with knowledge of all the relevant background material. At the risk of trespassing into the very field which Widgery LJ in the Trustees of Walton case said was forbidden territory in this branch of the law, he felt that a limited analogy with recent developments in the law relating to the construction of contracts could be helpful. He had in mind particularly what Lord Hoffmann said in A-G of Belize v Belize Telecom Ltd [2009] 1 WLR 1988: -

"The question of implication arises when the instrument does not expressly provide for what is to happen when some event occurs. The most usual inference in such a case is that nothing is to happen. If the parties had intended something to happen, the instrument would have said so. Otherwise, the express provisions of the instrument are to continue to operate undisturbed. If the event has caused loss to one or other of the parties, the loss lies where it falls.

In some cases, however, the reasonable addressee would understand the instrument to mean something else. He would consider that the only meaning consistent with the other provisions of the instrument, read against the relevant background, is that something is to happen. The event in question is to affect the rights of the parties. The instrument may not have expressly said so, but this is what it must mean. In such a case, it is said that the court implies a term as to what will happen if the event in question occurs. But the implication of the term is not an addition to the instrument. It only spells out what the instrument means

The current case seemed to Patten LJ to fall very much into the second of these two categories. In his view, the Court’s construction of the conditions did not really involve the addition of a new term at all. It merely recognised what the informed reader of the condition would always have understood it to mean.

I share the view already expressed by other commentators that it is hard to reconcile this decision with Sevenoaks, which seems to have been lightly brushed aside with a minimum of reasoning. If effect is given to the approach adopted by the Court of Appeal in this case, it could lead to a significant change in the way in which the courts construe planning conditions. I frankly find myself in disagreement with this judgment, and wonder whether the appeal might be taken on to the Supreme Court.


1 comment:

PGH said...

You might have added that this is the case that has just featured in the BBC2 programme 'Wind Farm Wars' that concluded last Friday 3 June, and which readers of this blog have no doubt been assiduously following!